Achieving Digital Maturity, One Project at a Time

How can you help your company become more digitally mature?

In researching the relatively recent buzz phrase “Digital Maturity,” I came across a lot of jargon and models. While I got the gist of what I read, I found many of the explanations to be overly complex, and many of the models would require significant effort to apply. Thus, to simplify things, I decided to share several digital maturity concepts I found useful, with suggestions on a deeper dive into several areas.

Three Levels of Digital Technologies

Pamela Winikoff, in a recent blog post, defined a hierarchy of applying digital technologies to business that I found helpful in understanding digital maturity:

• Digitization – At the most fundamental level, digitization is the process of converting analog data and information into a digital format. This process involves capturing and representing physical or analog signals, such as sound, images, or documents, as a series of discrete numerical values that can be easily stored, processed, and transmitted using digital technologies.
• Digitalization – While digitization focuses on the conversion of analog data into digital form, digitalization is the next step in the digital transformation journey. Digitalization is the process of using digital technologies and data to transform business operations, models, and customer experiences to create new value for owners and users.
• Digital Transformation – This goes beyond the mere digitization of data or the optimization of existing processes. It represents a fundamental shift in how an organization operates, leveraging digital technologies to create new or significantly improved business models, customer experiences, and internal capabilities. ... It involves the adoption of technologies ... to drive innovation, enhance customer engagement, and increase operational efficiency.

The author also provided an example that greatly clarified these concepts. A healthcare provider might...

• Start their [digital maturity journey] by digitizing patient records, making them more secure and accessible.
• They can then digitalize their appointment scheduling and billing processes, which improves efficiency and patient satisfaction.
• Finally, they can use technologies like telemedicine, predictive analytics, and Internet of Things (IoT)-enabled medical devices to digitally transform and deliver more personalized patient healthcare services.

While the author did not provide a model to assess digital maturity, she did note her three levels of digital technologies varied in both scope of application within a company and impact on the company's operations and results.

Four Stages of Digital Maturity

Justin Grossman of meltmedia, a design and development marketing agency serving multiple verticals with a focus in life sciences, wrote The Four Stages Of Digital Maturity: How Does Your Organization Rank? This 2018 article described four stages of digital maturity he'd seen among marketing agencies. Even though this was just one industry, I believe his concepts apply to virtually all industries. Here are his stages and descriptions (with some simplifications made by me):

• Incidental – These organizations are executing a few activities that support digital transformation, but these happen by accident, not from strategic intent.
• Intentional – Companies in this stage are purposefully carrying out activities that support digital transformation, including demonstrating some strategic initiatives, but their efforts are not yet streamlined or automated, and these efforts are only in certain business functions.
• Integrated – Businesses in this level are successfully implementing numerous activities that support digital transformation. These initiatives are executed with high strategic intent, and for the most part are well-coordinated and streamlined. These efforts have been in force long enough to show a business impact.
• Optimized – Organizations in this category are few and far between, and they are considered standard-setters in digital transformation. Almost all of their activities are undertaken strategically, and most are fully streamlined, coordinated and automated. Any new technology added to the organization is easily integrated into existing systems and processes because of company culture and organizational agility.

It might be helpful to view these four levels as “Grades” on a Report Card (C, B, A, and A+) or “Ratings” on a Performance Review (Satisfactory, Good, Very Good, and Outstanding).

Questions for Deciding Where to Start

The hardest part on the road to digital maturity could be deciding where to start, so let me offer three questions to ask yourself.

1. What Type of Company Do You Have? – First, decide whether your company is known for being Operationally Excellent like WalMart, being Customer Intimate like Zappo’s, or being an Innovator like Apple. (One tool I recommend to help answer this question is the Strategy Map – read more about this in my article “Technology Enablement” = Strategic Use of Technology.)
2. Which Process Cycle Is Most in Need of Attention? – Let's say you're a product-based Customer Intimate company, yet you know things don't happen as quickly as they should in the “Quote to Cash – Product” Process Cycle, so you grade it as a “C” or rate it as “Satisfactory.”
3. Which Activities Seem to Frustrate Customers or Prospects the Most? – Upon further reflection, you've recently heard complaints from customers and prospects that it takes too long after a sales representative meets with them to send a Quote.

