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The Advantages of Digital Maturity

Facebook, Amazon and Google are not the only companies that can get success from using digital technologies. It's harder for traditional companies than for businesses that grew up on the Internet, but it is happening. As companies mature in their use of technology, their bottom-line performance improves.

A digital maturity model, developed by MIT's Center for Digital Business and Capgemini Consulting, shows how companies react to technological opportunities. The model combines two elements: digital intensity (the level of technology investment directed towards changing how a company operates) and transformation management intensity (the level of investment in leadership skills needed to create digital transformation).

This model yields four types of digital maturity: Beginners, Conservatives, Fashionistas and Digirati. Beginners lack much experience with new digital technologies and don't actively try to bolster transformation management in their leadership. Conservatives prefer prudence to innovation. They understand transformation management, but are skeptical of the value brought by new and often-hyped technologies. Fashionistas are quick to adopt new technologies and use them, but have no real vision for applying them across the business.

Digirati, meanwhile, combine transformational management with effective investments in technology. They also develop a digital culture to continually advance their digital transformation efforts.

Of 184 public companies studied, Digirati substantially outperformed companies in the other three categories. But companies don't have to be Digirati to do well: Fashionistas saw higher revenues than Conservatives in their industry sectors. Meanwhile, the transformation management skills of Digirati and Conservatives meant that they saw 9 to 26% more profit than the average in their industry. It will take several years for Beginners to catch up to a competitor who is a Digirati.

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