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Let’s Understand the Various Stages of Digital Transformation

Every industry will  have to transform itself, for what’s “coming at us is bigger than the original internet,” and companies “need to understand it, get on board with it and figure out how to transform [their] businesses,” says Tim O’Reilly, Founder and CEO, O’Reilly Media.

Indeed, digital transformation has been a buzzword since 2019. And currently, in the post-pandemic era, it’s garnering even more attention from all organizational facets — culture, innovation, and management. 

Technology has transformed most businesses by bringing them online. However, not all companies are confident or aware of their current state and what goes into achieving a true state of digital transformation. This leads to delayed growth and acts detrimental to otherwise being a part of the digital disruption bandwagon. 

A lot of questions usually arise when businesses contemplate digital transformation. Does digital transformation involve automation alone, or is it a cultural change? How do we get on board and make the cut?

Therefore, the aim here is to help businesses understand their digital transformation journey better and to help them get a hold of driving more business value. As such, the article explains the five stages of digital transformation every company goes through or lies in. These include

  • Stage 1: The Foundation 
  • Stage 2: The Siloed 
  • Stage 3: Partially Synchronized Transformation
  • Stage 4: Fully Synchronized and Strategic Transformation
  • Stage 5: Living DNA

The 5 Stages of Digital Transformation

These five stages help business leaders form a clear understanding of where their organization lies and what can be done to hop on to the subsequent stages.

Stage 1: The Foundation

In this stage, the organization has not transformed much but has started exploring digitization by automating its internal processes. Automation is key to accelerating digital transformation.

Although both the terms – digitization and automation are used interchangeably, they are still different. With automation, you bring in efficiency by freeing tedious manual tasks, thus increasing the organization’s overall productivity — more productivity results in more time for future transformation activities. 

Stage 2: The Siloed 

For stage 2, organizations may have started using advanced technologies in a few areas by learning about their viability and observing the competition leverage them. But the truth is, there is still a lack of a solid plan in place, causing the operational processes to be siloed.

When there is no transformation strategy driving sufficient value, the organization is still stuck in silos even while using new technological interventions or upgrading its business models.

Stage 3: Partially Synchronized Transformation

This stage is where the CEO or the founder has stepped in. They have an understanding of the power of digital technologies and have defined the business goal for transformation. 

But the organization has not yet reached an agile state or a continuous innovation mindset on the whole. They are yet to define a concrete approach to executing a step-by-step transformation plan. Such a partial approach to transformation is the most common cause of businesses failing midway through their digitization journeys.

Stage 4: Fully Synchronized and Strategic Transformation

The fourth stage calls for more business and technology restructuring for long-term success. In this stage, businesses have reached a safe point by implementing an organization-wide digital platform, a technology, or a particular business model. 

Also, there’s enough strategic growth in the business as they have worked their way around avoiding potential bottlenecks and pushed for more collaborative efforts.

But these efforts do not suffice. Why is that so? Because any one-time change in the organization is still not a promising approach to surviving disruption in the long run. Digital transformation is a journey and certainly not a destination. And this brings us to the final stage – making digital transformation the living DNA of the business.

Stage 5: Living DNA

Businesses that reached this stage have imbibed digital transformation into their very DNA. They have made continuous innovation, learning, and mindset shifts a part of their transformation culture. All in all, they are in it for the long term.

In this stage, they start to see the desired results of their transformation efforts and are resilient to future disruptions. They are up-to-date with technology trends and proactive in their approach to identifying and solving issues along the way. Therefore, businesses that have reached this stage are termed successful and are leaders of the trend.

The Path Forward

Digital transformation is difficult. And it’s even more challenging when businesses are clueless about staying resilient in the face of disruption. To that end, setting clear goals and learning from past outcomes in every stage outlined above is one way to start on the right note. 
So, although it might be hard, it is not impossible. Talk to a professional today to identify the perfect transformation path for your business and to be equipped for the digital road ahead.

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