Digital transformation – It’s about adaptation, stupid!

Last week, my colleague Erhart von Ammon asked me in passing how digital transformation could be presented simply in relation to companies. I mindlessly scribbled a few graphs on a piece of paper and we discussed it for a while. The sheet of paper sat on my desk for a few days and I gradually came to like the model. This morning I finished it and it’s ready to be shared with you.

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Digital transformation is the buzzword of the hour for C-level and marketing staff. Time and again, I notice that there are many people who use the term but don’t seem to really know what it actually means. Well, it’s quite simple: it’s about the adaptation of technology by customers/individuals and companies.

If a technology is available, it will be used sooner or later.

The essential part of this is when a technology is used by customers on a broad scale and how companies react to it. At its core, this is what digital transformation is all about:

1. technological development
This straight line shows the course of technological development. It goes without saying that technological development is always ahead of adaptation by users and companies.

2. adaptation of the technology by customers
This curve shows the adaptation of the technology by society or, because we are talking in a business context here, by customers. It is typical that when a new technology appears, customers are initially hesitant to use it. Once a critical mass of users has been reached, use usually spreads “by leaps and bounds”. This is simply because we humans are much more likely to do something that our fellow human beings do.

3. adaptation curve of the average company
This curve shows the degree of adaptation of the average company in simplified form. It traditionally lags behind social adaptation. If the adaptation behavior of users changes very quickly, as is now the case in the digital revolution, companies are surprised and fall behind. This is what has happened in the digital sector over the last 10 to 15 years.

4. adaptation curve of the doomed companies
Typically, there are always companies that fail to adapt to the new market environment. There can be various reasons for this, such as a lack of market analysis, a lack of willingness to change, a lack of change management and even a stoic “it’s-always-been-this-way-we’ve-always-done-it-this-way” attitude. A quick look back over a person’s lifetime shows that there has never been a time when a market environment has not changed rapidly. These companies will not be able to adapt and will sooner or later disappear from the market.

5. social, digital transformation
The convergence of the technology adaptation curve of users to the technology provided can be described as a social, digital transformation. This is what we can observe in ourselves every day. It’s how and when we use new technology. I know you have dozens of examples in your daily life. If not, please send me an e-mail. I’m curious to see if we really can’t find anything. Change is not always obvious.

6. digital business transformation
The convergence of the technology adaptation curve of companies with that of users can be described as digital business transformation. Companies must change their communication, their products and their business model to meet the new needs of users/customers. It is absolutely crucial that the focus is on the user and their behavior and not on the available technology. If the company focuses on the technology that is already available, it will overwhelm the users/customers and simply not find the critical mass to operate the offering economically. There are numerous examples of this. For example, the internationally active premium manufacturer that I was able to advise for several years. At the turn of the millennium, an eCommerce offering was created there for several million, which unfortunately never achieved the desired sales and therefore became an internal debacle. If you look at the use of eCommerce at that time, it quickly becomes clear that there was not yet a great need to be able to order online. The company had created an offering that was ahead of the social adaptation of the technology. Such offers can be strategic, but never pay off economically in the medium term. In the case of my client, this experience led to a kind of traumatic obstacle that still has an impact today. While huge sums are being invested in conventional stores, the digital area is being frittered away on a shoestring budget. The company runs the risk of misjudging the development of user needs for a second time.

The above model explains the interaction between technological development, the adaptation of technology by customers and the reaction of companies to it. In principle, it applies to all technologies. Most companies were and are taken by surprise and fall behind, which they now have to overcome in a special process. I will explain why many companies have overslept and continue to oversleep this development in an upcoming post (sic!)