There are five stages of the digitยญal transยญformยญaยญtion hierarchy.
Digital transยญformยญaยญtion is a worthy underยญtakยญing for any busiยญness hopยญing to thrive in the 21st-cenยญtury online cacophony.
Drawing inspirยญaยญtion from Maslowโs hierยญarchy of needs, Iโve broken down the purยญsuit of digitยญal maturยญity into five disยญtinct stages. Just as humans start by meetยญing basic needs and proยญgress towards self-fulยญfilยญment, busiยญnesses must meet foundยญaยญtionยญal digitยญal needs before reachยญing their full digitยญal potential.
Here we go:
The Digital Transformation Hierarchy
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The Digital Transformation Hierarchy
Itโs not just about stayยญing alive in the digitยญal spaceโโโitโs about thrivยญing, leadยญing, and transยญformยญing the industry around you. The digitยญal transยญformยญaยญtion jourยญney isnโt a straight lineโโโitโs a series of stages, each buildยญing on the last.
5 Stages of Digital Transformation
The transยญformยญaยญtion starts with the basic needs and works towards industry leadยญerยญship and innovation.
Assess where you curยญrently stand on this path and use it as a guide to move forward.
About Digital Transformation
โDigital transยญformยญaยญtion is an ongoยญing proยญcess using new digitยญal techยญnoยญloยญgies, with agilยญity as the core mechยญanยญism for straยญtegic renewยญal of an organยญizยญaยญtionโs busiยญness modยญel, colยญlabยญorยญatยญive approach, and culยญture.โ
Source: Long Range Planning 1Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. โฆ Continue readยญing
Learn more: The Digital Transformation Hierarchy
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Stage 1: Foundation /โ Structure & Security
Every jourยญney starts with the basics.
Businesses that have been around for a while all have a digitยญal presยญence already, but itโs nevยญer too late to ensure itโs robust and secure enough to meet todayโs challenges.
This stage is the digitยญal equiยญvalยญent of securยญing food, water, and shelยญterโโโensurยญing your busiยญness can thrive in a comยญpetยญitยญive online environment.
Examples of Needs:
Stage 2: Stability /โ Operational Development
Now that youโre surยญvivยญing, itโs time to staยญbilยญise and optimยญise internยญal operยญaยญtions. Chances are, you already have some sysยญtems in place, but how can they be upgraded to ensure youโre runยญning like a well-oiled machine? Digital staยญbilยญity is about improvยญing effiยญciency and elimยญinยญatยญing outยญdated or inefยญfiยญcient processes.
Examples of Needs:
Stage 3: Engagement /โ Content & Community
Your operยญaยญtions are stable; itโs time to re-engage with your audiยญence and build deepยญer relaยญtionยญships. You likely have a digitยญal presยญence, but more must be done to ensure you conยญnect meanยญingยญfully with your community.
Examples of Needs:
Stage 4: Differentiation /โ Datadriven Adaptions
Youโve got the basics down, but now you must stand out. Differentiation is what will elevยญate your brand above comยญpetยญitยญors. You may have data insights and perยญsonยญalยญisaยญtion tools, but are they being used to their fullest potential?
Examples of Needs:
Stage 5: Innovation /โ Industry Leadership
The final stage isnโt just about surยญvivยญal or optimยญisaยญtion but transยญformยญaยญtion. If your busiยญness has been around for a while, itโs time to leverยญage all youโve built to become an industry leadยญer. Innovate, disยญrupt, and lead the charge.
Examples of Needs:
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PR Resource: Digital Transformation
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Digital Transformation
Digital transยญformยญaยญtion is a mulยญtiยญfaยญceted proยญcess drivยญen by advanced digitยญal techยญnoยญloยญgies requirยญing sigยญniยญficยญant organยญisaยญtionยญal change and adaptยญaยญtion. Despite the proยญgress, organยญisaยญtions face numerยญous chalยญlenges, parยญticยญuยญlarly at the iniยญtial stages of transformation.
