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The Digital Transformation Hierarchy

A series of stages, each building on the last.

Jerry Silfwer
by Jerry Silfwer

Cover photo: @jerrysilfwer

tl:dr;
Digital transformation requires a systematic approach, with a hierarchy that prioritises digital literacy and readiness across an organisation. This foundation supports the adoption of new tools, processes, and, ultimately, a culture that embraces innovation and adaptability.

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There are five stages of the digit­al trans­form­a­tion hierarchy.

Digital trans­form­a­tion is a worthy under­tak­ing for any busi­ness hop­ing to thrive in the 21st-cen­tury online cacophony.

It’s not just about stay­ing alive in the digit­al space — it’s about thriv­ing, lead­ing, and trans­form­ing the industry around you. The digit­al trans­form­a­tion jour­ney isn’t a straight line — it’s a series of stages, each build­ing on the last.

Here we go:

The Digital Transformation Hierarchy

Drawing inspir­a­tion from Maslow’s hier­archy of needs, I’ve broken down the pur­suit of digit­al matur­ity into five dis­tinct stages. 

The digital transformation hierarchy.
The digit­al trans­form­a­tion hierarchy.

Just as humans start by meet­ing basic needs and pro­gress towards self-ful­fil­ment, busi­nesses must meet found­a­tion­al digit­al needs before reach­ing their full digit­al potential.

The 5 Stages of Digital Transformation

The trans­form­a­tion starts with the basic needs and works towards industry lead­er­ship and innovation.

  • Stage 1: Foundation /​ Structure & Security.
  • Stage 2: Stability /​ Operational Development.
  • Stage 3: Engagement /​ Content & Community.
  • Stage 4: Differentiation /​ Datadriven Adaptations.
  • Stage 5: Innovation /​ Industry Leadership.

Assess where you cur­rently stand on this path and use it as a guide to move forward. 

About Digital Transformation

“Digital trans­form­a­tion is an ongo­ing pro­cess using new digit­al tech­no­lo­gies, with agil­ity as the core mech­an­ism for stra­tegic renew­al of an organ­iz­a­tion’s busi­ness mod­el, col­lab­or­at­ive approach, and cul­ture.“
Source: Long Range Planning 1Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​L​R​P​.​2​0​1​8​.​1​2​.​001

Learn more: The Digital Transformation Hierarchy

Stage 1: Foundation /​ Structure & Security

Every jour­ney starts with the basics. 

Businesses that have been around for a while all have a digit­al pres­ence already, but it’s nev­er too late to ensure it’s robust and secure enough to meet today’s challenges. 

This stage is the digit­al equi­val­ent of secur­ing food, water, and shel­ter — ensur­ing your busi­ness can thrive in a com­pet­it­ive online environment.

Examples of needs:
  • Website. It’s not just about hav­ing a web­site; it’s about main­tain­ing a fast, pro­fes­sion­al, and eas­ily man­age­able one. Optimise your land­ing pages, pri­or­it­ise a clean user exper­i­ence, and ensure your site is access­ible and com­pli­ant with cur­rent stand­ards. A slow or inac­cess­ible web­site is like lock­ing your shop’s front door and won­der­ing why cus­tom­ers aren’t show­ing up or converting.
  • Domain. Your domain might be estab­lished, but are you man­aging it effect­ively? Ensure your domain is secure, adja­cent domain names are con­trolled, and host­ing is fast and reliable.
  • Email list. Many busi­nesses have email lists, but are you mak­ing the most of yours? Refine your tag­ging, set up advanced autorespon­ders, and ensure your com­pli­ance meas­ures are current.
  • Social media. Having social pro­files is one thing, but are they optim­ised? Develop a cohes­ive brand voice, sched­ule posts con­sist­ently, and lever­age ana­lyt­ics to meas­ure engage­ment and refine strategies.
  • Cybersecurity: As threats evolve, so should your defences. Revisit your cyber­se­cur­ity meas­ures — guard against DDOS attacks, ensure reg­u­lar data backups and bol­ster your sys­tems to pre­vent new threats.

Stage 2: Stability /​ Operational Development

Now that you’re sur­viv­ing, it’s time to sta­bil­ise and optim­ise intern­al oper­a­tions. Chances are, you already have some sys­tems in place, but how can they be upgraded to ensure you’re run­ning like a well-oiled machine? Digital sta­bil­ity is about improv­ing effi­ciency and elim­in­at­ing out­dated or inef­fi­cient processes.

