Studying the impact of innovation on business and society

LinkedIn: The Race Against Digital Darwinism, The Six Stages of Digital Transformation

contributed by: Brian Solis, LinkedIn

We live in a time of digital Darwinism, an era when technology and its impact on business and society are constant with varying, but inevitable, degrees of both evolution and revolution. The effect of digital Darwinism is real and it’s enlivened through changes in people (your customers, employees and partners) and how markets are advancing as a result. 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 from Deloitte to Accenture to CapGemini and also my team at Altimeter Group are dedicating significant resources to study how companies are changing because of digital.

For all of its exposure (or overexposure), digital transformation is relatively young and still developing with much still to understand. For example, in my previous research, I found that most companies claim to be undergoing digital transformation (88%) but only 25% were doing so with purpose beyond investing in new technology as a means to modernize technology infrastructures. What became clear over the years is that many of the executives who are driving change did so from a technology-first perspective when in fact, this work represents so much more.

Digital transformation is one of those terms that means different things to different people. After studying the space and talking to those leading change, I sought to capture a definition based on what I heard time and time again. The working definition for digital transformation I ended up with was this…

Digital transformation as 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 are often cited as the rival to CIOs in spending when it comes to new technologies and resources. But over time, all facets 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 attempt change independently. Eventually, there’s momentum and support to drive collaboration across the enterprise.

How is it that companies start working as one entity?

Time and time again, it comes down to how people are changing as customers and employees, how their relationship with technology impacts behavior and ultimately how companies, in addition to drive profitability, continually invest in new and emerging tech to remove friction, create new value and scale. 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, 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 of other successful companies. But more so, it’s meant to give a checklist of sorts to guide, justify, validate, and effectively make the case for driving transformation.

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, digital transformation, I learned, organizations evolved through six progressive stages…

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.

Please download the report here.

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