When I was a child, we looked after a kitten on what was supposed to be a temporary basis. Not wanting to cause confusion for the next owner, we didn't give her a name other than ‘Kitten.’ Somehow, she stayed, and once she was obviously not a kitten, she needed a new name. My Dad, a straightforward man, called her, “Kitty.” Problem solved.
In a similar way, I believe what we call Digital Transformation is misnamed, misleading and very often missing the mark. Names matter, and we need to find a new way to describe what we are attempting in order to guide our efforts and investments more effectively. Unfortunately, my Dad is not around to solve this one, so I will try.
Let me begin by positioning the subject of technology using a spatial analogy. When I started my career in the early nineties, IT was at the back of the organization. It was a necessary but expensive function that was seen as administrative rather than strategic. In the late nineties, it moved to be under the organization providing the foundations of process and information flows through ERP. Soon afterward it moved dramatically forwards, first through CRM and then online business. At this stage technology enveloped the organization, finally becoming crucial to its success. This situation persisted until around 2010, but then the biggest shift of all started to happen: technology began to move into the organization helping to define what a business actually is.
We have chosen to call this latter phase digital transformation which is enormously confusing. All computing has been digital since around 1950, so this name carries no intrinsic meaning. Like the proverbial elephant described by multiple blindfolded people, what you say about digital transformation often depends on which part you are touching. Digital includes major advances in technology such as AI and blockchain; easy and inexpensive access to vast computing power through cloud; the mass adoption of mobile and online technology by consumers; the rise of ‘born digital’ companies with new business models that are disrupting whole markets; and a new ‘agile’ culture that is collaborative, dynamic and cool. But these are the conditions that created digital transformation and some of its attributes, not the phenomena itself.
We urgently need to see the whole elephant.
To do this, we must return to the idea that technology is moving into the business. Until recently technology and ‘the business’ were considered somehow separate, the former enabling the latter. Technologists were always keen to know what ‘the business’ wanted to do. The existence of a border between business and technology undermines agility, prevents a fluent translation of strategic need into a holistic response and frustrates efforts to use data natively for insight. The perpetuation of the business-technology dichotomy also preserves old business thinking and old technology thinking that are both rapidly losing their relevance in the modern marketplace.
What is needed, and what is beginning to happen, is a deep fusion between business and technology, where the two distinct entities combine to form a new whole. When this happens, the resulting organization has radically new properties and capabilities. So much so that I argue these are a new kind of organization.
Having been so critical of the term digital transformation, I recognize some responsibility to find a better name for the outcome of what I am describing. After considerable thought, and some entertaining dead-ends, I have returned to a simple fusion of business and technology to mirror the concept itself: BizTech. This is also an extrapolation of the widely used FinTech that is somewhat analogous. Even if this term is eventually superseded, it is a good working title.
A BizTech has a superior set of characteristics that mark it out competitively:
- Strategy, product and change execution are enacted through adaptive, agile models in rapid, collaborative cycles.
- The capabilities of the organization are encoded and extended in software and data forming a codex of its knowledge and wisdom.
- The organization has plug-and-play interfaces at its borders to interact with customers and consume services from other organizations.
- Data is a strategic asset of the company that is mined continuously for insight.
- The organization can be configured and reconfigured quickly and easily using an automation first approach.
- Technologists are diffused through the organization rather than siloed in one place, but there is still cross-company planning and cohesion.
- Digital assets are protected with security and risk considerations engineered into every design.
- Culture is fast, dynamic, empowering, smart and positive.
The goal of traditional and born-digital companies alike is to acquire and maintain these capabilities. Everything else is a means to that end. As such, BizTech defines a meta-narrative that helps us describe and organize everything else we are currently talking about in the world of digital.
My hope is that a better-defined objective will help reduce the high number of disembodied and ill-conceived digital transformation efforts we see in the market today. Assessing whether a company has acquired BizTech characteristics is a much more structured task than asking whether a company has digitally transformed. This is largely because it answers the lingering question we have today, “Transformed into what?”