Digital transformation, driven by digital innovations, disrupts organizations across all industries, forcing them to reassess their practices and adjust their products, processes, and business models. The need to adapt to the digital change is clear. However, many organizations still face challenges in executing their digital transformation. The ability to act and react in organizations is fundamentally determined by its competencies. Thus, competencies are an essential condition to drive digital transformation in organizations. Existing competence models lack a holistic perspective on the complexity of organizations during DT and the socio-technical nature of digital innovations. To address this limitation, we extend the established concept of IT competence and develop a new characterization of digital transformation competence. We contribute to the literature by elaborating a solid characterization of digital transformation competence and its nuanced facets. Moreover, we offer valuable insights for practitioners, which enables them to select appropriate management practices.