It's a term most would agree has outworn its welcome. “Digital transformation” has been tossed around for quite some time, but the term isn't actually about digital technology.

“The core idea behind digital transformation is that we are in a unique period of time in which we are transitioning out of the industrial age and entering something altogether new,” says Charles Araujo, principal analyst with Intellyx and founder of the Institute for Digital Transformation. “This new time has been called the Digital Era, the Fourth Industrial Revolution and about a hundred other things. But whatever you call it, the underlying message is that the rules of the game — the ones we have been taught, by which we have played and have built our plans around — have changed. You can count on nothing.”

Defining terms

 Frequently used in the business world, “digital transformation” describes how companies have scrambled to keep up with changing business climates determined by customer demand and technology.

The fact is, digital tools and technology are changing how people interact, and, ultimately, how they do business. According to Araujo, what's important to remember is that the fundamental constructs that influence the way we structure, manage and lead our organizations are changing in the Digital Era.

“Technology underpins and powers this transformation, but it is the transformation of the organizations themselves that is the central theme. The implications are far-reaching, and are already touching nearly every aspect of how we live and work. The driving force of this transformation is something called the ‘primacy of the customer.’”

“Customer centricity is the true essence of digital transformation.”

Moving forward

“In the industrial age, the central operating paradigm was that organizations mass produced products or services for a mass market,” Araujo explains. “The goal was to drive optimization and efficiency into every component of the value chain. This societal paradigm guided everything from how we built factories, to how we educated our children, to how we planned our cities.”

At the start of the Digital Era, upstart organizations determined they could disrupt entire industries by using technology to provide customers with flexibility, options and choices.

“The power shifted to the customer. As a result, the Digital Era organization must now reset its entire operating paradigm to compete in a world in which the customer dictates the terms of engagement.”

Rethinking business

According to Araujo, the key to taking your organization to the next level is to focus on the core truth of the concepts we've heard about regarding digital transformation.

“Customer centricity is the true essence of digital transformation. Whether old or new, every organization and every person must now reshape and remold themselves for this new era in which all the rules have changed,” Araujo says. To be successful, we must be aware of the Digital Era's ever-changing nature and be realistic about the process.

With this process in mind, Araujo cautions: “Digital transformation is a journey that you must begin now, but which you will never actually finish.”