Digital transformation is a process occurring in most industries. In this article, we explore digital transformation, and discuss why “digital maturity” is a better explanation of the digital transformation process.
What is digital transformation?
There are plenty of studies which demonstrate that digital organisations have a greater insight into their business operations than traditional ones. They are more agile, and it’s widely argued that digital leaders outperform their competitors.
In the current Coronavirus pandemic, this agility is evident in the organisations who have been able to quickly adapt their businesses, and transition to a new, remote working operating model in order to continue operations under the imposed lockdown restrictions.
Less digital businesses have had fewer options. They had to react in the spur-of-the-moment to quickly patch their organisations and implement immediate solutions that they’ve not used before in order to continue operating.
MIT sloan management review, best defines digital transformation as “adopting business processes and practices to help the organisation compete effectively in an increasingly digital world”.
Digital transformation enables organisations to break down functional silos and allows data to flow freely within an organisation. This greater accessibility of data allows companies to be more agile, to learn, to generate new insights and to pivot their decision making processes to being predominantly data-led.
Unfortunately, digital transformation isn’t a quick process, and companies can’t simply “transform” overnight. Becoming a digital business isn’t just about buying new technology and software. Digital transformation also involves leadership, processes, culture, the right talent and organisational structure to all be in place. To become digital, companies must transform.
Digital maturity = digital transformation.
Rather than focusing on transformation, the key to change is achieving digital maturity. Digital maturity is both a state as well as a process.
Companies first need to audit themselves to determine their level of digital maturity, and there are many tools and frameworks to help them do this. With an understanding of their current digital maturity gained, a company can see its digital strengths and weaknesses, and can use these to plan their next steps. Once they know where they are starting from, they can develop and implement digital strategies to help them achieve their business goals.
Digitalisation goals and their projects don’t need to be enormous. Rather than colossal programmes that overwhelm a company, smaller, incremental projects are common. They involve less risk and help a company to gradually review and adapt their digital strategies as they progress.
The term “transformation” often implies a drastic change from one state to another, whereas the reality is that the digital transformation process for a business is a continuous one. Companies are subject to market forces which requires them to adapt and “mature” in order to stay competitive. IBM has undergone several transformations during its 100+ years in business and, as a result, remains a relevant and an innovative market leader.
Digital maturity index.
Every industry will have its own, unique digital requirements and definitions of digital excellence. For industrial companies, the Industrie 4.0 maturity index helps companies to understand where they are relative to others and how to mature. At one end of the spectrum, maturity is basic. It assumes a level of computerisation, where digital capabilities allow employees to minimise their time spent on repetitive and manual tasks.
Each maturity step builds on the previous and helps companies to progress their digital strategies.
For now, the top end of the spectrum involves high levels of automation. Artificial Intelligence (AI) & Machine Learning (ML) allow companies to learn about their processes, their efficiencies and their inefficiencies and enable them to take action quickly- either automatically or by alerting employees of the options.
In Summary
For businesses, transformation is an essential requirement and a continuous process. Business environments change; disruption is common, meaning companies need to adapt in order to remain competitive.
Digital transformation is often perceived as a single step. In reality, it is more useful to see it as the continual process of maturing.
Digital maturity is a barometer for companies to assess how digital their organisation is relative to others and their industries. It’s also an effective measure to help companies develop and implement their digital strategies.
About the author
Les is the Founder of Lighthouse Analytics, a fast-growing, premium research & advisory firm focused on Digital Transformation.
Les is an industry expert with over 20 years of experience within the industrial and technology sectors. He regularly consults with Private Equity firms, investors and funds who are looking to learn more about the Industrial Technology sector. Les, originally a Chemical Engineer, has hands-on experience in Executive leadership, strategy and M&A roles, and has a comprehensive understanding of the Industrial Technology markets.
