How to measure a company’s digital maturity?

In my last article, I discussed the digital maturity of a company, which means how much the company has been investing in digital products to potentialize its results and how much the results have been actually potentialized by digital efforts.

Even though it is a clear definition, we can go a bit deeper to understand and even quantify the digital maturity of a company.

Digital maturity and product culture

Product culture means the set of values and behaviors that enables the digital product to generate the best results for the company while solving customer problems.

There are 4 main values/behaviors that are mandatory to any company that builds successful digital products:

1. Release early and often

The sooner we present the product to our users, the better, as we can receive feedback from real users who will be able to use the product in their own context. In this article, I explain the 4 reasons why it is so important to release early and often: (i) this is the moment of truth, (ii) so you avoid the excess of features, (iii) to accelerate the return of the investment and (iv) to avoid the perils of the cone of uncertainty.

To measure if the product development team is releasing early and often, we need to measure the number and frequency of deploys. A company called DORA (DevOps Research and Assessment), acquired by Google in 2018, have been researching the DevOps and SRE practices used by companies since 2015 and was able to categorize companies’ software delivery and operational performance based on 4 factors:

• Deploy frequency: how often does your organization deploy code to production or release it to end users?
• Lead time: what is your lead time for changes (that is, how long does it take to go from code committed to code successfully running in production)?
• Time to restore: how long does it generally take to restore service when a service incident or a defect that impacts users occurs (for example, an unplanned outage, service impairment)?
• Change fail percentage: what percentage of changes to production or releases to users result in degraded service (for example, lead to service impairment or service outage) and subsequently require remediation (for example, require a hotfix, rollback, fix forward, patch)?

Based on the answers, it is possible to have a software delivery performance metric, as detailed below:

DORA was able to gather during the seven years of research more than 32,000 survey responses from industry professionals and noticed an interesting evolution:

You can answer these questions directly on their site to check how your team is doing.

The more a product development team gets closer to the elite level described above, the more the company is digitally mature in this value/behavior.

2. Focus on the problem

As explained in this article, a very important step in creating a good solution is understanding the problem. When we hear about a problem, we immediately start thinking about solutions. However, the more time we spend learning about the problem, the easier it will be to find a solution, and chances are good that this solution will be simpler and faster to implement than the first solution we thought of.

Solution implementation teams are teams working on implementing a solution designed by someone else. Problem-solving teams are teams that work to deeply understand the causes of the problem, the context, and the motivation that people have to solve it. In doing so, they are able to implement the best solution for the problem at hand.

I’ve been working for quite some time in companies undergoing a digital transformation or which have people, including C-level, not familiar with digital product development methods. One of the biggest challenges in companies undergoing digital transformation is moving from a “business demands => technology implements” mindset into a “business brings problems/needs => technology works on understanding these problems/needs with the user, testing solution hypothesis, and implementing a validated solution hypothesis” mindset.

How can we measure how much a product development team is focused on problems? My suggestion is to look into the past 10 to 20 things that the team implemented and check how the need for each of the things implemented arrived for the product development team. Did it arrive as a feature request, i.e., a solution implementation request? Or did it arrive as a problem to be solved? The more things arrived to the product development team as problems to be solved, the more the company is digitally mature in this value/behavior.

3. Result delivery

Besides being able to deliver early and often and be focused on problems, the product development team has to deliver results. Business results as well as results for the client and user of the product. I discussed this value in this article, where I made it clear that delivering features is not a result. All features are a means that serves an end, the achievement of a business objective. It is very important that we have clear business objectives. Ideally, business objectives should be connected to the bottom line, i.e., increasing revenue and/or decreasing costs.

How can we measure how much a product development team is delivering results? My recommendation is to take a look at this product development team’s OKRs. The objectives and key results must be connected to the company’s results and the customers’ results. If we find OKRs that are tasks or OKRs that are metrics, but metrics that are not connected to the company and customers’ results, it is clear that the product development team is not focused on delivering results. Normally, a product development team has more than one objective and more than 3 key results. We can analyze all objectives and key results to check their connection with company and customer results as a yes or no. The more yes we find, i.e., the more objectives and key results we find connected to company and customer results, the more the company is digitally mature in this value/behavior.

