Digital Transformation and Digital Capability! What is the relation between them?


What is the relationship between Digital Transformation and Digital Capability? So often, we loosely use these terms.

Digital Transformation and Digital Capability

Let us first start with the definition:

What is Digital Transformation?

Digital Transformation is the initiative to make a fundamental change in the business through Digital Capabilities.

So, it is the business endeavour for a fundamental change through Digital Capabilities. For example, consider a retail organisation transform its customer experience. They develop a mobile app to order, track, return their orders.

Let us now jump to Digital Capability!

What is Digital Capability?

Digital Capability measures the organisation’s sophistication to execute a given business process digitally.

In the given domain, a higher level of sophistication implies higher Digital Capability.

Let us revisit the above example of the retail organisation. The organisation invests further in the Mobile App and develop additional features. As a result, its Customer Service Digital Capability improves further. For example, the Mobile App allows sending custom marketing, promotional material. The promotional material is based on customers previous digital interactions with the store.

What is the relationship between Digital Transformation and Digital Capability?

Digital Transformation is a business endeavour to add transformative value through new Digital Capabilities development or improving existing ones.

For example, consider a Digital Transformation initiative to transform the customer experience.

Within the scope of this initiative will deliver the following Digital Capabilities:

  • Digitalise Customer onboarding
  • Customer Analytics

Further, the initiative will improve the following existing Digital Capabilities:

  • Customer self-service
  • Custom promotions and marketing

To conclude, Digital Transformation implements new Digital Capabilities and improves existing ones.

That is a straightforward way to view the Digital Transformation initiative. As a sponsor, you must know which Digital Capabilities are in scope and their relative importance. Understand this simplified version, and take control of your Digital Transformation journey.

Good luck!