In today’s fast life, many organizations are struggling for a place in the sun, looking to redefine how they operate in the new economy. That is probably where business transformation comes in, along with digital transformation. But here’s the snag: The two are often confused. Are these the same or different? Almost everyone will wonder about the business transformation vs digital transformation question at some point.
This article explores their differences and similarities and how the two may be harnessed for sustainable growth.
What is a Business Transformation?
Business transformation refers to sweeping changes at a strategic level that impact the way a company operates, leading to a major improvement in performance or capability. This includes culture, leadership, offerings, customer experience, and the vision of the company.
This transformation refocuses the whole organization toward achieving new goals that meet market dynamics and enhance performance, not just through technology but also through people, processes, and innovation.
Some instances of business transformation include:
- Doing a new market entry.
- Transitioning into service-centric business models from product-based ones.
- Reorganizing leadership structure.
- Setting right the company culture.
What Is Digital Transformation?
On the other hand, digital transformation helps businesses find a better way to operate, improve customer experiences, and create new avenues of value. It commonly means procurement and deployment of new digital tools and platforms, automating existing processes, and using data to become better decision-makers.
Think of it as a technology-dependent evolution, which supports the higher business.
Some examples of digital transformation are:
- Transition of systems to the cloud.
- AI-powered chatbots for customer service.
- Automating marketing actions.
- Using data analytics for customized customer experiences
Objectives: Business Transformation vs Digital Transformation
The goals behind each transformation will further show their difference.
Business Transformation: To realign an organization’s strategy, culture, processes, and people toward the achievement of newfound objectives.
Digital Transformation: To utilize digital technologies to make operations more efficient and increase the value offered to customers.
Scope of Change
Business transformation transforms an entire organization’s leadership styles into marketing strategies. It is often about changing the DNA of how a business operates.
Digital transformation, while powerful in its own right, is typically far more targeted toward modernizing specific processes via technology with the potential to affect culture over time.
Processes Involved
Here’s a comparison of typical processes involved:
| Process Area | Business Transformation | Digital Transformation |
|---|---|---|
| Leadership Alignment | Often involves changing leadership style and the team | May introduce new roles like Chief Digital Officer |
| Process Overhaul | Redesigning workflows, org structures | Automating and optimizing workflows with tech |
| Customer Experience | Reimagining Value Propositions and Interactions | Delivering digital-first Experiences |
| Employee Experience | Cultural shift and new ways of working | Empowering employees with digital tools |
Technology’s Role
Now this is where the two seemingly really start to be distinctly different:
Business transformation incorporates technology as a facilitator to support much broader objectives.
In digital transformation, however, technology is the lead: Transformation really happens through technology.
Impact on Culture
A business transformation will often ask for grounds of cultural change: how people work together, how they innovate, and how they assess success.
A digital transformation can also influence culture (towards agility and using data to make decisions); however, it sometimes does not require full cultural re-invention.
Examples of Business Transformation
Here are some instances of business transformation in the real world:
- Car manufacturing switched to mobility service provision (think BMW’s mobility services).
- Traditional retail shifted to omnichannel shopping experience provision (consider Target’s transformation).
- Financial Institute adopted post-merger new leadership, customer-centered approaches.
Examples of Digital Transformation
Some tried and tested instances of digital transformation:
- From DVD rentals to a streaming platform of global repute, Netflix has gone a long way.
- With the use of AI, mobile applications, and data, Domino’s Pizza has tried to optimize the ordering and logistics processes.
- Starbucks provides amazing experiences with great mobile ordering and personalized reward opportunities through its app.
Benefits of Business Transformation
- Aligning the business to new realities in the market.
- To build long-term competitive advantages.
- Fosters innovation and agility.
- Weather employee engagement and leadership.
- Market a customer-centric culture.
Benefits of Digital Transformation
- Automates processes for great constancy.
- Eases customer experience and personalization.
- Materials to better and quicker data-driven decisions.
- Starting new revenue streams through digital products/services.
- Strengthens collaboration through modern-day tools.
How Business and Digital Transformation Work Together?
Here is the good news: you need not choose between business transformation vs digital transformation—both work really well together.
Nowadays, many of the most successful business transformations are led into existence by digital technologies. Here are just a couple of examples:
- A retailer may transform their business strategy (business transformation) to focus on omnichannel retail, supported by a corresponding e-commerce platform and personalized marketing (digital transformation).
- A bank striving to become a customer-first organization will, no doubt, introduce AI-powered chatbots, mobile banking, and big data analytics.
The main point is that digital transformation really should be a subset of a larger business transformation approach.
Choosing the Right Type of Transformation Strategy
Here is how to go about your transformation journey:
- Clarify Goals: Do you want to completely reinvent business, or modernize processes?
- Assess Culture: Is the leadership and team more inclined toward deep change or focused technology shifts?
- Prioritize Initiatives: Decide which initiatives will create the greatest impact (business, digital, or both).
- Balance Change: Combine technological changes with culture and process evolution to ensure sustainable transformation.
Don’t forget: Digital transformation won’t redeem a bad strategy. Make sure you coordinate both for superior success.
Conclusion
When it comes to the business transformation vs. digital transformation debate, the answer cannot be one or the other, but an integration of both counterparts. Business transformation speaks of a strategic reinvention, while digital transformation refers to making technology the enabler and fast-tracker of change.
So think big with your business goals, and have technology as a powerful enabler rather than your focus. These two transformations, when coupled, can ensure your organization against future threats for success in a digital-first world.
Are you ready to transform?
FAQs
No. In broad terms, business transformation changes strategy, leadership, culture, and processes. Digital transformation is mainly an adoption of technology.
Not always, but it frequently proves more effective when coupled with a business transformation strategy that aims at sustainable change.
Absolutely! Digital transformation can start small in whatever way be cloud tools, automated marketing, or data analytics.
Ideally, business strategy should lead while digital transformation should serve as one of the vehicles for those strategic goals.
A merchandiser launches a new business model (business transformation) that is supported by an e-commerce platform and digital marketing (digital transformation).