Digital Transformation and its Side Effects
How organisations transform themselves or not (enough)
So is digital transformation a necessity, probably yes. Is it always a good thing, possibly no. Digital transformation is a part of the wider business transformation. As it happens it’s an important element in the transformation that companies and organizations are going through, but certainly not the only one.
Transformation is primarily determined by the degree by which people are empowered, where they can actively embrace continuing change, and where they see this as an opportunity for growth and innovation. This is true for management and employees. There are at least three factors:
- The “freedom” that employees have to understand the outside environment.
- The possibility they have to interiorize the need for change.
- The opportunity to embrace the risks involved.
… are all part of the ingredients. To transform an organization successfully, the people (intended as organizational population) are a fundamental part of the process, they are the process and the result as well. As we know, digital transformation is a consequence, and a necessity, of the new digital trends.
What if digital transformation becomes digital disruption?
In our previous post on the digital transformation we said that digital transformation is part of a larger technological process, and is the change associated with the application of digital technology in all aspects of human society and thus also in business. But this process can be incremental or disruptive. Most organizations are not set up for disruption, but for incremental change.
It is the speed of transformation which determines if it is digital transformation or disruption. The internal rate of change of organizations and the speed with which people in these organizations can change may be very different from the change imposed from the ouside. There are many examples of companies coming from the outside of an existing industry, which imposed changes (external) on existing companies in a sector (AirBnB, Amazon, Uber, Netflix, etc.) thus transforming the competitive situation and rules in a very short time (disruptively).
This is why the imposed speed of digital change may be greater than the possibility the organizations have to react and their capability to incorporate the new technology and processes. This is mainly, but not only, a matter of managers understanding what is happening and taking the necessary steps, in time. And of the population in the organization to change with the new rules and adopt new processes at the right speed.
We speak of digital disruption when the force from the outside towards transformation conducts to destruction of the previous competitive situation (and “rules of the game”). Digital Disruption is thus about changing how business is done in all aspects of an industry.
Digital transformation is a necessity, and resisting it makes no sense. Digital transformation has created unique marketplace challenges but also opportunities.
While digital transformation is manageable, with digital disruption, the matter changes, as it may have many side effects (jobs, social unrest, strikes, tax revenues, competition from abroad, to name a few). Governments and organizations must factor the cultural changes they’ll confront as workers and organizational leaders try to adjust.
So digital disruption is an external change which occurs faster than the internal transformation can follow, if this happens the company or organization is at threat to be dwarfed, to incur heavy losses and in the end it may even cease to exist.
With several social and community related consequences.
For certain, everybody must be subject to the same rules of the game and obey the same regulations and laws. Which is unfortunately not always the case. So, rightly, we may apply Darwinism to organizations, but if everybody has the same opportunity and possibility to adopt and implement new and, possibly, unfamiliar technologies.
More information on digital transformation in our blog.