Is Digital Transformation about Adoption or Innovation?
Digital transformation is a popular phrase in business today. The pandemic has created a massive shift to work from home, remote work, online ordering, and other digital transformation efforts. It has been a frequent topic in strategy forums, webinars, C-suites, and more. There is no question that we are experiencing a transformation, with big chunks of work not likely to return to exactly how they were pre-pandemic.
But is what we’re witnessing in digital transformation adoption or innovation?
I’ve attended many forums through the National Association of Corporate Directors, where they select topics relevant to corporate leaders and boardrooms today. Ranging from local chapter meetings to the annual conference, all online, there were several forums with “innovation” in the title. All of them focused on digital transformation, mostly driven by the pandemic, but obviously started before and certainly to continue after. What started as a curious thought started to bother me more and more: tagging digital transformation as innovation is doing a disservice to both terms.
I would argue that the vast majority of digital transformation is the adoption of existing and proven techniques, processes, and technologies. This is no different than copying a trend of branding fonts, or employee interview techniques, or employee benefits. There is nothing wrong with adoption. Taking an idea created somewhere else, seeing strong evidence that it works, studying how it fits into your business, and then executing its adoption is an incredibly efficient way to improve. It should be celebrated. However, adoption is not innovation.
Innovation is creating a new situation. It might rely on existing ideas, existing technologies, existing processes, but they are modified to create something that didn’t exist before. So, in digital transformation, here are some examples:
If you started holding virtual meetings on Zoom or Teams, you have adopted a well-established technology. If you created a process to allow someone to walk through your museum through Zoom, or do a virtual wine tasting after shipping product samples, or handle customer service calls that used to be a phone call but now the customer can show you the problem…these all require creation to leverage existing technology to solve a problem in a new and useful way.
If you added a digital storefront so that your customers could order and pay you digitally, you have adopted a digital transformation. But if you add digital downloads to your product that enhance its value, you have innovated by changing and expanding on your value proposition. If you create a forum for customers to share how they use features of your product in interesting ways, and tie it to selling upgrades or new components, you have innovated to add more value and increase revenue.
What’s the big deal? Aren’t you splitting hairs? They both represent forward progress.
Yes, both adoption and innovation are forward progress and should be cultivated and celebrated. But if these two practices are confused, both are likely to be diluted, less guided, and ultimately less effective. While we won’t go into a great deal of detail, here are some differences.
Creating an effective organization that leverages adoption requires a study of what already works, seeking convergent thinking, testing and risk mitigation, and a set of behaviors and capabilities around execution and standardization. That’s all good stuff but is all about enabling effective adoption.
Creating an effective innovative organization requires asking big “dumb” questions, seeking divergent thinking, taking risks, and testing to see what could work, and a set of behaviors and capabilities around creativity and learning. That’s also all good stuff but geared towards enabling effective innovation.
So let’s not confuse the two. Digital transformation can involve both adoption (lots of it) and innovation (where applicable), but don’t think you’re being innovative because you signed up your organization for some digital tool subscriptions.