Innovation vs Transformation

I noticed recently a predilection for using the words “digital innovation” and “digital transformation” interchangeably and synonymously, sometimes in the same paragraph.

The misuse creeps into companies’ Annual Reports which makes it quite confusing for people to understand where the company is, on the evolutionary scale.


So let us attempt to clarify the difference and go a bit beyond that as well:

Innovation(s) and transformation(s),

digital or otherwise, are two separate things

Schumpeter, who showed that innovation is the source of economic fluctuations, notes that “the pure idea is not adequate by itself to lead to implementation”.

Between the two, in most cases, there is a mutually causal relationship with the differentiator being the speed element (presence or lack thereof) and the order in which they surface.

Generally speaking, transformations “take time” in moving from one given state to another. Innovation is usually a sudden creative a-ha idea, spark-like process or technology that may or may not find its way into the company’s strategy; it needs however to be a value-creator (tangible or intangible) for the company.

Transformation is an integrated nexus of technologies, tools, best & emergent practices in process, learning and optimal use of interfaces/human capital

Digital transformation is, in simple terms, the corporate-led strategy for technology implementation to reach a certain point/scope/end value, hence with a set objective. Digital transformations end up with a new reality, a new status quo which will remain valid until the next transformation cycle is sparked by innovation (or other factors). Innovation is “one” of the drivers of digital transformation (change) and usually, but not necessarily, precedes the change process.

One of my friends put it nicely saying that in a technology-savvy business, “Digital innovation and digital transformation are hand and glove”.

Now, the question is:

Must all innovations lead to transformation?

and by ex