Type of company vs digital maturity

  • Digital companies: the product sold by the company is the software or technology developed by the product development team. Product Management is the “core” of the company, responsible for the vision of the future and the company’s strategy. Product management will play a central role in defining and executing the company’s strategy. Examples: Google Search, AWS, Facebook, Locaweb, Conta Azul.
  • Traditional companies: the product or service sold by the company has probably existed for many years without the technology, but the company is beginning to understand how technology can power the product. Product Management is an “enabler”, but it is not the “core”. It is seen as the “digital area”. Product management will have to earn its space, showing what technology can bring to the business. Examples are any traditional company we can think of like supermarkets, banks, stores, industries, airlines, etc.
  • Born-digital traditional: the product sold by the company could exist without the technology, but the technology greatly enhances the product. The business was designed considering all the benefits that technology can bring. For instance, a born-digital bank may decide to carry all its customer relationships online, without the need to open any physical offices to serve its customers. Product Management is an “enabler”, but it is not the “core”. Product management will play a very important role in defining and executing the company’s strategy, but it will not be central. Business areas will likely play a more important role or, ideally, both areas will have similar importance. Examples: Amazon, which is a born-digital store. Netflix, which is a born-digital video watching service, any born-digital bank, etc.

Digital maturity

When presenting this classification to a product leadership coaching customer during an in-company training session, they pointed out that they were investing a lot in their digital transformation to become a digital company but, according to this classification, they will never be digital, since this classification does not allow for any movement between categories.

Digital maturity is a concept that applies only to traditional companies?

We may think that discussing the digital maturity of a company only makes sense when we are talking about traditional companies. Afinal, born-digital as well as pure digital companies are digitally native, right?

  • Gympass: when I joined Gympass, in mid-2018, the company already had 800 employees, and operations in 14 countries. However, their entire product development team, including engineers, product designers,s and product managers, had only 30 people, i.e., less than 4% of the company was in product development. The impact of this very small team compared to the size of the company was that, back then, many of the day-to-day tasks with clients and partners had to be performed manually, so Gympass had a huge operations team in order to carry out all this manual work. And the app was still a webview version. The C-level and the board recognized the need to invest in digital in order to scale the company, and this team grew considerably to around 250 people, who automated many of the manual operations tasks and delivered and evolved a fully native app. This is an interesting example of a born-digital company, that offered a corporate benefit to its customer to offer their employees access to a network of tens of thousands of gyms and studios, which had a low digital maturity. This normally happens when the founders of a born-digital company that is using digital to improve a traditional business have little to no previous experience with digital products. If they don’t bring someone with this experience to be part of the founding team, there are good chances that the digital maturity of this company will be low.
  • Locaweb: when I joined Locaweb in 2005, the company was around 100 people and the product development team had around 30 people, so a good size. However, product development was done a very old-fashioned way, waterfall, based on ideas from C-levels and sales, without talking to customers. I do remember one time filling out a PRD — Product Requirement Document — with all the requirements for a new product we were planning to launch based on ideas from C-levels. After filling out all the details, which took me 2 months to write, I hand it over to engineering to receive the product built 5 months later. Then I went on testing the product just to find out that some expected feature was not there. I checked the PRD to see if I had forgotten to include that specific feature but, no, I’ve not forgotten, it was there. Then, talking to engineers, they saw the documentation, did not understand all the details, and due to the rush to deliver, decided not to include the feature. So it is quite clear that our digital maturity back then was quite low. We were able to evolve and increase our digital maturity over the years, but this is a good example of a digital company, whose product sold by the company is the software or technology developed by the product development team, but with very low digital maturity that improved over the years.
  • Aurum: this is the company of 2 good friends from college. They graduated around 1990 and back then created a product to help lawyers in their day-to-day tasks. As all software back in the 1990s, it was on-premise software, to be installed on the computer of each lawyer. Later they launched a client-server version where lawyers could exchange information through the system and the work done by each lawyer was stored in an on-premise server. Around 2010 they started to perceive the need to move to the cloud and I helped them as one of my first consulting engagements. If you want to dive deeper into their digital transformation journey, you can check this interview. Aurum is another good example of a digital company, whose product sold by the company is the software or technology developed by the product development team, but with low digital maturity that improved over time.
  1. bring people with digital experience, i.e., experience in bringing digital products to the market that solve problems for the customers while achieving the expected company results. These people will help the company to understand the potential of using digital products and will help design a strategy to fully use this potential.
  2. go after education so people without the proper experience in digital products can learn faster. Can be books, courses, events, blogs, or in-company training. This topic should be in the center, not only for people working directly in the product development team but all other areas of the company must understand how digital can positively impact the company and their areas.

Summary

  • There are 3 types of companies. Digital companies, where the product sold by the company is the software or technology developed by the product development team. In traditional companies, the product or service sold by the company has probably existed for many years without the technology. Born-digital traditional companies, where products sold by the company could exist without the technology, but the technology greatly enhances the product. This is the nature of the company and can not be changed.
  • On the other hand, we can also analyze a company based on its digital maturity, i.e., its ability to use digital products to deliver a better experience to its customers and to improve the company’s results. Normally, traditional companies have low digital maturity, but they can evolve over time. However, even digital and born-digital traditional companies can also have low digital maturity as shown by the 3 examples: Gympass, Locaweb, and Aurum.
  • In order to improve their digital maturity these companies need to (1) bring people with previous digital experience and (2) go after education so people without the proper experience in digital products can learn faster.

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Joca Torres

Joca Torres

2.5K Followers

Digital product development advisor, coach, and board member. Also an open water swimmer and ukulelist.