For companies faced with the prospect of “Digital Darwinism,” the hardest part is evaluating what needs to be changed first. In this research report, we’ve created a maturity model that helps companies assess exactly where they are, and where they need to be on the road to digital transformation.

After several years of interviewing those helping to drive digital transformation, we have identified a series of patterns, components, and processes that form a strong foundation for change. We have organized these elements into six distinct stages:

• Business as Usual
• Present and Active
• Formalized
• Strategic
• Converged
• Innovative and Adaptive

Collectively, these phases serve as a digital maturity blueprint to guide purposeful and advantageous digital transformation. Our research of digital transformation is centered on the digital customer experience (DCX) and thus reflects one of many paths toward change. We found that DCX was an important catalyst in driving the evolution of business, in addition to technology and other market factors.

This report introduces each of the six stages as a self-contained phase, offering a narrative and a checklist to guide your journey. While presented in a linear format, our research shows that companies may span multiple stages at once depending on their goals, resources, and overlapping initiatives. Use this framework to validate, benchmark, and map your company’s progress toward digital literacy and leadership, but know that you may find yourself revisiting and overlapping stages throughout program and strategy deployment.

To make this more actionable, we’ve identified six key elements within the organization that must undergo a simultaneous transformation, Analytics, Customer Experience, Governance and Leadership, People and Operations, Technology Integration, Digital Literacy.

By examining the progression of transformation for each of these elements separately, the framework makes it easy for individual stakeholders within the company to focus only on the areas they are managing. For example, a COO could focus on People and Operations, while the CTO can focus on technology, with the CIO focusing on Digital Literacy. By laying out the plan for each department, it becomes much more manageable for a company to execute smaller plans that service the digital transformation effort as a whole.

“The one constant of change is that it’s always for someone else…except it’s not.”

Today’s customers demand to be recognized across every channel, whether online or offline. They don’t care about which part of the company they are dealing with, to them, there’s only one brand.

Yet, companies continue to give customers a disconnected experience, with sales, service and marketing each working to engage the audience on their own, without coordinating their efforts. It makes customers frustrated, disengaged and disloyal; in fact, one survey found that one-third of Americans consider switching companies after just one poor experience.

“The convergence of technology and behavior is only accelerating, and the butterfly effect it causes is transformative and disruptive.”

The convergence of technology and behavior is only accelerating, and the butterfly effect it causes is transformative and disruptive. Markets are shifting to such an extent that they open the door to innovation with new products, services and ways of doing business becoming the norm as a result.

All of this is (and has been) playing out at the expense or demise of those who continue down a path of business as usual. The need to change is no longer something for everyone else; it is the first step toward one of the most important movements in business evolution today… digital transformation.

Leading Digital Transformation

At Altimeter, a Prophet Company, I have led several research studies on digital transformation. As part of this work, we’ve interviewed many executives who are leading transformation to document the challenges they face, the opportunities they uncover and more so, what it is they do to navigate the complexities of uncertainty, bureaucracy, politics, skepticism, fear, etc., to make progress.

Along the way, we’ve observed a series of patterns that help executives make the case for change, earn support and take the little (and sometimes big) steps that lead to digital transformation.

8 Factors for Successful Digital Transformation

Change always starts with one step and more often than not, I found that zeroing in on the digital customer experience uncovers areas of immediate opportunities to learn, experiment and eliminate existing hurdles and points of friction in the customer journey.

Altimeter’s  “OPPOSITE” framework is an acronym that represents the best practices guiding transformation efforts around the digital customer experience

1. Orientation

Establish a new perspective to drive meaningful change. If your organization is built on the “inside out” model, meaning that it is organized around your internal processes and functions, update to focus on customer needs, wants and priorities

2. People

Understand customer values, expectations and behaviors. This requires digital transformation buy-in at all levels— all employees and leadership— so that the entire organization is aligned with digital goals and strategies.

3. Processes

Assess operational infrastructure and update (or revamp) technologies, processes and policies to support change. Start with the contact center, which is a key platform for delivering great customer experiences, and make it collaborative, unified, and intelligent

4. Objectives

Define the purpose of digital transformation, aligning stakeholders (and shareholders) around the new vision and roadmap. Set goals for your digital transformation— what specific areas do you hope to improve through digital? What kind of metrics are you hoping to achieve? Setting quantifiable KPIs can help ensure that you meet your digital transformation objectives.

5. Structure

Form a dedicated digital experience team with roles/responsibilities/objectives/accountability clearly defined. Ensure the entire team is aware of objectives and processes so that you are centered on purpose.

