Digital transformation is awful jargon but businesses must buy in or lose out to startups

Often incomprehensible, frequently misused, and always irritating, the world of business jargon is a common gripe among everyone in the workplace. Perhaps most annoyingly, new jargon is continually being developed in order to express age-old ideas: 'engagement' (interaction with customers), 'paradigm shift' (changing your business) and 'growth hacking' (business development strategy) are key offenders.

So when terms such as 'Digital transformation' make it into the corporate lexicon it's easy to be cynical. However, simply dismissing it as jargon is unfair; digital transformation represents a potential change in the way organisations operate. Its impact will shift the wider business' relationship with IT, pushing towards a more collaborative and unified approach between departments and consigning the traditional silo'd working structures to the past.

Digital-first business

Unlike much business jargon, digital transformation does exactly what it says it is: the movement toward a digital-first business model in which technology is used as an enabler of growth. Perhaps best illustrated in the Agile Manifesto principles, digital transformation values individuals and interaction over processes and tools; it is open to change rather than blindly following strategy. Software should be intuitive rather than relying on heavy documentation. Companies should be willing to collaborate with their customers rather than holding them hostage during contract negotiations or ignoring users' ideas for alternative functionality.

In many respects, software holds the key. With technology so pervasive throughout society, businesses are being forced to think carefully about how they can match the digital expectations of their customers. As usual, consumer demand is at the backbone of any true business shift. Digital transformation encourages organisations to effect the changes that will take them from being good businesses, to good software businesses – an important move for enterprises looking to tap into today's market.

On the flip side, organisations who fail to see themselves as a software business risk opening the door for disruption in their markets, with any number startups ready and waiting to move in and offer customers a new experience. Taxi drivers know this only too well, with Uber continuing its rapid growth in a market previously thought impenetrable.

The rise of digital thinking

It is easy to get stuck in the belief that digital transformation is simply an upgrade for the organisation's IT. It is much more than throwing a few tablets out to the C-Suite. Questions over technology specifications have become redundant – there is only one question a CIO should ask: "How can we achieve our company goals?". The businesses that will thrive are those that are building digital into the core of their organisations – not just bolting it on as a 'nice-to-have' afterthought.

Most critically, time is of the essence. Speed of development and deployment is the top priority. Modern digital transformation is about enabling businesses to act as quickly as possible, getting ahead of competitors, responding to customer demands, and, crucially, figuring out the needs of the market - for both today and tomorrow - and working out the right way to address them.

Reid Hoffman, founder of LinkedIn, is often quoted as summing the central tenets of business transformation:

"If you are not embarrassed by the first version of your product, you've launched too late".

Favouring an iterative approach to technology, many proponents of true digital transformation have also co-opted techniques such as the plan, decide, check, act (PDCA) loop, or observe, orient, decide, act (OODA) loop, decision cycles that are at the core of lean concepts. The general idea is that as everyone's decision-making runs in this same recurring cycle. Those who can move through the cycle quickest – observing and reacting to the latest events before their competition – can start to "get inside" and disrupt the decision cycle of others and, therefore, gain an advantage.

In business, this might be analysing a new market trend, calculating how it will impact revenue stream, how to respond and the consequences of that. The organisations that act first – whether this is making the right investments, getting a product to market, or closing down a threat – have the advantage, and can work to refine their action until they get optimal results.

Getting closer to customers

Fundamentally, digital transformation is a project that's never finished. If you're not transforming, you're standing still. If you're standing still then you're liable to get left behind. Digital transformation is just a term to help companies understand that pretty much all companies are, or will be, software companies; and for those companies to understand the steps to bring digital mindsets to its leaders.

The buzz around digital transformation has only just started, so it's a term businesses should get used to. But given the importance of this paradigm shift, not simply in driving influencer engagement, but in revamping your organisation's overall growth hacking strategy, it's jargon worth hearing.

Robbie Clutton is Director at Pivotal Labs