Digital transformation: What business schools should teach

Business Impact - Digital transformation: What business schools should teach
Business Impact - Digital transformation: What business schools should teach

Business schools should teach students about digital transformation in the same way companies see and do digital transformation. For example, most ‘digital transformation’ projects are not ‘transformative’. They don’t disrupt business processes or whole business models. Instead, they tend to be ‘incremental’ or just as often part of planned technology ‘modernisation’ initiatives. These kinds of projects are safer, less expensive and ‘politically’ protective of executive reputations, which is perhaps why the vast majority of digital transformation (DT) projects go down this line of focus.

Real DT projects that are truly transformative have targets of replacing or automating business processes, or replacing or automating whole business models. These goals are riskier, more expensive and politically dangerous than incremental/modernisation ones. Impact and risk are brothers and sisters: incremental/modernisation projects are easily less impactful than disruptive ones. Companies must decide what and how they want to ‘transform’, acknowledging the likely return on their DT investments. But eventually, because of the trajectories of technology and business, they will have to pursue more disruptive transformation and leave incremental transformation to operational technologists. The difference between incremental/modernisation DT is small and in fact not that different from ‘business as usual’. Will incremental/modernisation DT keep companies competitive? Will they enable profitable growth? Are they responsive to the competition? Can companies respond slowly to market trends believing they always have time to pivot to more disruptive behaviour? Or should they pivot to disruptive transformation? These are some of the questions that should be explored in business school.

Five digital transformation myths

Myth #1 – some companies can skip DT: It’s clear that every company must incrementally change the way it does business and modernise its ageing systems. Companies that refuse to change at all will find themselves at a competitive disadvantage. So, yes, every company needs to digitally transform, but we should note that refusals to change will likely be listed by the business coroner as the most likely cause of death.

Myth #2 – DT must leverage emerging or disruptive technologies: Incremental and modernisation-focused DT often uses conventional, existing digital technology. There’s often no need to adopt emerging technology to affect incremental changes or modernisation projects. Incremental/modernisation DT can stick with tried-and-true technologies. But disruptive transformation almost always leverages emerging technologies.

Myth #3 – profitable companies are more likely to launch digital transformation projects: The assumption that market leaders are the most innovative is usually false. Companies doing well believe that doing well is the result of repetitive processes and an unassailable business model. They do not believe their path to profitability should be disrupted.

Myth #4 – companies need to disrupt their industry before someone else does: Market leaders do not usually sense disruptive competition, especially from new entrants. So, no, market leaders are not obsessed with vulnerability. Instead, they feel strong and powerful, even invulnerable to disruptors that impact whole industries, such as Airbnb (hospitality), Uber and Lyft (transportation), Amazon (retail), SelectQuote (insurance) and Netflix (entertainment), among others that have reinvented a broad range of vertical industries.

Myth #5 – executives are hungry for DT: They’re not – unless their companies (and therefore themselves) are threatened by falling revenues and serious competition. But that doesn’t stop executives from talking endlessly about their digital transformation projects and goals.

Benefits of using the case study method

Case study analysis is a business school staple. Teaching students about the different types and myths of DT and then presenting them with some specific case studies would enable a good understanding of the range and impact of DT projects. Business schools might consider offering some dedicated classes or programmes that are organised in this way. They could also assign cases to students, or groups of students, to spark debate on the opportunities and risks around DT. Such cases should breathe life into classes that are managed by professors of practice. However, it’s integral that the process is led by identifying the types of DT projects companies undertake and the myths that surround them. DT is not abstract, theoretical or hypothetical. It’s in the trenches and should be taught that way.

Stephen J Andriole is professor of business technology at Villanova School of Business in the US and author of The Digital Playbook (FT Publishing International, 2023).

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