6. Insights & Intent

Gather data and apply insights toward a strategy to guide digital evolution. Data can help you streamline experiences across customer journeys, no matter how they interact with your brand. Data can also help you evaluate the results— brand relevance, increased revenue, and more— of your digital transformation

7. Technology

Re-evaluate front and back-end systems for seamless, integrated and native customer experiences and, ultimately, employee experiences. Use technology to promote trustworthiness and meet ever-increasing customer expectations. Ensure your content and communications are platform-proof so that algorithm changes do not interfere with customer experiences

8. Execution

Implement, learn and adapt to steer ongoing digital transformation and customer experience work. Evaluate the state of your transformation frequently so you can make adjustments if necessary.

When planning and implementing a digital transformation strategy, keeping “OPPOSITE” in mind can help your organization be successful.

Mainstream, established businesses have reached a digital tipping point. After decades of exploiting information technologies to improve the efficiency of their operations and amplify their communications, they must now shift their focus to digital to deliver greater customer value. Leaders face a stark choice: transform digitally on behalf of customers, or risk being abandoned by them for digitally enabled competitors, disruptive market entrants or new digital business innovations.

Digital transformation requires urgent and fundamental change. Success depends on elevating products and services into digitally enabled solutions and customer interactions into engaging, customer-centric experiences. The companies who have done so are reaping the rewards. A recent study by the Massachusetts Institute of Technology and Accenture reports that companies who reach a higher level of digital maturity are 26% more profitable, grow 9% faster and achieve 12% higher market valuations than their industry peers.

But leaders are struggling to chart a clear digital transformation path and execute it effectively. Most report that their digital investments have disappointed on the bottom line. Sure, they note some successes—a great app here that attracts new users or better data that helps to customize products. But the kind of digital transformation that unleashes new value for the customer? That’s not common.

There are plenty of reasons why companies find moving past the digital tipping point to unleash customer value is slow and difficult. For one, many companies start by delegating too many decisions to digital agencies that may be great at technology but lack customer insight. Or they work with management consultancies whose extensive industry expertise can blind them to breakthrough innovation opportunities on behalf of customers. Too often, the pursuit of digital transformation is not strategic as experts, pundits and agencies act like proverbial kids in a candy store, chasing the next digital fad without a view of what customers need most.

We’ve found that the companies that leverage digital to strengthen their bonds with customers and unlock new sources of growth share five imperatives:

Put Customers Before Technology

When customer insight guides technology, market adoption is faster, margins are greater and the impact on growth is more substantial. Companies must look past the shiny new technology toys to focus on what matters most – insights about customer needs. What are their perceptions? Motivations? Pain points and daily hassles? Harnessing their problems and desires to develop digital solutions and experiences is crucial to being more relevant to customers.

Scholastic, the world’s largest publisher and distributor of children’s books, knew it faced increasing competition as more parents shopped through Amazon and children engaged in new media. But it needed a solution that was bigger than just another e-reader. Scholastic partnered with Prophet to find an innovative solution that would be compelling to children, trusted by parents and teachers, and differentiated in the market. The result was an interactive tool called Storia that helps parents and children navigate the world of children’s literature, specifically focusing on a child’s reading level.

Shift the Organization

Leaders can tackle the greatest barrier to digital progress, organization inertia, by arming themselves with the understanding that digital transformation requires embedding new methods and mindsets. In a world where culture eats strategy for lunch, failure to build an organization’s ability to move faster, flexibly, collaboratively, and with more risk-taking is the chief pitfall to avoid in transformation efforts. A digital mindset requires thinking like an entrepreneur while leveraging the assets of an established firm. When companies build digital capabilities, digital becomes a core part of how work gets done. And of course, that positions them to better serve the customer.

Electrolux, a global leader in household and professional appliances, realized it needed a digital transformation if it was to leapfrog the competition and create engaging branded shopper experiences. And that required crafting a culture of experience innovation. Prophet partnered with the CMO and CEO to develop digital executive leadership across the organization, to create digital education summits across the globe and ultimately to create a governance model to drive digital transformation. Together, we developed a new way of working and empowered the entire organization to create differentiating and impactful digital experiences for customers.

Think Strategic, Act Bold

Building urgency is crucial to success but only if it leads toward a destination around more valuable customer relationships. Leaders must chart a path that defines the customer growth opportunities to pursue, the digital moves to make and the tools required to support these efforts. Sequencing the transformation and developing the right pace of digital innovation is a difficult challenge that can only succeed through clear strategic direction combined with a bias for action.

“Building urgency is crucial to success but only if it leads toward a destination around more valuable customer relationships.”

Monsanto knew it needed to transition from being product-focused to customer-centric and turned to Prophet to develop a new grower-focused approach. A robust customer segmentation revealed new opportunities to deliver differentiated value to growers, primarily through tools that would enable farm productivity. Monsanto started to deliver value beyond the product by pairing growers with Monsanto agronomists who provide customized advice for increasing yield. Today, customer-centricity as at the center of the company’s growth strategy, and can be seen through examples like the recent acquisition of a weather company – Climate Corporation – that will use weather data to help farmers optimize productivity.