Examples of needs:
  • Productivity tools. You may already be using tools like Slack or Trello, but take a step back — are they fully integ­rated? Ensure these tools are stream­lined and con­figured to elim­in­ate unne­ces­sary manu­al tasks and improve over­all communication.
  • Automation. You might have auto­mated some tasks, but now it’s time to go fur­ther. Expand auto­ma­tion to more areas — invoice pro­cessing, lead nur­tur­ing, social media schedul­ing — and elim­in­ate human error wherever possible.
  • Data man­age­ment. Review how you man­age your data. Centralised, cloud-based stor­age should be optim­ised for easy access and secur­ity. Eliminate redund­an­cies and improve data organ­isa­tion to make find­ing what you need hassle-free.
  • Workflow optim­isa­tion. Don’t just main­tain work­flows — optim­ise them. Remove bot­tle­necks and ensure your team has the tools to oper­ate seamlessly.
  • Basic ana­lyt­ics. If you’re track­ing basic met­rics, ensure they’re the right ones. Refine what you meas­ure to focus on KPIs that genu­inely reflect oper­a­tion­al efficiency.

Stage 3: Engagement /​ Content & Community

Your oper­a­tions are stable; it’s time to re-engage with your audi­ence and build deep­er rela­tion­ships. You likely have a digit­al pres­ence, but more must be done to ensure you con­nect mean­ing­fully with your community.

Examples of needs:
  • Social media engage­ment. You’re already on social media, but are you enga­ging? Interact with your audi­ence bey­ond just post­ing — reply to com­ments, ini­ti­ate con­ver­sa­tions, and make your pres­ence genu­inely felt.
  • Content mar­ket­ing. Content is crit­ic­al. Expand bey­ond the basics and invest in high-qual­ity con­tent that res­on­ates. Develop thought lead­er­ship pieces, video con­tent, and inter­act­ive ele­ments that bring cus­tom­ers closer.
  • Customer rela­tion­ship man­age­ment (CRM). You prob­ably have a CRM in place, but is it util­ised effect­ively? Ensure your CRM is integ­rated across all touch­points for a 360-degree view of the cus­tom­er journey.
  • Website optim­isa­tion. Your web­sites and apps should be easy to nav­ig­ate and delight­ful. Conduct reg­u­lar audits to improve user exper­i­ence, reduce fric­tion points, and provide value at every click.
  • Email cam­paigns. If you’re send­ing emails, ensure they’re tar­geted. Segment your lists based on updated data and deliv­er per­son­al­ised con­tent that speaks dir­ectly to each customer’s needs.

Stage 4: Differentiation /​ Datadriven Adaptions

You’ve got the basics down, but now you must stand out. Differentiation is what will elev­ate your brand above com­pet­it­ors. You may have data insights and per­son­al­isa­tion tools, but are they being used to their fullest potential?

Examples of needs:
  • Advanced data ana­lyt­ics. Go deep­er with your data. Use advanced ana­lyt­ics to uncov­er pat­terns that can drive strategy, not just ret­ro­spect­ive reports. Tools like cus­tom­er beha­viour heat­maps and pre­dict­ive mod­els can help you stay ahead of your cus­tom­ers’ expectations.
  • Personalisation strategies. You’re per­son­al­ising emails — great. Now, extend that to your entire digit­al pres­ence. Tailor con­tent, offers, and recom­mend­a­tions across all chan­nels to reflect each individual’s pref­er­ences and behaviours.
  • Customer jour­ney map­ping. Ensure every inter­ac­tion is accoun­ted for. Review your exist­ing cus­tom­er jour­ney maps and update them to reflect chan­ging beha­viours. Identify fric­tion points and find ways to sur­prise and delight.
  • Loyalty pro­grammes. Go bey­ond the basics of reward­ing repeat cus­tom­ers. Create loy­alty exper­i­ences that feel exclus­ive — per­son­al touches, early access, spe­cial rewards — that help deep­en the emo­tion­al con­nec­tion with your brand.
  • A/​B test­ing. Experimentation shouldn’t be occa­sion­al. Develop a cul­ture of con­stant test­ing — refine every part of your digit­al exper­i­ence, from land­ing pages to email sub­ject lines, through sys­tem­at­ic A/​B testing.

Stage 5: Innovation /​ Industry Leadership

The final stage isn’t just about sur­viv­al or optim­isa­tion but trans­form­a­tion. If your busi­ness has been around for a while, it’s time to lever­age all you’ve built to become an industry lead­er. Innovate, dis­rupt, and lead the charge.

