Digital Transformation: Efficiency or Transformation?

A programme that starts without a named outcome ends without one. Before the first tool is chosen, the leadership agrees what the programme is for: cost, productivity, the customer, or a new way of earning. Each is a different programme, with its own owner and its own clock, and a company that runs all of them under one name usually finishes none.

Three kinds of work, two engines

We read the work in three kinds and run it on two engines. Running the business better and optimising how it serves its customers work today’s business, for margin and cash. Transforming what the business earns from builds tomorrow’s, as a line a buyer prices on a different basis. The first pays for the second, and the two are kept apart so the new business does not starve the old.

Run: efficiency and productivity

Running better takes cost out of the work the company already does: fewer hand-offs, less re-keying, decisions made on one set of numbers. Technology does much of it, and the gains are real and quick. They are also bounded. A company that only runs better becomes a cheaper version of itself, and a buyer prices it as before, on more profit.

Optimise: the customer

Optimising the customer’s experience moves revenue as well as cost: retention rises, the cost to serve falls, and the data the company holds on its customers becomes something it can use. It is still today’s business. The customer buys the same thing in a better way, and the multiple a buyer applies stays where it was.

Transform: what the company earns from

Transformation changes what the company sells or how it is paid: a service turned into a product, a project turned into a contract that renews, an asset the company owns where it used to rent one. This is tomorrow’s business, and it is the kind of work that moves the multiple as well as the profit. It is also the slowest and the least certain, so it is staged: each tranche of money is released on a measured result, never on a date.

Balancing the three

The balance depends on where the company stands. A company with a weak operating core spends most of its first year running better, because a new line built on a broken core inherits the breakage. A company whose core is sound moves sooner to the new line. Sixty, thirty and ten per cent across the three is a reasonable first split for many companies; the right split is the one written down, owned and read again every quarter.

Five steps that decide the outcome

1. Name the outcome in euros, months and an owner, before the first tool.
2. Agree the definition once, at the top, so the programme means one thing to everyone who runs it.
3. Read the current state across the business, operating and technology models, in that order, because each caps the one below it.
4. Fund the new line from the margin of the old one, and release each tranche on a measured result.
5. Read the plan again every quarter against what landed, and keep the misses beside the hits.

Final remarks

Efficiency is necessary, and on its own it is never enough. The companies that end the hold worth more did both: they ran today’s business for profit and built tomorrow’s for value, and they wrote down which was which.

Revised 18 October 2026 in the house’s frame. The first version spoke of three pillars, run, optimise and transform; the house now reads the first two as the work on today’s business.