By Jeremiah Owyang, Jessica Groopman and Jaimy Szymanski.
Digital transformation has become a top priority to many companies, yet to provide clarity to an overused term, we published a definition and now share a maturity framework with descriptors.
We define digital transformation as: a technological, cultural, and operational shift in which organizations leverage data to deliver customer value, innovate with agility, and sustain vitality.
The final word of this definition is the end state: “vitality”. This suggests the organization is architected to be proactive and foster new business growth both internally and externally across an ecosystem of customers, partners, and beyond.
So how do companies get to vitality? As a research firm, we’ve conducted over 200 interviews over the last few years, and have found companies fit into one of these phases.
Five Phases of Digital Transformation Maturity:
- Stunted Awareness
- Distributed Experimentation
- Strategic Alignment
- Responsive Investment
- Sustained Vitality
Phase 1: Stunted Awareness The organization realizes there is an existential need for digital transformation based on customer needs, competitors, and industry, but yet has not taken any actions to begin the process of digitization. Companies who remain in this phase risk losing customers to exponentially growing competitors.
Phase 2: Distributed Experimentation Deliberate planning is underway, and some boundary-pushing digital experiments begin throughout the organization. They are conducted in disparate silos with disconnected goals, resources, and vision. The risk of staying in this state is a disjointed company both internally, and to the market.
Phase 3: Strategic Alignment A formalized digital transformation charter takes shape. It guides customer experience, data strategy, organizational structure, culture, all towards a shared vision. Integration and investments remain limited. If companies fail to fund against a shared vision, morale will degrade and talent will leave.
Phase 4: Responsive Investment Leadership supports transformation with both a digital mandate and reactive resource allocation. The organization expends great efforts to stay aligned across departments, pushing hard to stay current. Staying in this phase is straining, it can lead to systems breakages and employees burning out.
Phase 5: Sustained Vitality Company culture proactively evolves and disrupts itself, both internally and externally, enabling value across their ecosystem. Internally, it is using data to collaborate across all groups, enabling a nimble organization that is constantly innovating. Externally, it enables new business growth for partners, and has also established coalitions to accelerate market innovations. The result: continued, scalable growth, internally and with the extended ecosystem.
Accelerating Digital Maturity: Digital Directive Companies in every sector are struggling to catch-up, plan, and allocate investments in digital transformation. Kaleido Insights is helping companies advance their digital transformation maturity by taking a research-based approach. Our Digital Directive is a proprietary research service offering to conduct an expert review with key stakeholders, take inventory of current efforts and gaps, review resources, then provide an actionable-roadmap to advance and score their digital transformation efforts. We also will rescore the company after a year, to show measurable progress, accelerating your digital transformation efforts.