Since I first wrote about digital transformation back at the end of 2012, the term has become wildly overhyped. Since CEOs are now at least asking about digital transformation, and every technology vendor now claims expertise in digital transformation, it’s time to burst a few of the myths surrounding digital transformation.

But first, let’s recap (feel free to skip ahead to the first myth):

Why Is Digital Transformation Different From What Came Before?The simple answer is that because of the changes outlined below, the business environment is much more volatile than before, resulting in the need for urgent change:

  1. Customers are more empowered and connected. Your customers now expect all products and services to come with digital experiences to enhance their ability to get to an outcome they value more effectively (and more enjoyably).
  2. Customer expectations are rising faster than ever. Because of the pace of change of the technology underlying new digital experiences, your customer’s expectations are going up almost daily. This causes the digital value equation to get very quickly out of balance.
  3. Technology is evolving new business capabilities. The confluence of rapidly evolving technologies (e.g., mobile internet, social, cloud, mobile, voice, IoT, AR, ML and AI — sometimes referred to as the digital age) creates opportunities for companies to radically change the way they help customers achieve outcomes they value through new technology capabilities.
  4. Last-century business design no longer works. Ninety-nine percent of businesses around at the turn of the century were not designed for the digital age. Instead, they were designed for an era when markets and businesses evolved very slowly. In the digital age, businesses must be designed with agility in mind (see No. 1, 2, and 3 above).
  5. Skilled employees are more mobile. In your last-century business design, the employer had the upper hand. In the digital age, skilled employees are much more aware of their marketability, and they leverage that knowledge to find the best jobs. Employee mobility adds greater pressure on organizations to shape the ideal culture and work environment.
  6. Competitive threats surface daily. It has never been easier for any company to test a new business idea. Whether it’s a couple of students in a dorm or a company with 100,000 employees, it’s relatively easy to build prototype products and test them in new markets. Disruptive threats within any industry can come from nimble incumbent competitors or vendors in other industries bringing their capability to a new market.

Myth No. 1: Transformation Means Simply Updating The Website And Building A Mobile AppWhile adding new digital customer or employee experiences can drive significant business improvement, transformation must go deeper. Digital transformation requires new digital business capabilities to help the business deliver customer outcomes in entirely new ways.

In banking, adding mobile check deposit to a mobile banking app enhances the customer experience, but enabling person-to-person mobile payment using a phone number or email address requires a more fundamental shift in thinking. Adding digital wealth management capabilities to help customers automatically manage and optimize their money pushes capabilities even further.

Coming soon: “Myth No. 2: IT . . . ”

(This post originally appeared on the Forrester Research blog, which can be viewed here).

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