Stages of Transition in Becoming a Digital Organization

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Click to learn more about author Deborah Soule.

This is the second part in a series of articles on digital transformation. Read Part One titled Where is Your Organization on the Digital Transformation Journey?

There are few truly digital organizations, but there are many organizations in the process of becoming digital. Many companies struggle with this process. Thus, while the end-state is important, it is interesting and useful to understand the transition to “becoming digital.”

From research with a variety of organizations, we identified distinct stages in the process of becoming digital. This characterization of different stages of digital transition can help practitioners make sense of their experiences and understand that their challenges and difficulties are not unusual, but an inevitable part of the journey.

Stage 1: Early Transition – Marked by Inconsistencies Among Mindsets, Practices and Resources

Organizations early in their digital transitions are just starting to grapple with the possibilities and opportunities of digital solutions. Initially, this change can seem threatening and people are not yet fully committed to move forward with the necessary effort.

Often the impetus for change is external, coming from new customer expectations or new competition in the field. Employees may recognize the need to adapt to these external changes, but they may also feel overwhelmed by the gap between the skills they have and the skills they need. Sometimes, existing internal structures hamper efforts to adapt organizational practices to meet new client expectations. It also can be disconcerting to discover that certain practices and ways of working, which served the organization well in the past, are now misaligned with current values and hinder present efforts.

Often, technology to support new client expectations is still lacking or new to the organization. In addition, making commitments to technologies that are still evolving rapidly can seem too risky.

At this stage, an organization’s experience of becoming digital may be marked by dissonance, inconsistency, and uncertainty. Digital-driven change is still seen as a threat. Despite their efforts, employees and groups are not ready to seize digital opportunities fluidly and effectively.

Stage 2: Later Transition – Marked by More Alignment of Mindsets, Practices, and Resources but Inconsistencies Remain

Organizations further in their transition are progressing toward building digital mindsets and practices and supporting cognitive and behavioral changes with appropriate resources. Now, thinking about digital change becomes more aspirational, reflecting a view of digital as a source of opportunity rather than risk or threat. People are less concerned about uncertainty around technology and their digital tools. Instead, they place more value on learning, experimentation, and innovation.

By this stage, an organization uses its digital technologies to inform operational improvements, enable faster, more fluid problem-solving, and to share knowl­edge discovery across boundaries – especially in service of solving customer issues. Both behavioral practices and organizational structures shift to align with the ability to communicate and exchange information fluidly and flexibly.

Stage 3: On the Threshold of Digital Mastery – Benefitting from Highly Aligned Digital Mindsets, Practices, and Resources

Organizations on the threshold of digital mastery benefit from the full alignment of digital resources, practices, and mindsets. A digital-first mindset prevails, and a robust digital platform has become the foundation for all business processes. Important and well-established practices include agile experimentation, using both manual and digital tools, and collaboration with internal and external resources to take quick advantage of new business opportunities. Systematic data analysis routinely precedes important decisions.

Organizational structures are fluid and complemented by an appreciation for boundary crossing and community building among customers, employees, partners, and other members of the organization’s digital ecosystem. Despite an intense focus on speed and scale, the value of uniquely human expertise is still recognized, and integrity remains an important pillar of the human side of the organization. In addition, information transparency drives further consistency in the attitudes, values and behaviors towards all the organization’s stakeholders.

At this stage of transition, an organization’s digital mastery is evident in its dexterity, flexibility, fluidity, and self-awareness as it responds to digital opportunities. At the same time, it remains mindful that becoming digital is an ongoing journey.

The path from traditional to digital modes of organizing is typically not intuitive to organizational leaders steeped in the more control-oriented practices of bureaucratic firms.

As a leader at any level of an organization, recognize that you’re not alone in experiencing uncertainty, inconsistency, or dissonance in your digital journey. This is not a linear process. Diagnose where you are on your digital journey and decide on logical next steps as you attempt to transform your organization to operate effectively in an intensively digital (and digitized) world.

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