Building Digital Maturity – your company’s Digital DNA

capgemini-report-coverOver the past several posts I have been looking at the excellent Capgemini report on digital leaders.

To understand this post, you may need a quick refresher on the four types of digital maturity: fashionistas, digerati, beginners and conservatives.

The diagram below and this post will help.

4-types-digital-matrurity

In this post, we look at how companies can build digital maturity, and what it takes to have a company with a digital DNA.

The report made a strong case that leading firms perform well in both the digital intensity and transformational management intensity axis of digital maturity outperform their peers.

Firms that excel in the digital intensity sector do so because they can afford to spend significant amounts of money on new technologies.

To truly be a digital performer, firms must also excel in the transformational management intensity space.

The latter trait is much harder to execute. You cannot just throw money alone at a transformation of the scale required to be a leader in this space.

The report suggests that there are 4 areas which need to be addressed to succeed in the transformation into a truly digital business:

1. Transformative vision

A strong vision helps to frame in people’s minds a picture of how the company will be different in the future. It also helps people understand what former assumptions may no longer be valid.  Without a vision, you can’t possibly hope to be a digital business.

2. Digital governance

Effective investment rules and coordination mechanisms improve efficiency and ensure digital efforts are moving in the right direction. When Spanish media conglomerate Prisa launched its digital transformation program, one of the first initiatives was to create a central digital unit to coordinate and assist in building digital businesses. Appointing a Group-level Chief Digital Officer, reporting directly to the CEO, was a major signal.  We can expect to see more CDO’s appointed.

CDO-logoIn fact in New York in February, there will be a Chief Digital Officer Summit - a sign that this role is becoming important.  The summit features CDO’s from NBC, Newscorp, Obama 2012, Disney, MIT, Clear Channel, and Universal Music Group to name a few.

3. Engagement

When employees are engaged in a shared vision they help to make the vision a reality. They offer less resistance to change and often identify new opportunities that were not previously envisioned.  This is probably one area where money cannot simply be thrown at the problem.  If employees are not engaged in the whole process – and contribute  actively to need to change, then it will most likely fail.

4. IT-Business relationships

Digital transformation is about re-defining big parts of the business, and IT is essential in doing it. In some companies, the CIO is the perfect person to suggest and even drive digital initiatives; in other cases the digital agenda will be driven by business or joint IT-business teams. In any case, shared understanding between IT and business executives is critical to success.

By definition, both Conservatives and Digerati perform well on the four components of transformation management intensity. What separates Digirati, however, is Vision.

Where Conservatives focus on control and alignment, Digirati have also developed a strong transformative vision that energizes employees to make change happen.

This last point is key.  Unless your workforce is willing to be involved in the sometimes radical changes needed to move to a strong digital footing, then the whole exercise is moot.

Where do digerati invest?

The digerati also are successful because the make strategic choices on where to excel digitally (see below – click to enlarge).

capgemini-fig7

The report also looked at the 391 companies in great detail, and mapped how companies link their customer facing processes to operational processes.

Where are the most common linkages between domains of excellence?

capgemini-fig8

The report poses the question: Why not use this model to build a digital vision and decide what you want to be famous for?

burberry-logoWhat did Burberry do to become one of the digerati?

According to Burberry CEO Angela Ahrendts, “we began to develop our five-year strategy, asking: What do we have that our peers don’t?… And we did have a number of key differentiators in the luxury sector we could exploit.”

Building on these strengths, Burberry decided to transform its customer experience, both in-store and online, including advanced customer interactions in social media.

Internally, Burberry rolled out a large ERP program to improve data integration and find ways to excel in operational processes.

According to Ahrendts: “we wanted to be as admired and respected for the back end of our business as for the front end.”

Ahrendts also made mention of the value she places on big data. For the report she was quoted as saying:

“Consumer data will be the  biggest differentiator in the next 2 – 3 years. Whoever unlocks the reams of data & uses it strategically will win.”

Other firms start at different points

Indian paint manufacturer Asian Paints started with process excellence and moved leftward. Manish Choksi, CIO and Head of Strategy, explained: “in the early 2000s, our focus was on internal efficiencies. We implemented a traditional enterprise-wide ERP and advanced supply chain. This was the basis for further improvements in sales and customer processes.

Transforming business models

Changing customer experience or operational process – two key elements of digital intensity is difficult. Changing a business model or globalizing a company is even more difficult.

The figure below shows the extent to which companies in each quadrant are able to execute these changes. Digirati are far better than other types of firms at changing their business models. They are able to link their implementation capabilities and leadership capabilities to fundamentally transform how the company operates.

Companies in other quadrants are less able to do so.

capgemini-fig9 

How do you start your own digital transformation?

Here are 4 checklist items from the report to start you off.

1. Understand threats

2. Audit the firm’s digital maturity

3. Develop the transformative digital vision

4. Senior team agree on the vision

Importantly, you need to have a focus on the investment, cut back unproductive areas and ramp up investment where it needs to occur.

The report findings prove that Digerati differentiate themselves by excelling in a few areas – customer experience, social media, mobile, customer analytics, process digitization or internal collaboration – but rarely in all.

Executives must identify where the company should excel now, based on its existing capabilities and strategic assets. Then, as capabilities improve, they can refocus toward new areas of excellence.

Next time we will look at how you adapt your business model to go digital.

Why not download the report yourself, it is a great read.

If you enjoyed this blog post you may like other related posts listed below under You may also like ...

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About 

Based in London, Andrew is an internationally renowned thought leader in the field of social business and social media networks. Andrew is a Global Partner with IBM, with a focus on Social Business.

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  • johndodds

    My one concern about the report is that there’s correlation but no certain causation. Is the success of the digitally mature industries due to their digital maturity or is it more likely that digital maturity is important in their sectors and is one element of their success? As with so many reports, it’s a consultancy sales document predicated on a thesis that doen’t look too closely looking at other possibilities. I’m not disagreeing with the thesis per se, just questioning the logic.

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  • Christopher Rollyson

    @Andrew, thanks for previewing the Cap report, which I’d just downloaded yesterday. I advise globals on social business for transformation and have watched the debates on “digital transformation” and “the rise of the CDO” with intense interest. I note that most thought leadership mentions “digital technology” more than the shift that’s driving it: the customer is digital now, so markets exhibit unprecedented volatility, which is still accelerating. The only reason that 90% of the Global 500 are still in business is that everyone else is falling behind just as quickly, with few exceptions, so your call to action here is right on from my perspective. Most customers don’t *expect* individualized, personal “experiences” with brands—because they are just starting to experience it. Very thin ice for skating. So what does “individualized, personal” mean? Obviously there’s not one answer, but my observation that the general rule is, how I guide clients in social business, move your imagination beyond the product or service you sell. Customers have never liked products as much as producers; they buy the outcome they can enjoy by using that product/service. Digital social has offered up, for the first time, social information about outcomes. For the first time, brands/firms can align with customers/clients—in the Social Channel. What do you think? I flesh out these ideas here [http://bit.ly/sochanexecsum]

  • http://twitter.com/CiscoEngineers/status/462757032056332288/ @CiscoEngineers

    RT @gociscocollab: Good read, reminder about vision & purpose in digital.
    http://t.co/US8LAFrn0q via @EmilyCBaxter