Start Now, Improve

Transformation cannot wait. Digital moves too fast and is too complex to work on ten-year plans or monolithic, pie-in-the-sky customer engagement platforms. Rapid innovation based on frequent trial, measurement and refinement has proven time and again to work best. A customer-inspired digital strategy puts technology in its proper place, treating tech as a tool to better serve customers, not as an end in itself. When launching and then enhancing MVPs (Minimum Viable Products) becomes standard operating procedure, companies know they are on the right track. Seamlessness is crucial. Every innovation cannot come at the cost of replacing everything a customer already values. When new ways of providing value are integrated with what already works well, customers adopt more rapidly and are far more likely to be satisfied with the end results.

Schneider Electric, a B2B company is transforming to change the way it works throughout its complicated, multi-layered value chain. By providing tools and mechanisms for understanding new customer groups, Prophet is helping Schneider Electric drive demand with electrical contractors and facility managers, while also enabling traditional channel partners with better tools for delivery. Today, customized online portals and mobile tools are enabling contractors around the world to make smarter project decisions, while end customers are empowered to better monitor energy usage through a dashboard called Building Insights.

Measure What Matters

Measures matter when they drive improvements to digital transformation. The key is to link business impact to the work digital investments undertake. Without a clear connection, leaders scale up winners and eliminate losers far too late or never at all. When companies understand the relationships between customer behavior, the motivations that underlie behavior and the impact of behavior on the business, they can rapidly accelerate the pace of digitally enabled growth. In a digital world, it is possible to measure almost everything. So focusing on what really matters and taking action to address what the measures reveal becomes the job of everyone in the company.

For Charles Schwab, determining the most important metrics has been critical. With investors increasingly relying on digital and mobile for both financial transactions and information about investment decisions, it’s created a range of content and digital tools. And it tracks them for engagement and conversion across different channels and investor segments. Thanks to this commitment to its customers and its “Own your tomorrow” positioning, Schwab is earning record sales and profits and outpacing its competitors.

If you think social was disruptive, it was really just the beginning. Altimeter’s research team recently convened for our annual research offsite and found over 30 disruptions and 15 trends that have emerged. These disruptions and trends will affect consumers, business, government, the global economy; with accelerating speed, frequency and impact.

Four Major Business Disruptions Emerge – Business Leaders Must Prepare.

Out of these disruptions and trends, Altimeter identified four major themes that will be disruptive to business. Below is a preview of Altimeter’s four business disruption themes, with a definition and short description of each. In the coming weeks, we’ll publish a short report explaining these themes in more detail.

Everything Digital: An increasingly digital landscape – including data, devices, platforms and experiences – that will envelop consumers and businesses.

Everything Digital is the increasingly digital environment that depends on an evolving ecosystem of interoperable data, devices, platforms – experienced by people and business. It’s larger than the scope of Internet of Things, as it’s pervasive or ambient – not defined only by networked sensors and objects, but including capabilities such as airborne power grids or wireless power everywhere. Everything Digital serves as the backdrop for our next three themes.

Me-cosystem: The ecosystem that revolves around “me,” our data, and technologies that will deliver more relevant, useful, and engaging experiences using our data.

Wearable devices, near-field communications, or gesture-based recognition are just a few of the technologies that will make up an organic user interface for our lives, not just a single digital touchpoint. Digital experiences will be multiplied by new screen types, and virtual or augmented reality. Individuals who participate will benefit from contextualized digital experiences, in exchange for giving up personal data.

Digital Economies: New economic models caused by the digital democratization of production, distribution, and consumption.

Supply chains become consumption chains in this new economy as consumers become direct participants in production and distribution. Open source, social, and mobile platforms allow consumers to connect with each other, usurping traditional roles and relationships between buyers, sellers, and marketplaces. Do-it-yourself technologies such as 3D printing and replicators will accelerate this shift, while even currency becomes distributed and peer-to-peer-based. In this new economy, value shifts towards digital reputation and influence, digital goods and services; even data itself. The downside? An increasing divide between digital “haves” and the digital “have-nots.”

Dynamic Organization: In today’s digital landscape, dynamic organizations must develop new business models and ways of working to remain relevant, and viable.

Business leaders grapple with an onslaught of new technologies that result in shifting customer and employee expectations. It’s not enough to keep pace with change. To succeed, dynamic organizations must cultivate a culture, mindset, and infrastructure that enables flexibility and adaptability; the most pioneering will act as adaptive, mutable “ad-hocracies.”

Altimeter’s Disruption Database

Below are the 30 digital disruptions and 15 digital trends, which were used as the starting ground of our analysis.

“These disruptions and trends will affect consumers, business, government, the global economy; with accelerating speed, frequency and impact.”