Lee Frederiksen - Digital maturity
Lee Frederiksen is an award-winning business strategy expert and a pioneer of research-driven marketing, currently acting as the Managing Partner of the US marketing firm Hinge.
In this episode, we discuss the concept of digital maturity, breaking down what it means to be digitally mature and how that differs across businesses and industries. We explore the close connection between digital maturity and digital transformation, as well as the differences between B2C and B2B approaches. Like in many of our episodes, we also take a look at the key role of the people in reaching digital maturity and what trends are dominating here.
Links & mentions:
“The process of going through a digital transformation will offer you the opportunity to increase your digital maturity. Just the learning that you do going through it and the adoption of more digital processes and so forth will also accelerate.”
Welcome to the Agile Digital Transformation Podcast, where we explore different aspects of digital transformation and digital experience with your host, Tim Butara, content and community manager at Agiledrop.
Tim Butara: Hello, everyone. Thanks for tuning in. Our guest today is Lee Frederiksen, award-winning business strategist and a pioneer of research-driven marketing with a PhD in behavioral psychology. He is currently the managing partner of Hinge, a US marketing firm focusing on the professional services industry. We have a really great topic for you today. We'll be talking about digital maturity and what it means for businesses in this era marked by high level digitalization. Welcome, Lee. It's both a pleasure and an honor having you with us today.
Lee Frederiksen: It's a pleasure to be here, Tim.
Tim Butara: Do you want to add anything to my introduction, or shall we just go ahead with our topic for today?
Lee Frederiksen: I think we're in good shape. We're going to be talking today about a study we've recently completed on digital transformation and digital maturity. So I think with that, we should just plow into it.
Tim Butara: Awesome. So first off, Lee, can you tell me what specifically does the term digital maturity mean? And is there a different digital maturity baseline for different industries businesses? I assume that is so, right?
Lee Frederiksen: Yes, indeed. Well, digital maturity kind of captures an overall firm's, sort of how they view the digital process and how integrated it is to theirs. And in that regard, it takes into account both their people and the skills that they have. It takes into account some of their policies and how they approach it and also the technology that they're using. So overall, you think about it as maturity as how well are you able to use the tools that you have to your advantage, I think, is a good shorthand way of thinking about it.
Tim Butara: Yeah. That's a really great definition, because it's not just about having the tools, right? It's also about priming your people, priming yourself up for success so that they're, as you just pointed out, so they're able to leverage the tools in the best way possible to kind of have this kind of whole overarching effect, not just on a particular area of the business. If I understand it correctly.
Lee Frederiksen: Exactly. And I think the second part of your question is, yes, there are very big differences across industries and, of course, between individual firms, there's big differences. For example, the technology industry and the marketing industries are ahead of things like accounting, for example, and architecture and engineering, even though there's no particular reason they should be behind.
It's probably the combination of how they approach technology, the people they have on their staff and so forth where they end up with, different industries tend to have different levels of maturity. And then, of course, within that, firms can change their maturity over time by decisions they make and things that they do. So it's really quite a dynamic concept when you think about it.
Tim Butara: Yeah. I can imagine maturity itself is a dynamic concept. So it would only make sense that digital maturity would follow that same principle.
Lee Frederiksen: Right. Exactly. And sometimes companies can be like those teenagers who one minute they act like an adult, and the other minute they act like a child. And so you see that in companies where they don't necessarily have consistent approaches to all areas of digital maturity.
Tim Butara: Yeah. You mentioned earlier that marketing is one of those fields that really has to be at the forefront of digital maturity. And it makes sense, right. Because marketing is kind of the one field that's, first of all, unique to most brands, most other industries. And it uses the most popular avenues of the time period for its efficiency, for its functioning. So marketing wouldn't be able to be marketing if it wasn't digitally mature.
Lee Frederiksen: Exactly. And to a large extent, digital maturity is reacting to what's happening with customers anyway. In a large degree, the customers are kind of in the driver's seat of this about what they want and what they expect. And some of the consumer products have– the Amazons of the world who have offered a certain level of consumer interaction and consumer experience that consumers have come to expect that from other sort of interactions with other kinds of companies. And that, of course, has worked its way into the professional services and B2B world just as much as it has into the consumer world over time.
Tim Butara: That's a great lead-in into the next topic, actually. So can you tell us more about this, about how things are maybe different between B2C brands and B2B professional services firms?