โDigital transยญformยญaยญtion is an ongoยญing proยญcess using new digitยญal techยญnoยญloยญgies, with agilยญity as the core mechยญanยญism for straยญtegic renewยญal of an organยญizยญaยญtionโs busiยญness modยญel, colยญlabยญorยญatยญive approach, and culยญture.โ
Source: Long Range Planning 2Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. โฆ Continue readยญing
Technological Drivers and Enablers
Digital techยญnoยญloยญgies such as mobile, AI, cloud, blockยญchain, and IoT (to name a few) can enable sigยญniยญficยญant busiยญness improveยญments, enhanยญcing cusยญtomยญer experยญiยญence, streamยญlinยญing operยญaยญtions, and creยญatยญing new busiยญness modยญels. 3Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. โฆ Continue readยญing 4Rogers, D., & Euchner, J. (2022). Digital Transformation. Research-Technology Management, 65, 11โโโ17. https://โdoiโ.org/โ1โ0โ.โ1โ0โ8โ0โ/โ0โ8โ9โ5โ6โ3โ0โ8โ.โ2โ0โ2โ2โ.โ2โ0โ9โ5โ759 5Yaqub, M., & Alsabban, A. (2023). Industryโ4.0โEnabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. โฆ Continue readยญing
Industry 4.0 techยญnoยญloยญgies are key drivers of digitยญal transยญformยญaยญtion, enhanยญcing comยญpetยญitยญiveยญness through envirยญonยญmentยญal and social susยญtainยญabยญilยญity, corยญporยญate growth, and supยญply chain integยญraยญtion. 6Yaqub, M., & Alsabban, A. (2023). Industryโ4.0โEnabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. โฆ Continue readยญing
Organizational Adaptation and Change
Digital transยญformยญaยญtion moves organยญisaยญtions towards flexยญible designs that enable conยญtinuยญous adaptยญaยญtion, drivยญen by digitยญal busiยญness ecoยญsysยญtems. 7Hanelt, A., Bohnsack, R., Marz, D., & Antunes, C. (2020). A Systematic Review of the Literature on Digital Transformation: Insights and Implications for Strategy and Organizational โฆ Continue readยญing
It is an ongoยญing proยญcess requirยญing agilยญity for straยญtegic renewยญal of busiยญness modยญels, colยญlabยญorยญatยญive approaches, and organยญizยญaยญtionยญal culยญture. 8Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. โฆ Continue readยญing
Strategic Responses and Dynamic Capabilities
Organizations must develยญop dynamยญic capยญabยญilยญitยญies to manยญage the disยญrupยญtions caused by digitยญal techยญnoยญloยญgies and alter their value creยญation paths. 9Vial, G. (2019). Understanding digitยญal transยญformยญaยญtion: A review and a research agenda. J. Strateg. Inf. Syst., 28, 118โโโ144. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โJโ.โJโSโIโSโ.โ2โ0โ1โ9โ.โ0โ1โ.โ003
Building dynamยญic capยญabยญilยญitยญies involves recogยญnizยญing and respondยญing to trigยญgers, enabling factors, and barยญriยญers withยญin the organยญizยญaยญtion. 10Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. โฆ Continue readยญing
Challenges and Managerial Implications
Firms face sigยญniยญficยญant chalยญlenges at the beginยญning of their digitยญal transยญformยญaยญtion efforts, includยญing culยญturยญal resยญistยญance and the need for new manaยญgeriยญal guidยญance. 11Schneider, S., & Kokshagina, O. (2021). Digital transยญformยญaยญtion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://โdoiโ.org/โ1โ0โ.โ1โ1โ1โ1โ/โCโAโIโMโ.โ1โ2โ414
There is a need for a uniยญfied definยญiยญtion of digitยญal transยญformยญaยญtion to provide conยญcepยญtuยญal rigยญor and guide both researchยญers and pracยญtiยญtionยญers. 12Gong, C., & Ribiรจre, V. (2021). Developing a uniยญfied definยญiยญtion of digitยญal transยญformยญaยญtion. Technovation, 102, 102217. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โjโ.โtโeโcโhโnโoโvโaโtโiโoโnโ.โ2โ0โ2โ0โ.โ1โ0โ2โ217 13Mergel, I., Edelmann, N., & Haug, N. (2019). Defining digitยญal transยญformยญaยญtion: Results from expert interยญviews. Gov. Inf. Q., 36. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โJโ.โGโIโQโ.โ2โ0โ1โ9โ.โ0โ6โ.โ002
Future Research Directions
There is a call for more pracยญtice-oriยญented research to address the remainยญing chalยญlenges and explore new themes in digitยญal transformation.
