Digital transformation can be a complicated and intimidating process. Company leaders should learn the six digital transformation stages so they know what to expect for their organization and can better plan for the inevitable disruption.
The stages progress from business as usual, in which a company is at the beginning of its digital transformation, to innovative and adaptive, when the organization has finished its transformation and has embraced this change. Each step comes with its own challenges, which can include vendors resisting change and employees potentially objecting to the change, and the amount of time that each step takes will vary between companies.
Here are the six digital transformation stages and what each involves.
1. Business as usual
During the business as usual stage, the company operates normally. No effort is expended to look to the future and investigate how a digital transformation could improve the business. Company leaders do not look to industry and consumer trends to determine whether implementing new digital software could help the organization grow and become more efficient.
To kick-start the journey, the company may need to experience losses like sales declines, high turnover, or higher-than-average operational costs, which will convince leaders that digital transformation is necessary.
2. Present and active
At the present and active stage, interest in digital transformation begins appearing. At this stage, that interest may be led by an employee who lacks the power within the company to launch a digital transformation.
During the present and active stage, leaders may begin to witness competitors gaining market share because of their digital transformation, or they may learn about the benefits of digital transformation in trade magazines or at trade shows. Also, new hires may have witnessed the benefits of digital transformations at past employers and begin to realize how digital transformation could benefit their current company.
At this stage, no initiatives are in motion to begin a transformation.
During the formalized stage, the employees who are beginning to take note of a need for digital transformation start to do research on digital transformation to evaluate the benefits, build a business case and get buy-in from the company's executive team.
The corporate culture may work against the early adopters at this stage because others may feel uncomfortable with potential change. Externally, vendors may also resist change, and some of the company's customers may not be on board at first, with customers potentially struggling with the idea of new software or a new service.
Small digital transformation projects may begin, but they are most likely at the departmental or team level. Success during the formalized stage can help move the company to the next stage.
At the strategic stage, most or all the executive team is on board, and the company has decided to move forward with a digital transformation. The roadmap for the project may be at the departmental, business unit or overall company level.
By this point, proponents of the digital transformation have mostly overcome cultural resistance within the company, and other employees are likely waiting to see how the digital transformation will affect their day-to-day lives. Early success can help reassure employees that the digital transformation is a good investment and will improve their work lives.
At the converged stage, the company as a whole views digital transformation as a key initiative and sees the value of investing in a team to lead future transformations.
The organization has dedicated resources and money to new initiatives for digitizing the workforce, and the company's culture has embraced this new business model and accepted the benefits of digital transformation. Transformations which affect employees across the company, rather than a single business unit or department, become the norm.
6. Innovative and adaptive
By the innovative and adaptive stage, the company has come to fully support the digital world and is continuing to invest in new initiatives to ensure the organization doesn't become complacent.
The company's culture has completely embraced this new way of working, and this support of digital transformation helps attract new employees who prefer a digitized company. External vendors are reaping the benefits of the transformation, and customers prefer the renewed or new company services.