Five Stages of Digital Maturity

You’ve likely started your digital transformation journey, but how far have you progressed? What’s left to achieve? Digital maturity refers to how advanced a company is in using digital technologies to improve its operations and services. There are five stages: Digitally Present, Digitally Active, Digitally Engaged, Digitally Competitive, and Digitally Mature.

For a deeper understanding of the foundational concepts, you might find it helpful to read How To Assess Digital Maturity

1. Digitally Present

In this stage, a company establishes a basic online presence. This usually involves launching a website or creating social media profiles. The goal is to be visible and accessible online, allowing customers to find information about the company and its products or services. However, the company’s digital activities are still quite limited.

Example: A local bakery sets up its first website where customers can view the menu and contact information.

2. Digitally Active

Here, the company starts to integrate digital tools into its daily operations. This might include using digital platforms to manage and distribute content or to interact with customers. The focus is on improving efficiency and customer engagement through digital means.

Example: The bakery begins using an online ordering system and social media to interact with customers and promote special offers.

3. Digitally Engaged

At this stage, the company adopts a more advanced digital strategy. It starts to innovate and experiment with new digital tools and approaches. The company may also embrace a customer-centric mindset, using data and digital insights to better meet customer needs.

Example: The bakery starts using customer feedback collected online to develop new products and improve services. It might also implement a loyalty app to reward frequent customers.

4. Digitally Competitive

In this stage, digital tools and strategies become a core part of the business. The company develops its own digital solutions to optimize operations and enhance the customer experience. This often leads to significant improvements in performance and competitiveness.

Example: The bakery develops its own app for ordering and delivery, integrates advanced analytics to optimize inventory, and uses targeted online advertising to reach new customers.

5. Digitally Mature

A digitally mature company fully leverages digital technologies as a fundamental part of its business strategy. It often creates new digital products or services and may even license its technology to other businesses. Digital initiatives are deeply embedded in the company’s culture and operations, driving continuous innovation and growth.

Example: The bakery not only uses digital tools internally but also launches a software platform for other small businesses to manage their orders and inventory. This new digital product becomes a significant revenue stream.

By understanding and progressing through these stages, companies can enhance their efficiency, competitiveness, and ability to innovate.

Provide Strategic Clarity, Focus, and Alignment

As changes occur more rapidly, it’s crucial for companies to align on their vision and strategy. Many companies now shorten their strategic planning horizons because they believe too much will change beyond that period. Others adopt a “Zoom Out, Zoom In” approach, where they first agree on a shared 10 to 20-year vision and then focus on activities that can advance that vision in the next 6 to 12 months.

Revisiting and Communicating Strategic Plans

Strategic plans are as vital as ever, but in the digital era, the need to revisit and communicate them transparently is even more critical. Companies should actively pursue ideas that might compete with their existing offerings. As Andy Grove, former CEO of Intel, suggested, you need to become your own best competitor to stay ahead of others. Establishing a clear vision and strategy, along with an explicit culture and mindset, is essential in the digital age.

Example: Tesla

Vision and Strategy

Tesla, the first American car company to go public since Ford’s IPO in 1956, had a unique opportunity to define its vision and strategy from scratch. Tesla’s clear long-term vision is to accelerate the world’s transition to sustainable energy. The company has been very transparent about its strategy to achieve this mission:

1. Build an expensive, low-volume sports car.
2. Use the profits to build a medium-volume car at a lower price.
3. Use those funds to create an affordable, high-volume car.
4. Provide zero-emission electric power generation options.

Updated Strategy

After making significant progress over a decade, Tesla updated its strategy in 2016 with “Master Plan, Part Deux”:

1. Create stunning solar roofs with integrated battery storage.
2. Expand the electric vehicle product line to cover all major segments.
3. Develop a self-driving capability that’s ten times safer than manual driving through massive fleet learning.

Tesla shares its strategy publicly to attract people who resonate with its bold vision.

Culture and Mindset

A bold strategy requires a bold culture and mindset. Tesla has a mission-driven culture focused on innovative problem-solving. The six major cultural attributes of Tesla, which other companies can adopt to operate like innovative digital organizations, are:

1. Move fast.
2. Do the impossible.
3. Constantly innovate.
4. Reason from first principles.
5. Think like owners.
6. We’re all in.

Transparency and Boldness

When defining your strategy and culture, be transparent and bold. Transparency will attract the right people and ensure everyone pushes in the same direction. Boldness will ensure they aim for the biggest opportunities possible.

Serve the Customer Where They Wish, How They Wish

Customers today have more power than ever. They can walk into a store, check a product, and instantly compare prices across different stores, both online and locally. They can read reviews, and if they decide to buy, they can have the product delivered the same day to their home or office. This power, facilitated by digital devices, has indeed transformed consumer behavior. So, how should businesses respond to this new reality?

Case Study: Domino’s Pizza

One of the best-performing stocks in the U.S. over the past decade might surprise you. It’s not Amazon, Apple, Google, or Facebook. It’s Domino’s Pizza. You might wonder how a pizza company became a leading digital player. Here’s their story.

Early Success and Challenges

Founded in the 1960s, Domino’s thrived for decades, revolutionizing home delivery. However, by the late 2000s, the company faced hard times. Their pizza quality declined, and social media amplified customer dissatisfaction. In response, CEO Patrick Doyle apologized publicly, saying, “We’re sorry for sucking,” and the company set out to reinvent itself.

Digital Transformation

Domino’s didn’t just improve their pizza; they transformed their digital strategy.

• Investing in Technology Talent: They hired top tech talent.
• Iterative Development: They adopted an iterative approach to developing customer-facing technology.
• Modern Infrastructure: They updated their outdated systems with modern architecture.

Innovative Customer Experience

Domino’s led the industry with several digital innovations:

• Mobile Ordering: They were the first to introduce industry-leading mobile ordering.
• Pizza Profiles: This feature enabled easy, repeat online ordering.
• Anywhere Ordering: Customers could place orders via tweet, text, or Amazon Echo and track their orders on any device.
• Addressless Delivery: They even introduced delivery to locations like parks, using customers’ mobile devices to locate them.

Results and Virtuous Cycle

These innovations restored Domino’s reputation and created a cycle of success:

• Talent Attraction: As a recognized digital leader, they attracted more top talent.
• Revenue Growth: Online sales grew to over 60% of their total revenue, amounting to multiple billions of dollars.
• Market Leadership: Domino’s became the largest pizza chain in the U.S. by revenue.

Lessons for Your Business

When you hear about the digital feats of Amazon or Google, you might think it’s only possible with a massive tech budget. But consider Domino’s starting point. If they could transform digitally, so can you.

Steps to Take

1. Identify Customer Preferences: Understand the various ways your customers prefer to interact with your business.
2. Experiment with Technology: Start experimenting with different digital tools and platforms.
3. Energize Relationships: This process will not only strengthen your customer relationships but also motivate your employees.

By serving customers where and how they wish, you create a virtuous cycle of innovation and engagement. This cycle will drive both customer satisfaction and business growth.