Future research should focus on examinยญing the role of dynamยญic capยญabยญilยญitยญies and ethยญicยญal issues in digitยญal transยญformยญaยญtion. 14Schneider, S., & Kokshagina, O. (2021). Digital transยญformยญaยญtion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://โdoiโ.org/โ1โ0โ.โ1โ1โ1โ1โ/โCโAโIโMโ.โ1โ2โ414
Learn more: Digital Transformation: Overview
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ANNOTATIONS
1, 2, 3, 8, 10 | Warner, K., & Wรคger, M. (2019). Building dynamยญic capยญabยญilยญitยญies for digitยญal transยญformยญaยญtion: An ongoยญing proยญcess of straยญtegic renewยญal. Long Range Planning. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โJโ.โLโRโPโ.โ2โ0โ1โ8โ.โ1โ2โ.โ001 |
---|---|
4 | Rogers, D., & Euchner, J. (2022). Digital Transformation. Research-Technology Management, 65, 11โโโ17. https://โdoiโ.org/โ1โ0โ.โ1โ0โ8โ0โ/โ0โ8โ9โ5โ6โ3โ0โ8โ.โ2โ0โ2โ2โ.โ2โ0โ9โ5โ759 |
5, 6 | Yaqub, M., & Alsabban, A. (2023). Industryโ4.0โEnabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. https://โdoiโ.org/โ1โ0โ.โ3โ3โ9โ0โ/โsโuโ1โ5โ1โ1โ8โ553 |
7 | Hanelt, A., Bohnsack, R., Marz, D., & Antunes, C. (2020). A Systematic Review of the Literature on Digital Transformation: Insights and Implications for Strategy and Organizational Change. Journal of Management Studies. https://โdoiโ.org/โ1โ0โ.โ1โ1โ1โ1โ/โJโOโMโSโ.โ1โ2โ639 |
9 | Vial, G. (2019). Understanding digitยญal transยญformยญaยญtion: A review and a research agenda. J. Strateg. Inf. Syst., 28, 118โโโ144. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โJโ.โJโSโIโSโ.โ2โ0โ1โ9โ.โ0โ1โ.โ003 |
11, 14 | Schneider, S., & Kokshagina, O. (2021). Digital transยญformยญaยญtion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://โdoiโ.org/โ1โ0โ.โ1โ1โ1โ1โ/โCโAโIโMโ.โ1โ2โ414 |
12 | Gong, C., & Ribiรจre, V. (2021). Developing a uniยญfied definยญiยญtion of digitยญal transยญformยญaยญtion. Technovation, 102, 102217. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โjโ.โtโeโcโhโnโoโvโaโtโiโoโnโ.โ2โ0โ2โ0โ.โ1โ0โ2โ217 |
13 | Mergel, I., Edelmann, N., & Haug, N. (2019). Defining digitยญal transยญformยญaยญtion: Results from expert interยญviews. Gov. Inf. Q., 36. https://โdoiโ.org/โ1โ0โ.โ1โ0โ1โ6โ/โJโ.โGโIโQโ.โ2โ0โ1โ9โ.โ0โ6โ.โ002 |