14 March 2017

What’s in a Name: the Difference Between Digital Disruption and Digital Transformation

 

As we discussed in a previous post, there’s a lot more to digital transformation than might be at first supposed.

In fact, whatever the sector you operate in – be it private, public or third sector – it describes a contextualised change process that nearly every company needs to consider if they want to remain relevant in a digital world.

So if digital transformation is something that organisations are having to consider, what then do people mean by the term “digital disruption”?

To many, referring to this or that digital initiative or technology as “disruptive” has become commonplace. It is often used – incorrectly we would argue – to describe anything that might make someone, somewhere go “Hey, that’s going to change the world!”.

With this in mind, we present what we feel are a few key differences between digital disruption and digital transformation.

Note: if you truly want to understand the difference between transformation and disruption then read the brilliant Digital Disruption by James McQuivey (Forrester Research: 2013))

What is digital transformation?

The best working definition of digital transformation comes from Brian Solis, principal analyst at Altimeter Group. Solis defines digital transformation as:

The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle.

We like this definition, as it strikes a healthy balance between theory and practice.

At its most basic, digital transformation enables an organisation to address the needs of its customer more simply and directly. Yet it is very important not to falsely identify all and every digital initiatives within a digital transformation process exclusively with the idea that it will disrupt your (or your competitor’s) business.

What is digital disruption?

In The Digital Transformation Playbook, David L. Rogers defines digital disruption as:

… disruption happens when an existing industry faces a challenger that offers greater value to the customer in a way that existing firms cannot compete with directly.

This is a great definition because it usefully defines digital disruption as a type of digital offering that offers a far better way to users of doing things that current incumbents simply can’t compete with.

In this respect, Uber – that darling of digital disruption – is a great example. The taxi industry has been genuinely disrupted because Uber provided their customers with substantially greater value, without even being in the same industry. Their business model was fundamentally different, making it that much more difficult for the average taxi company to have chance of replicating the model.

Learn how to spot and defeat digital disruption with our FREE case study and strategy guide!

 

Is your organisation prepared?

It is important to realise that digital disruption in the form of the creative application of digital technologies in different settings is a genuine threat to many organisations.

As such, it is worthwhile to give some thought as to how your organisation can react should the threat of disruption arise – and what you can do to prevent it from happening in the first place.

The SWOT analysis (assessing strengths, weaknesses, opportunities, and threats) is a great tool for this.

Your company’s strengths and weaknesses determine its ability to react to asymmetric competitors (i.e. those who are traditionally not your immediate competitors). This is where agile businesses truly shine, as arguably they are better equipped to change and adapt to disruptive challenges as they arise.

Equally opportunities and threats facing the organisation are now significantly influenced by digital communications and technology. But the extent to which digital technology is a threat or opportunity largely depends on how well equipped your organisation is to deal with the challenges of the digital world.

Always keep in mind that in the digital world asymmetric competition to what you do can literally come from anywhere. And that if this happens ideally your organisation needs to be agile to have any chance of rising to the challenge.





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