Examples of needs:
  • AI/​ML integ­ra­tion. You may already be dab­bling in AI and ML, but con­sider expand­ing those efforts. AI can not only auto­mate but also pre­dict and per­son­al­ise at a level bey­ond human cap­ab­il­it­ies — use it to drive stra­tegic initiatives.
  • Digital innov­a­tion: Don’t rest on your laurels. Continuously innov­ate your offer­ings — launch digit­al products that meet evolving mar­ket demands and incor­por­ate digit­al ele­ments into your phys­ic­al products.
  • Industry lead­er­ship. If you’ve fol­lowed the mar­ket, it’s time to lead it. Become a thought lead­er by con­trib­ut­ing to industry dis­cus­sions, pub­lish­ing insights, and stay­ing on top of trends.
  • Culture of innov­a­tion: It’s time to foster an innov­at­ive cul­ture. Create spaces for cre­ativ­ity, cel­eb­rate risk-tak­ing, and encour­age your team to think out­side the box — make innov­a­tion part of the com­pany’s DNA.
  • Strategic part­ner­ships. Don’t do it alone. Form alli­ances with oth­er for­ward-think­ing organ­isa­tions — lever­age part­ner­ships to co-cre­ate and bring cut­ting-edge solu­tions to market.

Digital Transformation

Digital trans­form­a­tion is a mul­ti­fa­ceted pro­cess driv­en by advanced digit­al tech­no­lo­gies requir­ing sig­ni­fic­ant organ­isa­tion­al change and adapt­a­tion. Despite the pro­gress, organ­isa­tions face numer­ous chal­lenges, par­tic­u­larly at the ini­tial stages of transformation.

Digital transformation is a challenge for organisations.
Digital trans­form­a­tion is a chal­lenge for organisations.

“Digital trans­form­a­tion is an ongo­ing pro­cess using new digit­al tech­no­lo­gies, with agil­ity as the core mech­an­ism for stra­tegic renew­al of an organ­iz­a­tion’s busi­ness mod­el, col­lab­or­at­ive approach, and cul­ture.“
Source: Long Range Planning 2Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​L​R​P​.​2​0​1​8​.​1​2​.​001

Technological Drivers and Enablers

Digital tech­no­lo­gies such as mobile, AI, cloud, block­chain, and IoT (to name a few) can enable sig­ni­fic­ant busi­ness improve­ments, enhan­cing cus­tom­er exper­i­ence, stream­lin­ing oper­a­tions, and cre­at­ing new busi­ness mod­els. 3Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. â€¦ Continue read­ing 4Rogers, D., & Euchner, J. (2022). Digital Transformation. Research-Technology Management, 65, 11 — 17. https://​doi​.org/​1​0​.​1​0​8​0​/​0​8​9​5​6​3​0​8​.​2​0​2​2​.​2​0​9​5​759 5Yaqub, M., & Alsabban, A. (2023). Industry‑4.0‑Enabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. â€¦ Continue read­ing

Industry 4.0 tech­no­lo­gies are key drivers of digit­al trans­form­a­tion, enhan­cing com­pet­it­ive­ness through envir­on­ment­al and social sus­tain­ab­il­ity, cor­por­ate growth, and sup­ply chain integ­ra­tion. 6Yaqub, M., & Alsabban, A. (2023). Industry‑4.0‑Enabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. â€¦ Continue read­ing

Organizational Adaptation and Change

Digital trans­form­a­tion moves organ­isa­tions towards flex­ible designs that enable con­tinu­ous adapt­a­tion, driv­en by digit­al busi­ness eco­sys­tems. 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 â€¦ Continue read­ing

It is an ongo­ing pro­cess requir­ing agil­ity for stra­tegic renew­al of busi­ness mod­els, col­lab­or­at­ive approaches, and organ­iz­a­tion­al cul­ture. 8Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. â€¦ Continue read­ing

Strategic Responses and Dynamic Capabilities

Organizations must devel­op dynam­ic cap­ab­il­it­ies to man­age the dis­rup­tions caused by digit­al tech­no­lo­gies and alter their value cre­ation paths. 9Vial, G. (2019). Understanding digit­al trans­form­a­tion: A review and a research agenda. J. Strateg. Inf. Syst., 28, 118 – 144. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​J​S​I​S​.​2​0​1​9​.​0​1​.​003

Building dynam­ic cap­ab­il­it­ies involves recog­niz­ing and respond­ing to trig­gers, enabling factors, and bar­ri­ers with­in the organ­iz­a­tion. 10Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. â€¦ Continue read­ing

