What is “digital transformation” anyway?

 At heart, digital transformation is simple. It’s the way an organization reinvents itself by using digital technology — especially social, mobile, analytics and the Internet of Things — to make radical changes to how it does business.

This transformation could involve changing the types of products or services the organization offers, how it provides them, or even rebuilding its entire business model from the ground up. But one thing most digital transformations have in common is that they’re responses to rapid and significant market changes.

It’s no surprise that digital technologies are often referred to as “disruptive technologies.” They’ve torn up the rulebook in every market, giving customers more power and opening the door for swarms of new players. The traditional market leaders are now forced to catch up — or risk becoming irrelevant.

So how do you get it right? Begin with customers

With so many factors in play, there’s no cookie-cutter solution for digital transformation, but here are a couple of examples that illustrate how it can work.

As well as its executives being famous for collecting garbage on flights as an opportunity to chat with customers face-to-face, JetBlue is applying a similar approach to its digital transformation — focusing on a technology-driven customer experience.

Recently, the low-cost carrier launched Technology Ventures, a new company that aims to bring machine learning and analytics to commercial aviation, by investing in early-stage startups. In doing so, JetBlue is able to research new approaches to customer service — helping it adapt faster to changing customer demands, without compromising core operations.

All of this has helped the company revolutionize how it engages customers, giving it a significant advantage over its competitors (although having cheap flights probably helps, too).

It’s not just about customers …

Improving the customer experience is a big part of digital transformation. But making radical changes to internal processes and corporate culture can have just as big an impact on business performance.

At corporate giant GE, they’re using digital technology — especially process automation — to digitize the industrial space. Industrial manufacturers gather huge quantities of data. Take jet engines, for example; each one can have a hundred sensors that gather data on all aspects of its operation — producing a terabyte of data during a domestic flight.

But for GE, harnessing massive volumes of data to transform global operations and fuel rapid innovation wasn’t just a tech challenge — it needed to transform its 120-year-old industrial culture for the digital age. To do that, it worked hard to drive a “culture of simplification,” removing roadblocks and adopting lean tools to reduce internal risk.

…and it’s not just about technology

Digital technology alone won’t bring about transformation. A recent study found that employee talent and organizational strategy are vitally important for real transformation to happen.

So important, in fact, that the leading 100 organizations in the study expect 23 percent higher growth revenue than the other 2,900 in the next two years.

GE’s transformation is a good example of how technology and cultural change can work together — creating a fluid environment where employees are more in control of analysis and feedback, leading to greater efficiency (and faster innovation).

And the result of this self-imposed digital disruption? Well, GE has over 19,000 employees working on the digital transformation projects that will define the future of the company.

Of course, any successful transformation must be driven from the top. Enterprises need a strategist who can combine tech with cultural change to empower employees to make change happen. Step forward … the CIO.

CIOs leading the change

With a bird’s-eye view of the enterprise, CIOs are ideally positioned to lead digital transformation initiatives. They understand the potential of the technology, as well as the risks and drawbacks that may be involved.

But to drive transformation CIOs must think like enterprise leaders, not IT leaders. That’s how they’ll perform two crucial tasks for successful digital transformation:

  • Communicate how new technologies offer improvements for all stakeholders: the business, employees, customers, partners and suppliers.
  • Build a consensus for change across the wider organization. Without a change in mindset throughout the enterprise, digital transformations can easily fall flat.