How To Guide Your Company’s Digital Transformation
The Race Against Digital Darwinism
We live in a time of digital Darwinism; an era when technology’s impact on business and society is constant with varying (but inevitable) degrees of both evolution and revolution. The effects of digital darwinism are real and enlivened by changes in people (your customers, employees and partners) and the speed of advancements in the marketplace. To thrive in these times, many companies are investing in digital transformation to drive business evolution and modernization. In fact, all the big research firms and consultancies, including Altimeter, are dedicating significant resources to understanding just how companies are changing because of digital.
Despite all of its exposure (or overexposure), digital transformation is still relatively young, developing and in need of exploration. For example, in my earlier research, I discovered that while 88% of companies claim to be undergoing digital transformation, only 25% are doing anything beyond investing in modernized technology infrastructures. What’s become clear is that many of the executives who are driving change have used a technology-first perspective, yet digital transformation embodies so much more.
Digital transformation means different things to different people. After studying the space and having many discussions with those leading change, I sought to capture a definition based on the consistencies I’d heard. The working definition for digital transformation that I arrived at was: Digital transformation is the realignment of, or new investment in technology, business models, and processes to create new value for customers and employees and more effectively compete in an ever- changing digital economy.
Digital transformation is the realignment of, or new investment in technology, business models, and processes to create new value for customers and employees and more effectively compete in an ever- changing digital economy.
What started as enterprise initiatives led by progressive CIOs and IT organizations has spread throughout every facet of business. Now, executives in other critical functions are also leading investments to bring their own technology roadmaps to life. In some cases, there’s internal competition between groups. For example, CMOs and CIOs often rival in spending when it comes to new technologies and resources. Over time, all areas of business must work together under a common vision and aspiration if it is to excel in an era of digital darwinism. This, I’ve learned, is something that happens only after departments have attempted change independently. Eventually, there’s the momentum and support needed to drive collaboration across the enterprise.
How can companies begin to work as one entity?
It comes down to how people are changing as customers and employees. Their relationship with technology impacts behavior and ultimately how companies drive profitability and invest in new and emerging tech to remove friction, create new value and scale. But, this is just the beginning of the digital transformation story. As part of my latest research study, I learned that change plays out in a series of common phases that span several key areas of most organizations.
Introducing a Maturity Model To Guide Your Digital Transformation
Over the last three years, I’ve studied the maturity paths of some of the world’s leading brands including Dell, Discover, GM, Harvard, Lego, Metropolitan Museum of Art, Nestlé, Novartis, Sephora, Starbucks and Target, among many others. The result is a new report, “The Race Against Digital Darwinism: Six Stages of Digital Transformation.” It introduces a maturity framework that documents how companies are advancing technology roadmaps, business models and processes to compete in the digital economy.
This model was developed to help CIOs, CMOs, CDOs and key stakeholders follow the paths set by other successful companies. But more so, it’s meant to provide a checklist to guide, justify, validate and effectively make the case for driving transformation in their organizations.
One of the key insights I learned in the process was that mature companies establish purpose to create the kind of holistic alignment that inspires and drives enterprise-wide change. I consistently found that customer experience (CX) often served as a primary catalyst for driving change, with CMOs and CIOs helping them come together to jointly lead common efforts.
Through the lens of customer experience and digital transformation, I learned that organizations evolved through six progressive stages:
- Business as Usual: Organizations operate with a familiar legacy perspective of customers, processes, metrics, business models, and technology, believing that it remains the solution to digital relevance.
- Present and Active: Pockets of experimentation are driving digital literacy and creativity, albeit disparately, throughout the organization while aiming to improve and amplify specific touchpoints and processes.
- Formalized: Experimentation becomes intentional while executing at more promising and capable levels. Initiatives become bolder, and, as a result, change agents seek executive support for new resources and technology.
- Strategic: Individual groups recognize the strength in collaboration as their research, work, and shared insights contribute to new strategic roadmaps that plan for digital transformation ownership, efforts, and investments.
- Converged: A dedicated digital transformation team forms to guide strategy and operations based on business and customer- centric goals. The new infrastructure of the organization takes shape as roles, expertise, models, processes, and systems to support transformation are solidified.
- Innovative and Adaptive: Digital transformation becomes a way of business as executives and strategists recognize that change is constant. A new ecosystem is established to identify and act upon technology and market trends in pilot and, eventually, at scale.
Technology has empowered consumers to become more mobile, social, and connected than ever. This has changed how they interact with each other and with products, services, and businesses. Digital transformation opens the door to new opportunities for innovation in how to design, integrate, and manage customer (and employee) experiences.
By following a digital transformation model, all aspects of business evolve, including management perspectives, roles and responsibilities, operations, work and ultimately culture.
The Six Stages of Digital Transformation represents a journey to evolve with and push ahead of technology and market trends. This is true business transformation. It’s in the ongoing pursuit that makes change less about resolute stages and more about an evolving vision, purpose, and resolve to engage a connected generation of customers and employees. It is the collective efforts of individuals and groups and the collaboration of cross-functional roles that pave the way for a new era of business, work, and customer centricity.