One of the most common misconceptions about digital transformation is that it’s about the implementation of cutting-edge technologies and IT systems that optimise operational processes. While technology plays an important part, it doesn’t give us the full picture. Many companies implement new digital tools and platforms only to find that they remain unused or unable to deliver the intended transformative impact due to low digital maturity levels within the organisation.
In fact, research into challenges companies face adjusting to the faster pace of digital business, from MIT Sloane and Deloitte, indicates that digital transformation constitutes a culture and mindset change first. Rethinking technology happens further down the line.
Digital transformation is better defined as a process of adopting new or different business processes and ways of thinking that help an organisation adapt and compete effectively in an increasingly digital world. This means that companies need to understand how digital affects and can transform all aspects of the business, including leadership, culture and customer experience in addition to technology and operations.
Understanding readiness to transform across these areas is also critical, as differing levels of digital maturity require different approaches – there is no one size fits all solution. But what is digital maturity and why is it important?
Digital maturity is simply a measure of how ready an organisation is to both understand and adapt consistently to ongoing digital change. Higher-maturity organisations are nearly three times more likely than lower-maturity organisations to report net profit margins and annual revenue growth that are significantly above the averages in their industry, according to research by Deloitte.
Digital maturity models evaluate how well companies have incorporated digital into their operating models, how effective they are at executing on digital initiatives and their ability to adapt to disruptive technology, events, market trends, competitors or other major factors – both culturally and operationally.
Performing an assessment of an organisation’s digital maturity levels across all aspects of the business is the best place to start a digital transformation journey. It allows you to determine where you’re at in the present, so that you can define where you want to go in the future and how to get there. What are the 5 stages of digital maturity?
1. Traditional: These are companies stuck with legacy systems, processes and outdated ways of thinking. They make little use of digital technologies and lack the ability to drive change across the business. Activities that support digital transformation are usually accidental and not a result of strategic intent. They are likely being disrupted by competition and must act quickly to build a strategic plan and organisation-wide awareness of why digital transformation is critical to save the business.
2. Emerging: These organisations embrace digital slowly and have modernised some aspects of their business but are largely reactive and only make changes when they have to. They are unable to outpace digital disruption. These companies must start addressing digital transformation seriously and avoid creating more legacy issues that will make it difficult to scale and compete in the future.
3. Engaged: These businesses experiment with some critical elements of a winning digital transformation strategy. Limited foundational activities and pockets of innovation are in place, but often siloed and lacking focus or leadership. These companies need a plan for driving adoption of a singular digital vision. Key stakeholders must be engaged to develop a structured and sustainable transformation roadmap that delivers measured business value.
4. Competitive: Companies in this category have a digital roadmap in place and are starting to combat disruption. They compete effectively in the current market but need a strategy for future growth. These companies should start optimising, and address any remaining blockers preventing them from launching and supporting new digital products or services that leapfrog competitors.
5. Maturing: These companies have a well-established transformation roadmap in place that effectively fends off disruption and evolves as needed. They use digital technologies to run their business and have the ability to drive continuous change across the company. These companies must develop a roadmap for continuous transformation and delivery, in order to realise their full potential and become leaders in their industry. Finding ways to remove friction enables them to react swiftly to market trends and speed up delivery of new digital experiences.
I prefer the term “maturing” to “mature”, as the nature of digital requires transformation to be an ever-evolving process without a finite end. Digitally maturing businesses are always transforming, and never transformed. These organisations constantly move forward on the digital continuum by regularly assessing and adopting new technologies, processes, and strategies.
How do we rate an organisation’s digital maturity?
There are varying digital maturity assessment models, but broadly all involve scoring an organisation’s digital maturity performance across several pillars of the business, including but not limited to: Leadership, Customer, Technology, Operations and Culture. Analytics and data should be included as a measure of performance within each of these categories as it is critical to the success of any digital transformation programme.
Comprehensive digital maturity assessments typically involve several months of stakeholder interviews, surveys, research and analysis by digital transformation experts immersed within the business. That’s great, but where do I start?
Start by completing an initial short, high-level online digital maturity assessment. This will provide you with helpful indicators and an initial appraisal of where your organisation stands, which be used to motivate your company to undertake a full audit. Keep in mind that digital transformation doesn’t happen overnight. It’s a long-term game with gradual progression.
Starting small with one sector of your business or examining one system is also a great way to show proof of concept and test out new ideas. The pillars of your business that score lowest for digital maturity could be an initial focus for your digital transformation programme, as they are still developing and may require immediate remedial action. Understanding exactly what this means for your organisation and developing a clear action plan is an important first move.
Catherine is the Head of Digital Transformation at Enlight Strategic. She has over 13 years digital experience and specialises in customer experience (CX), digital disruption, platform and digital maturity analyses, research, and cutting though the noise, to find simple, pragmatic solutions to complex challenges.