4. Ecosystem mindset

This value/behavior means making decisions that create value for all actors of the ecosystem where the business operates. These decisions cannot harm any of the participants of the ecosystem. In this article, I explained it at length with an example from Gympass. If the company is a platform or a marketplace, this value/behavior is quite easy to understand, but it also applies if the business does not operate as a platform or marketplace. If you are a business with one type of customer, the ecosystem is formed by the customer and the business, and this value/behavior means that you cannot make decisions that benefit the business but harm the customer or vice-versa. You can make decisions that benefit that business and don’t affect the customer, but you cannot harm the customer. And vice-versa, you cannot harm the business for the benefit of the customer. This value/behavior builds on top of the customer-centric concept but expands it to include all different customers and the business in this mindset.

How can we measure if the company has an ecosystem mindset? My suggestion, in this case, is to analyze the last 10 to 20 decisions made and check to whom they brought value and if any of them generated a negative impact on any of the participants of the ecosystem.

How to measure a company’s digital maturity?

Using the above values and behaviors, we can assess how digitally mature is a company and, more importantly, define what should be our focus areas to improve its digital maturity. Answer the 4 questions below to self-assess your digital maturity.

Release early and often: after taking the DORA’s DevOps quick check on the 4 factors (deploy frequency, lead time, time to restore, and change fail percentage), how do you rank?

(a) Elite

(b) High

(c) Medium

(d) Low

Focus on the problem: how much of the product development team deliveries originated from solution implementation requests?

(a) 0%

(b) Less than 5%

(c) Between 5% and 50%

(d) More than 50%

Result delivery: How much of the product development team’s OKRs are connected to the company’s objectives?

(a) All of them!

(b) More than 90%

(c) Between 50% and 90%

(d) Less than 50%

Ecosystem mindset: How much of the latest decisions impacted negatively one of the actors of the ecosystem?

(a) 0%

(b) Less than 5%

(c) Between 5% and 50%

(d) More than 50%

Now, for each (a) add 4 points, for each (b) add 3 points, for each © add 2 points and for each (d) add 1 point. The total indicates your digital maturity:

So there you have it, a simple way to assess your digital maturity.

Real-life examples

I joined Gympass in mid-2018 and when I joined, it was clear there was room for improvement in our digital maturity. The same happened when I joined Lopes in mid-2020. In both cases, we focused on improving the behaviors that could bring us to increased digital maturity.

Disclaimers and final remarks:

• The examples above are from what I recall from the time I worked in these companies. Ideally, this type of assessment should be done considering current behaviours with answers from the leaders of the company and the product development team. This assessment should be made periodically, every 6 months, or every year.
• It is possible to have companies with the same digital maturity score, but with different behaviors to focus on in terms of what to do to improve the digital maturity, as are the cases of Gympass and Lopes in the examples above.
• More important than knowing the digital maturity stage a company is in or the score it has, is to know what are the main areas that the company and the product development team should focus on to improve its digital maturity.
• Knowing and improving digital maturity is just a tool, not an objective. It is a tool to help a company extract more of its digital efforts. It’s a tool to help a company achieve its objectives and results.

Summing up

• Digital maturity of a company means how much the company has been investing in digital products to potentialize its results and how much the results have been actually potentialized by digital efforts.
• To measure digital maturity, we need to assess how the company is in each of the 4 values and behaviors of its digital product culture. Release early and often. Focus on the problem. Result delivery. Ecosystem mindset.
• Knowing and improving digital maturity is just a tool, not an objective. It is a tool to help a company extract more from its digital efforts. It’s a tool to help a company achieve its objectives and results.

Digital product education, coaching, and advisoring

I’ve been bridging the gap between business and technology through education, coaching and advisoring on digital product development and management. Check here how I can help you and your company.

Digital Product Management Books

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success, solve its user’s problems and achieve the company objectives? Check out my Digital Product Management bundle with my 3 books where I share what I learned during my 30+ years of experience in creating and managing digital products:

• Startup Guide: How startups and established companies can create profitable digital products
• Product Management: How to increase the chances of success of your digital product
• Leading Product Development: The art and science of managing product teams

You can also acquire the books individually, by clicking on their titles above.