The Six Stages of Digital Transformation and Their Characteristics



(Source: ‘The 2016 State of Digital Transformation’ report from Altimeter)

Research and advisory firm, Altimeter, in its latest report ‘The 2016 State of Digital Transformation’ has divided the whole digital transformation journey into six stages. As organizations traverse through this journey from the first stage to the last, one can see a gradual progression in terms of maturity. This digital maturity framework can be a good reference point for CIOs and CDOs to benchmark and map their own companies’ digital transformation progress.

 

Although the six stages are presented in a linear format, the companies may not necessarily migrate through each stage on a linear path. As per the report, companies may span multiple stages at once depending on various factors, such as their goals, resources and overlapping initiatives.

 

Each stage is marked by certain distinct characteristics that are unique to that stage. In order for CIOs and CDOs to identify where their organization stands in its digital transformation journey, I have picked up from the report and listed down here some key characteristics that mark each stage. More importantly, understanding what really differentiates one stage from the other will help them traverse more smoothly from one stage to the next.

 

 

STAGE 1: BUSINESS AS USUAL

 

-       The culture is risk-averse and inhibits ideation and experimentation. Compliance and regulation also deflate innovative thinking.

-       There is a general lack of urgency and any need to change is largely rebuffed or dissuaded by leadership.

-       Growth and change are part of a roadmap, yet digital is largely underappreciated and/or recognized.

-       Change becomes programmatic and technology-driven to push scale and efficiency rather than being inspired by customer empathy.

-       Leadership makes decisions about long-term strategy based on legacy business norms and rules.

-       Digital is not used as a formal directive within a digital-transformation approach, as companies are focused on existing stakeholder and shareholder value. This prevents any real change to initiate or stick, which also restricts the ability to compete for relevance with a new generation of connected customers.

 

 

STAGE 2: PRESENT AND ACTIVE

 

-       Have change agents who recognize new opportunities and fight to lead experiments within their respective domains.

-       New trends in digital, mobile, social, IoT, etc. inspire early adopters to experiment with new possibilities.

-       Experimentation is done in isolation without the benefit of shared insights and best practices across the organization.

-       These experiments push boundaries and create momentum for official digital transformation programs.

 

 

STAGE 3: FORMALIZED

 

-       The sense of urgency to modernize the customer experience accelerates.

-       Early adopters and change agents come together to make the case for collaboration and experimentation as a group (breaking down siloes).

-       Digital transformation efforts are focused on key areas for exploration and experimentation.

-       Change agents lead each area and also collaborate with others. Insights lead to early development of digital transformation roadmaps to prioritize and optimize areas of opportunity and deficiency.

-       Strategic investments in people, processes, and technology solve for current work and set the stage for a more unified digital transformation effort.

 

 

STAGE 4: STRATEGIC

 

-       Change agents have successfully created a sense of urgency, earned executive sponsorship and have the attention of the C-suite.

-       Efforts in digital transformation become a company priority.

-       The roadmap becomes focused and refined by specific short and long-term goals that necessitate changes and produce key outcomes.

-       This work is supported by dedicated investments in infrastructure and operations.

-       New skillsets are also brought in to manage/execute against the roadmap.

-       Technology is purposeful and implemented to drive goals rather than basing processes around technological capabilities.

 

 

STAGE 5: CONVERGED

 

-       The path toward digital transformation is underway.

-       New operating models and teams are created to unify disparate, repetitive or competitive roles and processes while streamlining operations to deliver integrated, consistent and holistic customer experiences.

-       Technology is purposeful both in customer-facing and back-office integration. Customer experience becomes seamless by design and enriched based on how customers expect to navigate their journey.

-       Digital transformation expands beyond digital customer experience and is now enterprise-wide affecting all facets of business - by function, focus, LoB, etc.

 

 

STAGE 6: INNOVATIVE AND ADAPTIVE

 

-       Digital is no longer a state, rather it is part of how a business competes, with work in transformation continuing as technology and markets evolve.

-       Innovation becomes part of the company DNA with the establishment of formal teams and efforts to track customer and technology trends.

-       These activities feed into a variety of programs that range from test-and-learn pilots to the introduction of new roles/expertise to partnerships with and investments in startups. Programs then permeate deeper functions within the enterprise to continually advance key processes.

-     Investments in people, processes and tech are tied to business, employee and customer experiences to ensure a democratized and empowered approach to ongoing change. 


(Image Courtesy: Pixabay.com)

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