How Companies Digitally Transform

I'm often asked what's the future of business aka WTF. One of the biggest trends I'm following is digital transformation. To be clear, investing in technology to stay current or ahead of the curve isn't the same thing. Pretty much every company is putting money into new tools, platforms, and services. And, doing so is a matter of becoming tech-enabled, which doesn’t mean companies are actually changing to compete in a digital economy. With digital transformation, however, technology is driven by purpose, and that purpose is meant to reshape business.

I define it this way...

The realignment of, or new investment in, technology, business models, and processes to more effectively compete in an ever-changing digital economy.

Of the companies I’ve studied over the years, I’ve learned that digital transformation isn’t an outcome or an end-goal; it’s a complex but enriching journey. So far,none would suggest they have reached the end of the digital transformation process. In fact, many would state they’re beginning or are in the process of an enduring enterprise-wide pilgrimage. At a time when everything is changing, the end state keeps evolving. What’s important is to find and build ways to be relevant now. This means changing everything from the inside out to become more nimble and resilient for our current and future worlds. What I’ve seen is that those who are bold enough to make change, realize great benefits.

The Six Stages of Digital Transformation Maturity

After spending time with countless businesses undergoing this process of adaptation, I’ve learned that change happens in a series of identifiable stages (six in fact). I recently partnered with Cognizant to produce a complementary paper that walks through each stage, including key milestones and relevant company examples. I'm proud to announce that you can now download it here (email gate).

By categorizing the commonalities found within these stages, a pattern emerges as the baseline of a digital journey. Outlining the key attributes of each stage also helps companies chart their course toward desired waypoints, which is often unique to each organization. At the same time, understanding the steps businesses take throughout their journeys also helps executives benchmark their progress against those who have already undergone change.

The framework for the Six Stages of Digital Transformation is modeled after Newton's cradle. It's meant to convey action, swinging from left to right. Once you swing the first ball, you set into motion the others. Change follows.

Its purpose is both prescriptive and aspirational and designed to help companies take an objective look at their own current state progress before trying to move forward (or even recognizing the need to do so). Additionally, organizations can and do occupy more than one stage at any one time.

Let's walk through each of the stages at a high level...

1) Business as Usual

Here, businesses do just as the category says, which is to operate as normal. Businesses ignore or are unaware of the risks and opportunities of Digital Darwinism and continue their course as planned.

2) Test and Learn

Companies are starting to get it in this phase, usually because someone in some department recognizes that things aren’t working as is. Or they see other businesses doing things differently.As such, digital, mobile, social, and all disruptive tech introduces new opportunities to test and learn internally and externally. Change agents take action, which isn’t necessarily organized or centralized. 

3) Systemize and Strategize

The Test and Learn stage offered tastes of new possibilities. At this point, companies are investing in ways to learn more about where and how to make more formalized investments for greater impact. Programs become more intentional, and we also start to see the early stages of uniformity taking shape. Executive education is key in this stage to earn support for formal programs.

4) Adapt or Die

If a flag were raised over HQ, it would read, “Adapt or Die!” There’s notable momentum at this point, and change is something that the entire organization is starting to recognize and appreciate.Businesses in this stage are becoming resilient. Efforts in digital transformation become intentional with short- and long-term goals/outcomes supported by investments in infrastructure. In fact, efforts are now more ambitious and organized formally, moving beyond prioritized-but-focused pilots to official pilots that span every category affecting the DCX (Digital Customer Experience) and beyond.

5) Transformed and Transforming

Digital transformation is now in the company’s DNA, and it becomes constant. Along the way, these efforts have reshaped the enterprise, creating new models and operating standards affecting people, process, and technology by function and line of business at both the local and enterprise-wide level. The organization is operating in a more unified manner with digital transformation efforts led/managed by a governing body.

Every function and business unit of the company is managing aspects of digital transformation locally and also enterprise-wide. IT and other key functions invest in dynamic architecture and sophisticated/mature technology to optimize the change process and empower new models to collaborate and adapt.

6) Innovate or Die

A culture of innovation becomes prevalent. Now, new models, roles, and investments shift toward innovation to accelerate transformation and identify new, unconventional opportunities for growth.

Shifting toward innovation unlocks an entire different maturity model. Lessons learned here are applied in real time to improve internal and external operations, as well as market strategies in specific cases. As time passes and experience develops, insights are examined for greater impact across the organization.

In Summary...

Combined, in any size and shape, investments in any or all of these fronts equate to digital transformation. Its extent and impact define placement on the maturity map, which demonstrates progress, orientation, and direction. As long as you’re not stuck on the left side of the maturity steps, your organization should be on its way to competing for the future rather than capitulating to Digital Darwinism.

Download the full report here.