“Digital transformation” is a collective term that suggests action being taken by an organization. While there are different definitions of the term, generally speaking, it entails an organization taking on a strategy, applying tactics, and changing from some versions of “analog-ness” to being digital. This can be in terms of business model, operations, technical underpinnings, etc.
“Digital disruption”, however, often connotes an action (and typically a bad one) happening to a market or an organization. People tend to think of being disrupted rather than disrupting, or at least those stories tend to receive the most press. That said, Gartner clients – and this should not be much of a surprise given that Gartner is a technology research and advisory firm and its clients have historically tended to be buyers or sellers of technology – closely link technology with disruption (blockchain, AI/ML, and IoT often come to mind first). That’s not totally correct, either. But we can agree that there is typically a notion of innovation or transformation – voluntarily or involuntarily – in one form or another (see research on the elements of disruption here) that accompanies digital disruption.
It turns out that these concepts are – and must be – intertwined. We need to think of the relationship between transformation and digital disruption similarly to the way we think about evolution. Along the way as species evolve, there are changes induced either through natural selection (giraffes have long necks) or through cataclysm (giant meteor wipes out dinosaurs), but one way or another, in order for a species to evolve, grow, and scale, disruption is part of the plan. The transformation of a species is directly tied to the manner and pace with which it disrupts or is itself disrupted (and whether it’s prepared to weather a negatively disruptive event). Moreover, it doesn’t have to consider whether or not to disrupt – it just either does it or is itself disrupted. Guess what? Digital disruption within the enterprise acts and works the same way.
This means two things:
- Disruption isn’t really a new thing. Organizations have been disrupting or feeling the effects of disruption forever. From train travel across the country to UPC codes shaking up retail to open source code and subscription business models, disruptions across the four elements (business/economics, society, industry, and technology) have always occurred. What’s different now is that there are entities that have been better able to take advantage of combinations of available funds, societal change, democratized technology platforms, etc. than traditional companies have historically been. When they’ve succeeded, they’ve been incredibly disruptive (Google, Apple, AWS, Microsoft with cloud, container technology, SaaS models); when they’ve failed, they often fail spectacularly (e.g., Theranos) (or both with Uber, a parabolic story of disruption). But the moral is, we shouldn’t be thinking of digital disruption as a New Thing — it’s an old thing wrapped in new clothing. And it’s clearly not unique to digital giants (see this note on Acorns, a disruptor in financial services).
- Transformation and disruption are inexorably linked. Organizations that are digitally transforming themselves must incorporate willful intent (read about this here) model and strategy for digital disruption so that they can scale (up, out, across) effectively. Since digital transformation addresses components that range from business strategy, to operations, to models, to technical underpinnings and innovations – and since organizations wish to win, not just place or show as a result of transformation – disruption, whether offensive, defensive, self-inflicted, etc. must be part of the strategy and delivery of outcome(s) of transformation.
Of course, not every organization is prepared to be a disruptor. Different enterprises have different personalities, some of which are less amenable to new technologies, some of which are anxious and adept at taking on new models, and others of which may prefer to wait and see what their peers to before considering innovative or (shudder) disruptive strategy or tactics. Fortunately, this isn’t an all or nothing endeavor, and organizations can consider a continuum that looks like the following:
Automate -> Optimize -> Innovate -> Transform -> Disrupt
Organizations can choose – per line of business or entirely – to focus efforts on any one of these. They might take then on in sequence, stepping toes into the water before implementing grand changes. Technology and service providers (TSPs), meanwhile, have an obligation to help their customers – these enterprises – understand the value, risk, costs, and rewards associated with employing and deploying their products and services along these lines as well as (sometimes) pursuing such change. The TYPES of products and services might also be tailored to each stage (e.g., should RFID be pursued as a way to track goods in our supply chain, or should we consider blockchain?). Sometimes, they may help their customers determine when and where to find opportunities (which we might characterize as helping parse opportunities within a value chain or through business moments within a value chain). But all participants have roles in this continuum.
It’s important to recognize that this IS a continuum in that these are all flavors of change that can and should be considered strategically — and that includes disruption. It should be a conscious and willful decision to make disruption part of a corporate strategy, and organizations must realize that digital disruption is not simply the outcome of mixing new technology with “digital giantism”. Everyone has an innate ability and will to be digitally disruptive – you just “have to wanna”, in the words of the great George Carlin.