Challenges and Managerial Implications

Firms face sig­ni­fic­ant chal­lenges at the begin­ning of their digit­al trans­form­a­tion efforts, includ­ing cul­tur­al res­ist­ance and the need for new mana­geri­al guid­ance. 11Schneider, S., & Kokshagina, O. (2021). Digital trans­form­a­tion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://​doi​.org/​1​0​.​1​1​1​1​/​C​A​I​M​.​1​2​414

There is a need for a uni­fied defin­i­tion of digit­al trans­form­a­tion to provide con­cep­tu­al rig­or and guide both research­ers and prac­ti­tion­ers. 12Gong, C., & Ribière, V. (2021). Developing a uni­fied defin­i­tion of digit­al trans­form­a­tion. Technovation, 102, 102217. https://​doi​.org/​1​0​.​1​0​1​6​/​j​.​t​e​c​h​n​o​v​a​t​i​o​n​.​2​0​2​0​.​1​0​2​217 13Mergel, I., Edelmann, N., & Haug, N. (2019). Defining digit­al trans­form­a­tion: Results from expert inter­views. Gov. Inf. Q., 36. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​G​I​Q​.​2​0​1​9​.​0​6​.​002

Future Research Directions

There is a call for more prac­tice-ori­ented research to address the remain­ing chal­lenges and explore new themes in digit­al transformation.

Future research should focus on examin­ing the role of dynam­ic cap­ab­il­it­ies and eth­ic­al issues in digit­al trans­form­a­tion. 14Schneider, S., & Kokshagina, O. (2021). Digital trans­form­a­tion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://​doi​.org/​1​0​.​1​1​1​1​/​C​A​I​M​.​1​2​414

Learn more: Digital Transformation: Overview

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Annotations
Annotations
1, 2 Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​L​R​P​.​2​0​1​8​.​1​2​.​001
3, 8, 10 Warner, K., & Wäger, M. (2019). Building dynam­ic cap­ab­il­it­ies for digit­al trans­form­a­tion: An ongo­ing pro­cess of stra­tegic renew­al. Long Range Planning. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​L​R​P​.​2​0​1​8​.​1​2​.​001
4 Rogers, D., & Euchner, J. (2022). Digital Transformation. Research-Technology Management, 65, 11 — 17. https://​doi​.org/​1​0​.​1​0​8​0​/​0​8​9​5​6​3​0​8​.​2​0​2​2​.​2​0​9​5​759
5, 6 Yaqub, M., & Alsabban, A. (2023). Industry‑4.0‑Enabled Digital Transformation: Prospects, Instruments, Challenges, and Implications for Business Strategies. Sustainability. https://​doi​.org/​1​0​.​3​3​9​0​/​s​u​1​5​1​1​8​553
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://​doi​.org/​1​0​.​1​1​1​1​/​J​O​M​S​.​1​2​639
9 Vial, G. (2019). Understanding digit­al trans­form­a­tion: A review and a research agenda. J. Strateg. Inf. Syst., 28, 118 – 144. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​J​S​I​S​.​2​0​1​9​.​0​1​.​003
11, 14 Schneider, S., & Kokshagina, O. (2021). Digital trans­form­a­tion: What we have learned (thus far) and what is next. Creativity and Innovation Management. https://​doi​.org/​1​0​.​1​1​1​1​/​C​A​I​M​.​1​2​414
12 Gong, C., & Ribière, V. (2021). Developing a uni­fied defin­i­tion of digit­al trans­form­a­tion. Technovation, 102, 102217. https://​doi​.org/​1​0​.​1​0​1​6​/​j​.​t​e​c​h​n​o​v​a​t​i​o​n​.​2​0​2​0​.​1​0​2​217
13 Mergel, I., Edelmann, N., & Haug, N. (2019). Defining digit­al trans­form­a­tion: Results from expert inter­views. Gov. Inf. Q., 36. https://​doi​.org/​1​0​.​1​0​1​6​/​J​.​G​I​Q​.​2​0​1​9​.​0​6​.​002
Jerry Silfwer
Jerry Silfwerhttps://doctorspin.net/
Jerry Silfwer, alias Doctor Spin, is an awarded senior adviser specialising in public relations and digital strategy. Currently CEO at Spin Factory and KIX Communication Index. Before that, he worked at Whispr Group NYC, Springtime PR, and Spotlight PR. Based in Stockholm, Sweden.

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