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Digital transformation vs innovation: The differences and why they're both important

Transformation and innovation are two terms often used synonymously but they’re not the same thing. Though, they are linked. If you’re debating digital transformation vs innovation, we’d say digital transformation is adopting technology to support your business goals (after realising the value of digitalisation). Innovation is what results from that.

Digital transformation vs innovation: The differences and why they're both important

What are the differences?

One of the major differentiating factors between transformation and innovation is speed—or lack thereof.  Transformations take time—moving from one state to another is a process. Innovation, on the other hand, usually refers to a sudden spark or creativity, and the incipient actions that lead to implementing that spark into a company’s strategy.

Innovation requires encouragement, collaboration, and communication, but it typically implies clear steps that must be taken—it’s the start of something great. What happens after is transformation—the implementation process following that first spark of innovation. It also suggests an eventual end once the transformation has been completed.

Challenge Norms Through Innovation

Innovations drive changes and make them a reality. For example, the dawn of social media disrupted the marketing realm forever. People can now communicate regardless of physical location, and information changes hands faster than ever. As new technology like smartphones and internet-connected devices emerged, society underwent transformations to accommodate those innovations.

Innovation is the rethinking or reimagining of a business process that already exists. Essentially, once a transformation is realized and the new reality is established, innovation describes when those norms are again challenged. For example, after social media reshaped social communication dynamics, various other accepted norms such as news, entertainment, recreation, content, and business had to change. Now, social media is being reimagined for countless purposes, including business.

Innovate To Improve

When a new product enters the market or a new service generates a great deal of sudden demand, an entire industry can shift seemingly overnight as competitors race to create something on par or better. Third-party developers scramble to provide the best content and services possible to accompany the newcomer. Consumers benefit the most, because this disruption generates competition, which in turn leads to better products and services for the end customer.

Evolve A Market Through Transformation

Transformation describes those ongoing processes that happen in the world after innovation enters the scene. Google is a great example of a transformative company. Today, the search engine is highly recognizable and easy to use, but since its inception, Google has undergone constant revision, optimization, and reconfiguration to deliver more accurate and relevant search results for users. Google has allowed users to reliably search for what they need, and, in doing so, has provided businesses with the tools needed to reach their audiences. Surely Google is often used as an example along with Apple and Amazon. However, other global leaders like Microsoft, Cisco, IBM, Dell, HP and non-technology companies like Procter and Gamble, Nike, BMW are all great examples of companies that are constantly transforming to meet changing market demands.

Why digital transformation is important for businesses

1. Enhances efficiency and productivity

High efficiency and productivity are key to business success. After all, if your organisation is spending disproportionate amounts of time on manual tasks or your machinery keeps requiring repairs, your operational costs will be much higher than they could be.

Digital transformation can boost efficiency and productivity thanks to:

  • Access to valuable data. For example, insights on your machinery performance can help you see whether they’re running as they should be and you can predict potential failures
  • Machine learning and AI: can automate manual tasks so your team can focus on other important tasks. This also helps to reduce the chances of human error
  • Cloud-based solutions: These allow for team-wide collaboration. So rather than having to manage several versions of the same document, your team can all work on the same version and make real-time edits
  • A centralised system. An ERP solution, for example, integrates with multiple third-party apps and can bring data from all these sources into one location. This means you no longer need to spend time searching for information; it’s all easily accessed in one central placeEnables cost savings

2. Enables cost savings

It’s easy for businesses to enter the mindset of ‘why fix something if it isn’t broken?’ - especially if the organisation is performing well already. What if you could be performing even better? What if your machines could be running more efficiently and your teams working more productively than they currently are?

But, without innovation technologies, you may not know that you’re spending more time managing your equipment and processes than you should be. Or you might know but you’re not sure exactly where you could be making improvements.

Digital transformation can help you streamline these processes and equipment performance, helping you save money in the long-run. It’s a short-term investment for long-term financial gains which just makes business sense.

3. Helps you keep ahead of customer expectations

Whether you market to B2B or B2C consumers, both parties’ expectations are constantly changing. Digital innovation has only accelerated it.

Innovation ensures you can keep up with what your consumers want and show them the exact answers/solutions to their precise questions/problems.

For example, technology can integrate customer data from multiple sources into one location so you no longer need to spend time looking for this insight. Instead, you can spend more time getting to know your customers, from their preferences and buying behaviours to problems they’re having. That valuable insight can be used to tweak your messaging, products and services to better market to customers (both potential and current).

Technology also helps keep your organisation at the forefront of your customers’ minds. Marketing automation software, for instance, can allow you to send automated emails to your customers. These emails can be personalised depending on your individual customers’ preferences (such as sales history and interactions on your website/channels) so you can always be sending out content that’s relevant to them.

The more valuable content you can provide to your customers, the more they’ll trust you, become loyal and make repeat purchases or enter a retainer contract with you.

4. Helps you stay ahead of the competition

Improving business processes and profits aren’t the only reasons digital transformation is vital. If your organisation doesn’t embrace digitalisation, you risk falling behind your competitors.

They may have decided to embark on a digital innovation project or implemented one years ago. Either way, their productivity, efficiency and profits are likely to be ahead of yours - especially as customer (potential and current) expectations are becoming increasingly aligned with the digital era.

Doing nothing because your organisation is currently doing well and you’re afraid of change is not an option.

For example, BlackBerry produced one of the first smartphones but its complacency and failure to innovate meant that it was left in the dust by Apple, Google and Samsung products.

To avoid joining the ranks of companies who failed to keep pace with changing buying habits and your competition, digital transformation must be one of your top priorities. TSO ready to be digital transformation companion with our effective services: