Digital Shifts: Transformation vs. Evolution Explained

Digital transformation is a term conceived in the late 1990s that gained prominence in the 2010s as businesses began incorporating digital technology into their operations.

Today, it’s reached buzzword status—a concept touted as the equivalent of spinach to Popeye for forward-thinking organizations.

As technologies like cloud computing, big data, and AI became more prominent, businesses seized the opportunity for digital transformation to help them innovate, improve their efficiency, and be more competitive.

But digital transformation’s holy-grail reputation is now being challenged, as many companies are turning to a digital evolution strategy instead.

This article will explain the differences between these two approaches to business development and highlight the advantages and disadvantages of each to help you understand which is the best strategy for your organization.

Digital Transformation vs. Digital Evolution: The Distinctions

These two strategies may sound the same, but they are significantly different.

Digital transformation (DT) entails a significant overhaul of business processes through digital technology—generally a large-scale, comprehensive, one-time initiative.

The reasons for such an undertaking can be compelling: operational efficiency, data-driven decision-making, and competitive advantage, to name just a few.

Yet, in a 2019 survey of directors, CEOs, and senior executives, digital transformation risk was their #1 concern.

According to Forbes, 70% of all DT initiatives do not reach their goals. Of the $1.3 trillion spent in 2018 on DT initiatives, it was estimated that $900 billion went to waste.

The bottom line: If people lack the right mindset to change and the current organizational practices are flawed, digital transformation will magnify those flaws.

Digital evolution, on the other hand, represents the continual adaptation and improvement of business processes to meet changing needs. Note the key word here – Continual.

It allows teams to use technology to optimize business processes, learning and refining as they go, and adapting to market shifts and organizational growth.

This digital evolution philosophy has many benefits over one-time digital transformation, but the most significant is incremental and sustainable modernization.

Take investing as an analogy: Imagine putting all your money into a single stock, hoping for a big win — it's risky and can lead to high losses, but you could be successful.

That can be the case with digital transformation. Digital evolution, on the other hand, is like building a diversified portfolio – continually adjusting to market conditions to minimize risk and increase potential gains over time.

Transformation or Evolution: Deciding What’s Best for Your Organization

Your organization’s unique goals and resources will determine your best course of action.

Each approach manages changes in technology and business environments differently.

To use another analogy, let’s view them both in the context of an aging building to bring some clarity.

Digital transformation is akin to building a new foundation after realizing your existing structure is deteriorating. Although it’s a positive and important step, it’s a one-time investment of resources (monetary and human), and the improvements may not hold up over time.

They’ll become outdated, and further innovation will be necessary at some point.

Digital evolution, on the other hand, embodies a philosophy of continuous improvement. It entails the ongoing enhancement of existing operations in response to changing needs.

While the foundational changes that occur through digital transformation may be necessary, digital evolution instills competitive and sustainable advantages.

These include integration with Business Process Management and strategic growth, which can support rapid modernization, minimal disruption, adaptability, and long-term cost efficiency by spreading out investments over time.

Sound too good to be true? As with virtually all business initiatives, digital evolution does have drawbacks, primarily the ongoing investment in money, time, and human resources.

Whereas digital transformation often involves a defined project with a start and end date, digital evolution is a continuous process that, over time, could strain resources if you don’t have a trusted partner who can fill the skills gaps when needed.

The Essentials for Integrating a Digital Evolution Strategy

With a clearer understanding of digital transformation and digital evolution and the significant distinctions between the two, the next step is to understand how to integrate digital evolution into your organization.

Strategic planning, continuous improvement, and organizational awareness are the three essential components of successful digital evolution – they are absolute necessities for businesses to remain agile and responsive to market dynamics.

Strategic planning is pivotal for digital evolution and involves continuous adaptation and integration of technology into an organization’s long-term vision. Ongoing learning, incremental improvements, and flexibility should be the core focus while setting clear yet adaptable goals and encouraging innovation and resilience. Ensuring scalability compatibility of all new and updated technologies and frequent updates is also vital.

Embedding continuous improvement into a digital evolution strategy encourages adaptability and a competitive edge. To accomplish this, assessing and refining business processes and technologies is important for ongoing effectiveness. Incorporating project management methodologies such as Agile can support ongoing adjustments, and applying data analytics will inform recommendations for improvements. In addition, ongoing employee training will ensure that teams are informed on and able to implement and support continuous improvements.

Organizational awareness may sound like a given with an essential and overarching initiative like digital evolution, but assuming everyone understands its magnitude and importance is a mistake. Promote awareness of the reasons for such an undertaking and the expectations involved –it will go a long way in eliminating confusion and gaining cooperation and buy-in amidst the imminent changes.

Incorporating these three elements as the cornerstones of your digital evolution journey will set your organization on the path to remaining relevant and responsive to market dynamics and evolving customer needs.

Navigating the Decision Process

The decision between digital transformation and evolution is not to be taken lightly.

There is no overall right or wrong solution.

Both initiatives have pros and cons, which will play out differently depending on the organization.

Digital transformation - the figurative one-and-done solution - may still be the best decision for some companies trying to scale rapidly or that require major updates to infrastructure or technology, or radical changes to business processes.

But for most organizations – especially those lacking the resources for such a large investment in time and money all at once, or those in environments of constant change where agility is necessary – digital evolution is the smarter solution.

It’s a versatile and adaptable strategy that will ensure your organization’s relevance and competitive edge far into the future.

About the Author:

Mike Spence brings over 20 years of experience in sales, marketing, customer experience, and IT to his role as TrellisPoint’s Vice President of Enterprise Delivery and Marketing. Mike’s deep knowledge of Microsoft Dynamics 365, Power Platform, and Artificial Intelligence helps him devise strategies and solutions that empower businesses to overcome complex problems.