Social media, mobile, wearables, Internet of Things, real-time — these are just some of the technologies that are disrupting markets. Changes in how people communicate, connect, and discover are carrying incredible implications for businesses and just about anything where people are involved. It’s not so much that technology is part of our everyday life or that technology is relentless in its barrage on humanity.

The real threat and opportunity in technology’s disruption lies in the evolution of customer and employee behavior, values, and expectations.  Companies are faced with a quandary as they invest resources and budgets in current technology and business strategies (business as usual) versus that of the unknown in how those investments align, or don’t, with market and behavior shifts.

This is a time of digital Darwinism — an era where technology and society are evolving faster than businesses can naturally adapt. This sets the stage for a new era of leadership, a new generation of business models, charging behind a mantra of “adapt or die.”

Rather than react to change or be disrupted by it, some forward-looking companies are investing in digital transformation to adapt and outperform peers. In November 2012, research-based consultancy Capgemini published a report studying the digital maturity of companies pursuing digital transformation. In its report, “The Digital Advantage: How digital leaders outperform their peers in every industry,” Capgemini found that those companies that are highly vested in both digital intensity and transformation management intensity, aka “The Digirati,” derive more revenue from their physical assets, they’re more profitable, and they also possess high market valuations.

Why is That?

It comes down to one word, relevance. If consumer behavior is evolving as a result of technology, businesses either compete to get ahead of it, they perpetually react to it, or they belittle it.  One of the most problematic aspects around digital maturity is that technology is both part of the solution and also part of the problem.

Enter digital transformation

Digital transformation may sound like it’s something you’d hear in buzzword bingo, but it is one of the most important movements facing businesses today. It is forcing businesses to look beyond the world as they know it, observe how things are changing on the outside, to change transform philosophies, models, and systems on the inside.  Ask 10 different experts in digital transformation for their definition of it though and you may just get 10 different answers. Before strategists can consider digital transformation, they at least have to know what it is, why it’s important, and what they need to do.

In 2013, I set out to better understand the catalyst and challenges around digital transformation and also the people driving it forward. It is indeed a deep and complex topic. I had to focus my research. Capgemini among others have already made tremendous headway in their work around technology and process models defining the evolution of digital maturity.  One of the things I heard over and over was the need to know who’s responsible for it and how do companies take steps in the right direction. Specifically, strategists wanted to know how to make the case in the absence of executive leadership pointing in new directions and leading teams to “adapt or die!” As a result, I explored digital transformation from a more human perspective. After a year of interviewing 20 leading digital strategists at some of the biggest brands around the world, I released my latest report, “Digital Transformation: Why and How Companies are Investing in New Business Models to Lead Digital Customer Experiences.”

What is Digital Transformation?

Again, it is a sweeping topic. Simply defined, digital transformation the intentional effots to adapt to this onslaught of disruptive technologies and how it’s affecting customer and employee behavior. As technology becomes a permanent fixture in everyday life, organizations are forced to update legacy technology strategies and supporting methodologies to better reflect how the real world is evolving. And, the need to do so is becoming increasingly obligatory.

In my research, I concentrated on how businesses are pursuing digital transformation in their quest to specifically understand how disruptive technology affects the customer experience. In turn, I learned how companies are reverse engineering investments, processes, and systems to better align with how markets are changing.

Because it’s focusing on customer behavior, digital transformation is actually in its own way making businesses more human. As such, digital transformation is not a specifically about technology, its empowered by it. Without an end in mind, digital transformation continually seeks out how to use technology in ways that improve customer experiences and relationships. It also represents an effort that introduces new models for business and, equally, creates a way of staying in business as customers become increasingly digital.

Some key findings from my research include:

  • Social, mobile, real-time, and other disruptive technologies are aligning to necessitate bigger changes than initially anticipated.
  • Digital transformation is quickly becoming a priority for many leading organizations.
  • Mapping and understanding the customer experience is becoming critical in guiding transformation efforts.
  • While gaining momentum, digital transformation as a formal process is still in its infancy.
  • Digital transformation is driven partly by technology and also by the evolution of customer behavior.
  • Three key elements that form the compound upon which digital transformation efforts are built:
    • It is most effective with pointed vision and supportive leadership.
    • Optimizing the digital customer experience becomes the initial objective.
    • Change materializes through the formation of a digital transformation team.

While early in its evolution, digital transformation represents the next big thing in customer experience and, ultimately, how business is done. Those companies that “get it” and invest more in learning about their digital customers’ behaviors, preferences, and expectations will carry a significant competitive advantage over those that figure it out later (if at all). What separates typical new technology investments from those pursued by companies in my report is the ongoing search to find answers to problems and opportunities presented by the nuances of digital customers.

For example:

  • What uniquely defines the persona of our customers?
  • What is different about their customer journey?
  • What are the touchpoints they frequent, how do they use them, and with what devices?
  • What are their expectations, what do they value, and how do they define success?
  • How are they influenced, and by whom? How and whom do they in turn influence?

In the end, digital transformation is not a fad or a trendy moniker. It represents the future of business through the re-alignment of, or new investment in, technology and business models to more effectively engage digital consumers at every touchpoint in the customer experience lifecycle. It’s bigger than any one area of technology disruption though and that’s the point. Social media, mobile, cloud, et al. are converging into a greater force to push businesses out of comfort zones and into areas where true innovation can manifest.

The Result?

The roles and objectives of everyday marketing, social media, web, mobile and customer service and loyalty, can evolve to meet the needs and expectations of a more connected and discerning digital customer. Additionally, the outcome of even the smallest investments in change brings together typically disparate groups to work in harmony across the entire customer journey. This allows teams to cooperate, or merge into new groups, in uniting the digital journey to improve engagement; deliver a holistic experience; and eliminate friction, gaps, and overlap.

Perhaps the most important takeaway from my research is the pure ambition to make businesses relevant in a digital era.