May we say 'Digital Transformation' is deprecated?

Without a doubt, "digital transformation" has become a wild card used in practically any context in which a more or less novel technology is applied. However, incorporating new technologies into a company does not necessarily imply a digital transformation process. Moreover, it is seldom like that.

Tony Saldanha, author of the book Why Digital Transformations Fail already claimed in 2018 that "the term has been used by every IT marketing professional who sells anything from an email update to artificial intelligence."

"Around the world, organizations are spending around a trillion dollars a year on digital transformation," says Saldanha, but "70 percent of those transformations fail. In my opinion this is happening because language prevents business owners and the public sector from setting the correct end goal”. The term digital transformation “creates a false sense of security”, since the breadth of the term prevents companies from describing their strategy, and their successes and failures, accurately, that´s why eventually “leadership equates anecdotal successes and small profits with what is essentially an existential threat to your organization. So, language is part of the problem”

Digital transformation rebuilds the dynamics of organizations to adapt them to the needs of the present and the future, and modifies their internal processes by designing a new business culture.

If we take this definition into account, what is usually referred to as “digital transformation” is nothing more than applying new technologies without deeply addressing the problems of organizations. It's like feeding a caterpillar simply to make it bigger (and fatter).

This approach, more than a digital transformation process should be considered as a digitalization process, something that our industry has been practicing for decades, and that although it is beneficial and can bring improvements in all business aspects, it does not have even remotely the same capacity to create new sustainable competitive advantages over time.

Digital transformation processes are supported by technology but they are not only the implementation of technology. Digital transformation processes are fundamentally the redefinition of business models, along with the processes, culture and organizations that support them, relying on technologies with the capacity to disrupt them.

Digital Metamorphosis

Given the digital transformation implies a substantial change in business processes supported by technology, the term that best describes the process is Digital Metamorphosis: It is not about making the caterpillar fat, it is about turning it into a butterfly.

This term is not new, as John Hitch proposed: “going through a metamorphosis implies that the company realizes of its shortcomings as a caterpillar, such as a being too slow and bitting always the same old leaf.

We can not agree more.


Become the change

In 1914 in the United States there were about 4.600 companies dedicated to the manufacture and repair of carriages. By the early 1920 there were about 150 left across the country.

One of the companies that did not survive was the John Stephenson Company, which that by then had more than 80 years of history. At the time of its collapse it had about 20 patents issued from its workshop / R&D department, and had launched successful new products such as city rail carriages.

Today, from time to time, rankings of the largest companies appear by listing or turnover, and we are surprised at the number of companies that disappear from the rankings or even from the market every decade. Surely all of them had large R&D departments.

So, if innovation is not the problem, where is it? The difference, generally, is based on the approach: It is not the same to be innovative in your current business model than to be innovative in new business models. Usually, companies disappear because they do not know how to adapt to changes.

The John Stephenson Company did not know to adapt to the second industrial revolution. Today we are immersed in the fourth industrial revolution. Change is happening, regardless of whether we assume it or not. Even metamorphosis goes beyond accepting this change:

Companies must become the change.