What is the purpose of digital transformation? That often gets lost. Some say digital transformation is “the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers.”
Others might say it is “the process of using digital technologies to create new--or modify existing--business processes, culture, and customer experiences to meet changing business and market requirements.”
Others emphasize new business models and new revenue streams. The emphasis might vary based on a firm’s own existing business: customer experience for firms who sell solutions to improve CX; revenue enhancement by firms whose products are said to lead to revenue gains; new business models among the key objectives pushed by consulting firms who specialize in business strategy advice.
The key concept, no matter who advances the idea, is tangible “transformation” in some way that benefits a business or organization. That can mean better processes, customer experience, ability to innovate, create new products, add new features, provide higher value, more efficient operations or the ability to enter new markets.
Which should raise a question. Since applied digital technology is not the only possible lever to pull to improve performance and outcomes, are there cases where DX is not the best way to spend effort and money?
Perhaps there are cases where expanding operations into an ecosystem or value chain adjacency is a more-immediate or realizable goal than DX. On the other hand, there are times when DX might arguably be the best way to grow an existing business.
And sometimes the two goals happen simultaneously, as when using DX (automation or “becoming a platform” enables movement into other parts of the ecosystem, or additional swaths of the existing ecosystem.
For example, DX might allow one entity to sell products that do not actually exist on its own network and facilities or owned inventory. The example is any large e-commerce site that sells products owned by third parties. More generally, any retailer sells inventory created by third parties. The difference is that DX might allow an e-commerce platform to sell at much-higher volumes while offering a much-larger product selection.
The point is that the larger business objectives are higher revenues, better profits, lower costs, new and improved products, happier and more-loyal customers. Sometimes DC helps achieve those outcomes, but sometimes it is only ancillary. The issue is “transformation.”
“Digital is only an “adjective” modifying the noun. The noun is the thing desired. Digital is an aspect or support to that effort. Sometimes we forget that in our rush to embrace the “next big thing.” The outcome is “transformation.” We sometimes mistakenly think “digital” is the outcome. It is not.
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