I was recently asked by a consultant what the definition of digital transformation was. Like many other technology buzz-words though, digital transformation doesn’t have a single definition and can be different depending on the situation.

In each case it begins with the same question:

What is the problem you are looking to solve?

Companies may be looking for new ways of working, to be able to respond quicker to new opportunities, increases of productivity, or to simply lower costs. But it all comes back to the original problem the company is looking to solve.

So to draw a proverbial line in the sand, my definition of digital transformation is:

To create significant increases in company capabilities, agility, and generation of value for customers, by leveraging the benefits of technology.

There is a school of thought that innovation is customer facing and digital transformation is internal facing. And whilst that does make sense in a perfect world, that isn’t always true.

In my case part of our $30 million program involves significant customer benefits, and strategic enhancements to our internal capabilities. Some are short term, and some are platforms that enable longer term innovation as well. It is all connected and the same program of work.

But aren’t companies already digital technology? What’s the difference?

The big difference is that one of the results of digital transformation is ‘fungibility’.

Pro tip, impress your coworkers today by casually dropping fungibility into a sentence…

Fungibility is the ability for the internal organisation to change quickly and be agile. Simply digitising paper based processes doesn’t automatically enable this capability.

For many large organisations moving from where they are, to a place of agility requires a significant (thus the word transformation) change.

Without a high fungibility, companies struggle to stay relevant.

Why would companies need to do this?

The three text book reasons that businesses start digital transformation projects are:

1. Changing consumer demand
2. Changing technology and
3. Changing competition

But for many, it’s simply survival.

It’s hard to find industries that aren’t being disrupted by smaller, nimble newcomers to the market. So much so that it is predicted that about 50 percent of the S&P 500 will be replaced over the next 10 years.

I’ve spoken about it before, but smaller, digital native companies can compete because they have a single product focus and lower amounts of technical debt. Using technology, they can leverage opportunities faster and cheaper than the big guys.

But what will happen to our jobs?

Whilst it is called digital transformation, it is also a cultural transformation as well.

If digital transformation is about enabling new ways of working, then it hinges heavily on changing the way people work. Changing the way people work (and want to work) can easily make people nervous about their future.

It takes time to change a culture, and not employing empathetic change management with transformation can lead to disaster.

“70 percent of siloed digital transformation initiatives will ultimately fail because of insufficient collaboration, integration, sourcing or project management” — IDC

If having to spend a lot of time with people, and hand-hold them on a long journey for change sounds like putting a fork in your eye, then a good strategy is to partner with a Change Manager to handle that for you.

This article was originally published by Mal sanders on medium.