What is Digital Maturity?
Understanding common stages and how to assess the digital maturity of your organization
Table of Contents
- What is Digital Maturity?
- Why do a Digital Maturity Assessment?
- Why is Digital Maturity Important?
- The Benefits of Digital Maturity
- The Four Stages of Digital Maturity
- Ranking on the Maturity Scale
- Starting a Digital Maturity Initiative
In recent years, organizations have been challenged to commit to digital transformation and digital maturity. The rapid pace of technological advancements has meant that no industry can escape the need for digital transformation – be it an increased online presence, 24/7 availability, or other demands that technology and society have created.
Digital transformation means different things for different industries and organizations, and it is taking time for organizations to come to grips with what digital transformation means for their unique circumstances and business goals.
Now, the focus has shifted from digital transformation to digital maturity. In this article, we’ll discuss what digital maturity is and why it’s necessary.
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What Is Digital Maturity?
Emerald Insight quotes research that defines digital maturity as “… a systematic way of ensuring the preparedness necessary to consistently adapt to continual digital transformation and enables structural changes over time”. It involves a continuous and procedural effort to find strategic options to accomplish digital transformation that matches company goals, which researchers admit is challenging.
Put differently, digital maturity is about continual digital transformation. It is important to understand that digital maturity is not an end point – there are no ‘most digitally mature’ companies. Technology keeps evolving, so there will always be the next cutting-edge technological innovation to implement. Digital maturity is about being ready and prepared to implement these innovations when they arrive.
An evolving digital process is thus more than periodic digital updates, even if they involve cutting-edge technologies. Digital maturity presupposes the expertise to devise strategic initiatives that can pinpoint the critical elements in digital transformation that will translate into growth and financial success of the organization. Updates without strategy won’t reap optimal benefits.
Research has found that the vast majority of digital transformation initiatives do not succeed. A major reason for this is business leaders who implement digital initiatives without a clear picture of where the company stands in terms of digital alignment and application.
Introducing the Stage Model of Maturity
One way to align digital initiatives to company goals, so digital transformation projects can succeed, is to understand where your organization stands in terms of digital maturity. Organizations progress through different levels of digital maturation. These stages are determined by using a digital maturity scale. Many have been created over the years, consisting of 4-6 stages that begin from something akin to ‘non-existent’ and progress to ‘exceptionally formed’.
A digital maturity scale is a means to determine an organization’s level of digital maturity – is it just in the beginning stages, or does it have a long history of digital transformation?
Because it’s impossible to devise one standard digital maturity assessment scale that would apply across all industries, several models developed to account for differences. The digital maturity index developed by Google and Boston Consulting Group (BCG) is currently the most popular one. It names four development stages: nascent, emerging, connected, and multi-moment.
Organizations use these stages as a digital maturity assessment tool, which helps them to understand their current level of digital maturity.
What Is the Purpose of Digital Maturity Assessment?
Companies use their digital maturity assessment to achieve different goals:
- To measure the current maturity level of different aspects of an organization in order to identify strengths as well as areas for improvement, so leaders can prioritize what to do to improve digital maturity.
- Companies can use digital maturity assessments to gain a competitive advantage. According to Boston Consulting Group (BCG), Companies with high levels of digital maturity have a competitive advantage in terms of revenue growth, time to market, cost efficiency, product quality, and customer satisfaction.
- A digital maturity assessment can also reveal where technology can solve specific problems a business is experiencing.
- Establishing a company’s digital maturity level ensures that digital transformation efforts are not jeopardized by unforeseen complications that end up being a time and cost burden.
- Digital maturity assessment is a great tool to build internal support for your ongoing transformation.
Why is Digital Maturity Important?
Digital maturity is not only important, it is essential because it helps businesses stay competitive and relevant in the current digital world. A business that refuses to evolve will be left behind, like Blockbuster upon the advent of Netflix.
It has been shown that companies with high levels of digital maturity are better prepared to respond to changing market conditions and customer demands.
According to MIT Sloan Management Review, digital maturity is important because it enables companies to achieve better financial performance. The Review refers to maturing companies rather than digitally mature companies, which makes sense since digital maturity is a moving goalpost.
What Are the Benefits of Evolving our Digital Presence?
Companies with higher levels of digital maturity perform better financially. An MIT survey of 184 publicly traded firms found that digitally mature companies outstrip industry competitors along different dimensions of financial performance – they outperform less mature companies on numerous financial measures.
Deloitte reports 43% of highly digital mature companies see significantly higher net profits than their industry averages.
According to Deloitte, these financial benefits can be attributed to digital maturity’s ability to improve efficiency, product and service quality, customer satisfaction, and employee engagement. It also sparks greater focus on growth and innovation.
Companies that commit to rapid digital transformation develop a high baseline of digital maturity that enables them to adapt quickly to market changes, giving them a competitive advantage. This was particularly evident during the COVID-19 pandemic, when agile companies outperformed their peers.
