Small Business Evolution in 2024: 6 Stages of Digital Transformation

Understand the distinct phases of digital evolution all companies go through on their journey to transformation with in-depth stage analysis and real-world examples.

The rapid pace of technological innovation presents opportunities for businesses, and as we weigh in on the advantages and disadvantages of digital transformation, a key question emerges: Where does your organization currently stand in its digital maturity journey?

Experts have seen a common, but unlinear pattern in businesses as they go through the journey of digital maturity. in 2019, Brian Solis coined the term Digital Darwinism -the evolution of businesses should match the pace of how technology and society changes, otherwise being at risk of getting wiped off. The 6 Stages of Digital transformation has then been a framework used as a tool to assess your business' digital state with new thinking, learning, experimentation and innovation as an end goal.

There are 6 stages to digital transformation: Business as usual, Present and Active, Formalized, Strategic, Converged and innovative & Adaptive. Each of these marks distinct changes in an organization and its relationship with emerging technology: from the scope of use, resource allocation, alignment to business strategy and goals, and planning ahead to a complete digital revolution.

This blog explores the different stages of digital maturity, breaking down key points that are common in each stage. We also relate these stages to the real-world business environment, making it easier for everyone to understand and identify with. By aligning your strategies with these insights, you can make the most of digital opportunities for growth and be well-prepared for any challenges that may come your way in your digital transformation journey.

6 Stages of Digital Transformation

The 6 Stages of Digital Transformation: usiness as usual, Present and Active, Formalized, Strategic, Converged and innovative & Adaptive. Each of these marks distinct changes in an organization and its relationship with emerging technology
Digital Transformation Framework and its' distinct characteristics

Stage 1:  Business as Usual

In the early phases of digital adoption, processes predominantly rely on manual methods, with technology limited to basic software tools like Excel or email. Companies focus squarely on day-to-day operations rather than digital strategy. At this initial level, leaders may vaguely recognize the need to evolve technologically but see it as a problem for later. 

Key Characteristics:

  •  The earliest phase of digital adoption.
  •  Traditional manual processes and limited reliance on digital technologies.
  •   Resistance to change and lack of strategic focus.

Real-world scenario:

You, as an office manager at a small firm, use printed sheets and forms. A centralized database may be present, but this is done periodically and with dedicated time to collate and organize in separate presentations to create a view of your operation’s performance. Without automated analytics, you could not identify market trends or growth opportunities in a timely manner.


Stage 2:  Present and Active

Pockets of digital exploration start sparking across your organization, though on an informal basis. No centralized coordination exists to scale promising pilots. Point solutions aim to optimize singular processes instead of an end-to-end digitization strategy. Still, these pockets of digital exploration breed awareness of digital capabilities, and adoption gains grassroots momentum.

Key Characteristics:

  • Growing awareness of digital technologies' significance.
  • Scattered digital initiatives across departments.
  • Increasing efficiency and acknowledging the benefits of digital transformation. 

Real World Scenario:

A team or two may have deployed CRM and productivity software, though inconsistently embraced. Some agents use the tools actively, while others continue to ask for printouts. Tech-savvy employees start using shared online sheets and use their own email response automation simply for their own ease. Digital transformation remains a back-burner priority amidst daily tactical urgencies.


Stage 3: Formalized

Disruption leads companies to formally evaluate technological integration opportunities. Digital adoption receives executive sponsorship, dedicated ownership, and formal governance. Cross-functional collaboration increases focus on comprehensive process improvement and end-to-end digitization.

Key Characteristics:

  • A coherent digital strategy exists and is aligned with business objectives.
  • Cross-functional teams are driving digital projects.
  • Emphasis on data-driven decision-making and process optimization.

Real-life scenario:

You might have heard of your competitors’ integrated end-to-end digital platform for listings, transactions, and customer support, and you are suddenly aware that you are behind. A Chief Digital Officer might be too costly, so a partnership with a Digital Maturity Advisor is created to chart a transformation strategy centered on pain point mapping, capability planning, and adoption requirements.


Stage 4: Strategic

Digital transformation continues to be an integral component of corporate strategy at this stage. Executive leadership drives company-wide integration, guided by formal roadmaps for emerging technology adoption and continual capability enhancement. Technology proves both a competitive necessity and a competitive edge.

Key Characteristics:

  • The executive team is fully onboard with digital transformation.
  • A clear digital strategy is closely aligned with business goals.
  • Planned investments for a seamless customer experience and enhanced efficiency.

Real-life scenario:

An integrated platform centralizing the entire value chain is now in place in your office—listings, client profiles, communications, and transactions that are used by everyone. Analytics dashboards delivered visibility into lead generation and campaign performance. Stakeholders also set aside regular time to discuss innovations that could elevate customization, speed, or connectivity.


Stage 5: Converged

Nearing the pinnacle stage of digital prowess, technology converges across each business function into the very fabric of operations. Digitization so profoundly alters ways of working that analog methods fade as relics of a bygone era. Companies must continue scaling emerging technologies to stay ahead of the curve.

Key Characteristics:

  • Prioritization of digital initiatives with dedicated resources.
  • Full integration of digital technologies into every aspect of the business.
  • Operation in a digitally enabled ecosystem with high agility and adaptability.

Real-life scenario:

The tangible impacts of digital transformation are now evident across your operations and revenue streams. Paper files have vanished, replaced by automated digital workflows, predictive analytics, and integrated self-service experiences. Technology has become an integral business driver rather than a cost center. Removing or limiting investments in digital capabilities is no longer an option, given their direct contribution to efficiency, growth, and competitive positioning.


Stage 6: Innovative and Adaptive

This stage marks the summit basecamp for a continuous journey in a digital journey. Maintaining vertical leadership depends on aggressively embedding innovations through trials, investments, and partnerships while still executing on a sound digital foundation. With technology ingrained across the business landscape, change itself becomes business as usual.

Key Characteristics:

  • Ongoing optimization and innovation are the norm.
  • Commitment to supporting the digital world.
  • Leadership in the industry, actively shaping the future through emerging technologies and business models.

Real-life scenario:

Your business gains more experience in digital adoption, and now you know that there is no way but forward through focus on continuous improvement and optimization of your digital systems and strategies. Digitization becomes a part of your business’s core values and mission, and as an established advocate of digital transformation, you develop a voice across your industry in this area.


Beat the Stagnation with A Digital Maturity Advisor

A Digital Transformation Advisor presenting business growth in a 3D Bar chart

Like in all growth and development, these stages represent general milestones, and rarely will a business land neatly in just one. More often than not, aspects of digital maturity are scattered across multiple levels. Plotting your coordinates along the spectrum enables you to:

  • Establish a clearer roadmap and direction based on benchmarking against industry standards.
  • Proactive risk mitigation plans tailored to the particular challenges and opportunities of your current stage(s).
  • More effective resource allocation for maximum impact at your digital maturity level.
  • Strategic decisions aligned with your overall organizational objectives.


Carefully analyze where your business currently stands and have candid conversations with an expert digital maturity advisor about where you aim to be in 1-3 years. A digital marurity assessment will help you find the gap between those waypoints and the work that is required to bridge them. With an honest diagnosis , you can seek help in the bridging stages, whether through funding, different skills, technical upgrades, or improved processes. Your digital transformation journey likely has bumps ahead, but the right strategic focus gets you back on track.