Research by Deloitte Digital and MIT Sloan Management Review seems to suggest that an organization’s relative level of digital maturity can predict how fast it is progressing in digital terms. The state of an organisation’s digital maturity seems to be a measure of how successful organisations are adapting to the digital environment.
In today’s competitive landscape, it can also be a measure of how well they are adapted to survive and thrive.
Capgemini Consulting considers digital maturity to be a combined measure of transformational management intensity with what it calls ‘digital intensity’.
Digital intensity reflects organisational investment into technologically-enabled initiatives, which includes things such as changes to how the company operates things, for example, customer engagement.
Transformational management looks at how far an organization possesses the leadership capabilities necessary to drive digital changes across its scope of operations. This includes the vision and effectiveness to reorganize the business in order to achieve new focus on digital working.
Capgemini found a strong correlation between an organization’s digital maturity and its performance, measured in such terms as profitability and market valuation.
In fact, its research found that the most digitally mature 25% of firms were 26% more profitable than their competitors, generate 9% more revenue from their assets, and have 12% higher valuations. It advised that in no industry could organizations afford to ignore the importance of improving their digital maturity.
How to gauge maturity
Digital maturity is about much more than technology, although tech is certainly an important part of the mix. The measure of a company’s digital maturity is gauged in much broader terms: by how the organization is adapting everything it does to face the new digital landscape of competition.
Leadership forms a key component of an organization’s digital aptitude. Organizations that achieve digital maturity need to be lead from the top. Achieving digital maturity requires vision and commitment to digital as a long-term goal. There needs to be buy-in from senior leadership right across the board in order to get this done.
It’s particularly important when change is painful and risky; senior buy-in is essential to power through any radical chance.
Leaders also need to create a corporate environment that enables the organization to achieve digital maturity. Management structures need to support and enable digital business priorities, rather than interfering with them.
For organizations to truly succeed at digital, it’s necessary to have cross-functional project teams in order to achieve digital progress. Digital can’t exist in a silo if an organization is to fully embrace digital working.
Ultimately, achieving full digital maturity requires an organization to re-orientate itself so that digital forms the core of its business. This means all business activities are seen through a digital lens, rather than digital being seen as an add-on or after-thought.
Organizations at the peak of digital maturity have fundamentally changed – and continue to change – in order to compete effectively in a new competitive landscape where digital is a vital channel.
Key elements of maturity
The difference between organizations at the early stage and late stage in their digital maturity is often one of scale. Early stage digital organizations may experiment at low level with digital activities and strategies, without ever letting them become larger initiatives.
In these organizations, the digital team are often working in a self-contained manner and their activities rarely spill over to affect the wider enterprise in any impactful way.
Progress in digital maturity is also achieved by learning from results. Confident digital organizations are able to take the results of digital experiments and incorporate them into the next stage of their digital strategy, rather than seeing them as one-off, self-contained events.
Culturally, digitally mature organizations are more prepared to accept a risk of failure than ones at an early stage of maturity. Their cultures also recognize and reward collaboration, and encourage experimentation and ongoing learning.
MIT SMR and Deloitte Digital found that there’s evidence that a lack of digital maturity can be detrimental to an organization’s worker attrition. That’s particularly the case at director level, where a lack of digital maturity means VPs and directors are 15 times more likely to leave within a year.
This is likely to be caused by frustration with the organization’s lack of digital confidence, and concern about a personal lack of development within such an organization. Even if organizations want to achieve digital maturity, they may be held back by the availability of skills and talent.
Companies don’t achieve digital maturity by recruiting digital specialists; digital visions are achieved by non-specialists who have digital understanding.
This usually means training existing employees, rewarding and supporting ongoing learning, and attracting new talent that has digital ability. Companies that don’t have some element of digital capability spread right across their functions will struggle to win at digital projects. It’s particularly challenging for industries where there are existing skills shortages in non-digital functions.
Capgemini concludes that no firm is immune from digital transformation – but warns that it’s a tricky process with many potential pitfalls for the unwary leadership team.
It’s certainly harder for more traditionally-orientated firms to distance themselves from legacy systems and ways of operating, to catch up with their more digitally mature counterparts. With digital maturity now proving to be a key signifier of general performance in today’s market, no organization can afford to ignore this measure of their ability to compete.