In this example, you've concluded that activities to prepare and send a Quote are the ones to tackle first.

Put on Your Consultant Hat

Once you select what Quote-related activities need to be reviewed and improved, you need to begin thinking the way the consultants at Todd Herman Associates (THA) do.

As I wrote earlier this year, there are three basic phases in every consulting process:

• Phase 1 – Know the Present – Understand the “Current State.”
• Phase 2 – Envision the Future – Describe the “Future State.”
• Phase 3 – Plan the Route – Identify the gaps between “Current State” and “Future State” and then recommend actions to close them.

In this example, your goal in Phase 1 – Know the Present would be to learn what you can about all the activities needed to prepare and send a Quote. Where do bottlenecks occur? What causes the workflow to stop flowing? How can managers know when something is taking too long?

Once you know the present, you can move on to Phase 2 – Envision the Future and describe how you would LIKE the process to work, so that the “Current State” problems are eliminated and Sales Reps are able to produce and send Quotes within, say, 24 hours of meeting with a prospect or customer.

Finally, you're ready to tackle Phase 3 – Plan the Route. Here, you would work with people doing the work (Sales Reps), people having a stake in improving the work (such as Customer Service), and people who can help make the needed process and technology improvements (such as a Business Analyst and an Application Developer) to close the gaps between “Current State” and “Future State.”

The three steps I just outlined for the Quote to Cash – Product example are the basic steps in a Business Process Review (BPR) project. For two examples of THA's BPR projects as part of a broader technology project, please see:

• Clarifying Business Needs and Issues to Specify Systems Requirements
• Selecting a New ERP System to Enable a Company to Grow

You need to have a good knowledge of your Current State so you can define what needs to work differently in the Future State.

Resources to Help Envision the Future

While Phase 1 – Know the Present is relatively straightforward, Phase 2 – Envision the Future requires thinking creatively and in terms of possibilities. Here, the concepts of Digitization, Digitalization, and Digital Transformation – discussed earlier – can be helpful in broadly imagining how the Future State could look.

To give you some specific tangible ideas to consider, please visit the Case Studies section of our website, where you'll find over 30 case studies categorized by Keyword (such as “Billing” or “Product Development”), Industry (such as “Distributor” or “Healthcare”), and Service (such as “System Selection” or “Executive Dashboard”).

Here are a few of my favorite Case Studies:

• Improving Pharmacists' Productivity by 400%
• Delivering Meaningful Information to Executives
• Eliminating Physical Inventory Shrink by Automating Production Accounting

One note – if you see a Case Study you like, yet it's tagged as an Industry unrelated to yours, here's a little secret...all companies, regardless of industry, have the same basic business functions and face the same potential business problems.

Thinking Like an Outsider

Phase 2 – Envision the Future may be the hardest of the three phases, since this requires you to NOT think about your company as an owner or manager. The mindset you DO want to adopt is that of an unbiased outsider, someone with a Third Party Objective (3PO) perspective. This is because you probably “know” all the reasons your company is doing things the way it is and are readily able to rationalize the status quo.

A 3PO observer wouldn't accept status quo rationalizations, such as “Oh, I don't think we could ever get Steve in Credit to adopt a web-based credit application and approval program” or “No one has dared touch that system in 5 years, since Pam retired.” If a 3PO observer wouldn't accept the status quo, neither should you.

Acting as a 3PO party requires challenging your colleagues and even your boss, potentially leaving you in an uncomfortable position. If this is the case, let's talk – my associates and I routinely fill the 3PO role, and avoid putting you in that uncomfortable position.

Regardless of how you approach things, just get started and keep working on your business, because the only way to achieve digital maturity is one project at a time.

Sincerely,

Todd L. Herman

PS – Check out our most recent video on Organizational Digital Maturity – How to Get There