Digitally advanced firms grow faster. This was the finding of an analysis of the digital maturity of 793 enterprises in North America and Europe Digitally by Forrester. Contributing factors are the ability to reinvent business models and focus on customer experience.
What Are the Stages of Digital Maturity?
For now, we’ll limit our discussion to the most common digital maturity stages.
Stage 1: Nascent
This is the first level of digital transformation. The collection of data is not prioritized, basic digital marketing techniques are used, with minimal manual optimization efforts, and limited collaboration among teams.
The organization operates in silos with limited collaboration between teams. At this stage, automation has not been implemented.
Companies at this stage need leadership to take ownership of the digital transformation journey to improve business results and stay relevant.
Stage 2: Emerging
At this stage, the silos start to crumble. Different departments start working together and sharing data, which now guide business decisions. In addition, the use of automation of repeatable processes becomes more pronounced.
Basic segmentation and testing are implemented to improve results. The organization begins aligning business units, defining KPIs, and documenting processes. Collaboration and sharing data across different languages become important, as do technologies that enable this business need.
Stage 3: Connected
In the connected stage, data collection expands to include both first-party and third-party sources. Businesses at this stage use advanced segmentation and attribution models and multiple channels and formats for advertising.
Emphasis is given to platform integration, which among other benefits, enables cross-channel campaign management and closer cooperation within the organization.
Silos are becoming something of the past, with project teams consisting of members from different departments working together and sharing the same data.
There is a stronger emphasis on technology, including the potential adoption of cloud solutions.
Stage 4: Multi-Moment
The multi-moment stage is the highest level of digital maturity. Organizations in this stage make use of automated and technology-driven processes to handle and leverage data for various purposes, including marketing activities.
Marketing strategies become highly personalized in terms of target audience and messaging. Customized experiences delivered across all advertising platforms, utilize personalized attribution models. Machine learning and data-driven insights play a significant role in optimizing marketing efforts.
It’s important to realize that very few companies have reached this last advanced stage of digital maturation. A study by MIT Sloan Management Review and Deloitte in 2019 found that only 11% of companies surveyed considered themselves to have “fully transformed” digitally. Other studies put the percentage as low as 2 and 5%.
Organizations can use the stages as a roadmap to understand their current position and set targets toward digital maturation.
How Do I Know Where We Rank on the Scale?
Before we start ranking ourselves against our peers and competition, it’s important to understand that there is no one, over-arching diagnosis for positions of digital maturity. This is not the DSM-V. However, there are some clear guidelines to start your investigation and larger stage accomplishments or hurdles to tackle before you can set yourself in the next stage.
- Evaluate your company’s culture and general attitude toward digital transformation. Is there leadership support and a general willingness to experiment and adapt to changes? What is the level of digital literacy and digital skills of the workforce?
- Investigate and evaluate your company’s ability to leverage digital technologies, make data-driven decisions, implement automation, and accomplish integration.
- Evaluate the company’s data management practices. Are you able to leverage data for insights and decision-making?
- Scrutinize your data collection methods, data quality, data integration, and your use of analytics tools. Do you need some improvements to generate actionable insights?
- Review your technological infrastructure and digital platforms. What is the level of integration and connectivity among these systems? Are you using cloud services to improve scalability?
- Consider factors like user experience design, omni-channel integration, personalization capabilities, and customer engagement through digital channels. Can you deliver a seamless and personalized customer experience across digital touchpoints?
- Use Benchmarking. Compare your company’s digital capabilities and strategies to industry peers or competitors. Study industry reports that provide insights into digital transformation trends and best practices within your industry to see how your digital transformation efforts compare with your peers.
How to Start a Digital Maturity Initiative
You’ve assessed your organization against maturity stages and benchmarked your progress. Now you’re ready to start your next focused, supported digital initiative. Starting a Digital Maturity Initiative won’t be the same for all organizations, but here are some steps to help you get started:
- Create a Roadmap
A digital maturity roadmap will help you to outline the steps and milestones needed to progress in its digital maturity journey. It provides a structured approach that includes your current state of digital transformation maturity, clear milestones with clear deliverables, and applicable timelines.
- Get Internal Buy-in
Digital transformation projects fall apart when all stakeholders are not committed to improving digital maturity. Change is hard, and not everybody in your organization will see the point of it all. To win everyone over, you need to show them how digital maturity will benefit them.
- Start Small
Introduce changes on a small scale so you can see what works and what doesn’t. This approach will minimize your risk and make projects more manageable. An iterative approach toward digital maturity makes sense since it’s an ongoing process.
- Seek External Expertise
Consider engaging digital transformation experts who can help you conduct your digital maturity assessments. External expertise can save you hours of agonizing over your digital transformation needs. Let them save you time and money with their insights gained over many years of experience and industry knowledge.
After reading this article, you may be rearing to get going on your road to your new digital future. TMG can help you with that. To begin with, read our strategy blog and then contact us to talk more about creating a digital maturity roadmap.