The Perils and Promise of Digital Transformation: Incremental versus Disruptive Change

Digital transformation comes in all shapes and sizes. Most digital transformation projects, however, are not really “transformative.” They do not disrupt business processes or whole business models. Instead, they’re “incremental,” or just as often part of planned technology “modernization” initiatives. These kinds of projects are safer, less risky, less expensive, and “politically” protective of executive reputations, which is perhaps why a vast majority of digital transformation projects focus on incremental changes or modernization. But digital transformation projects that are truly transformative are targeted at replacing or automating business processes, or replacing or automating whole business models — which are riskier, more expensive, and more politically dangerous projects than incremental and modernization ones. Impact follows risk: incremental and modernization projects are easily less impactful than disruptive ones. The “perils” and “promise” of digital transformation are defined around a simple risk/impact ratio. Companies should decide how and where they want to “transform,” acknowledging the likely return on their digital transformation investments. But eventually, because of the trajectories of technology and business, all companies will have to pursue more disruptive transformation.