Lee Frederiksen: Yeah. I think one of the big things is that a lot of the digital maturity developed in the consumer space by having products that were natively digital, if you will, they started out as digital products. They were designed as digital products, and the consumer experience was at the front end of it. In the business to business case, you have almost the opposite situation where most of the interactions have started out traditionally and only over time they've started to realize that, look, we have to be more digital in this, the customers, our clients are asking for it.
And with the onset of the global pandemic and shutting down so much face to face work, it's really been an accelerant in the B2B world to, really, we need to do something about this now because all the ways we used to rely on are no longer accessible to us.
Tim Butara: In this same line, maybe, are you also seeing any new trends, for example, of B2B marketing using more and more B2C marketing strategies because of this?
Lee Frederiksen: I think the interesting thing about it is there's probably going to be a limit to how many B2C kinds of things you adopt. The technologies, I think will be there. But there's a somewhat different buying process. You're not selling nearly as much sort of lifestyle, I would say, or impulse buys. In the B2B world, you're dealing more with things that are essential to the business. So you have a different buying process. You have a buying committee oftentimes and so forth.
And so what you're seeing is that in the B2C world, the buying decisions and the person making those, they're one and the same. Whereas in the B2B world, a lot of times, the interaction around the digital is with gathering information and selecting alternatives. And how are we going to go about doing it. And the product itself, some of them are certainly digital native products, but others are where they're enhancing what was traditionally a face to face product and porting it over to becoming digital.
Tim Butara: Yes. That's a great point. Especially the part about this multifaceted decision making process, as opposed to B2C, where it's just one person and it's the same person who's making the decision and buying it and using the product. Yeah. And you mentioned brands that are digitally native. I assume that these brands had a natural and unique advantage when the pandemic hit because they were already kind of already digitally mature.
Lee Frederiksen: That's right. And you can see that in the financial performance in the marketplace of some of these brands, the Amazons of the world and so forth. It was harvest season, should we say, over the last couple of years, for those that were digitally native.
Tim Butara: I love that term. It's a bit spicy, but I think it gets the point across perfectly. And we already talked about this a little bit earlier, but can you tell us more about the necessary elements or skills that really constitute true digital maturity?
Lee Frederiksen: Yeah. If you look at the skills that are necessary, it's a fairly wide range of skills that involve both the understanding of your target audience, your research and analytical skills and those kinds of things, as well as the development of products and the technical skills necessary to program that. So it's not just one set of skills. And what we find in our research is that probably that lack of relevant skills and access to those relevant skills is probably one of the biggest single things that are holding firms back.
That's the biggest thing they’ll say, we don't have the people, and when we do try to hire them, they're very difficult to keep. They're very expensive. So it sort of forced firms to rethink, how are we going to go about doing this? And I think it's really created an opportunity for a lot of those firms that are assisting other firms in the digital transformation. So you need the skills and whether you have them in house already, whether you hire them or whether you use a third party to bring them. That's kind of one of the core things you need.
The other thing that you need is the vision really about where you're going to go and the management support around that. About one in four firms we surveyed said that the lack of management support was part of the reason that they had not made the digital transformation or that was holding back their maturity.
And then a third element we see in there is just budget and prioritization. Is it the right time for this? We know we need to do it, is now the right time, or do we need to wait until things slow down a little bit or so forth? So you have those kinds of– should we say, difference in priorities that are always common in a large, complex organization.
Tim Butara: But it's never the right time, right? You shouldn’t wait for it.
Lee Frederiksen: Yeah. And it's never slowed down.
Tim Butara: We've now entered this era of uncertainty. I know this is an overused term by now, but it's overused for a reason, I guess. And you shouldn't. I mean, now that we've gotten used to it, you have to think in a more agile, more proactive, more future-ready way, I think. And I think this is also a part of being digitally mature.
Lee Frederiksen: Yeah. I think that's a great point. And we actually see some interesting evidence of that. And that more of our research on some of the fastest growing and most profitable firms shows that they tend to use more outside resources to aid in that flexibility and to fill in the spots where they don't have the skills. And some of these, they are things you may need for a short period of time, whereas you build a system and you transition to it. And then over time, it becomes more routine in just what you do. So I think this is a big problem now. I think in the future we'll look back and sort of laugh at people who hesitated at this point as to why are you doing that?
Tim Butara: But I think that this is also a great point about because of this really acceleration of the necessity of new skills and new ways of life and working and whatnot, it's become more and more common for businesses, especially the most successful ones, to kind of partner with others, to collaborate, to outsource some parts of their project, some parts of their businesses. Do you think that this is a trend that we will continue to be seeing or what's the situation here?
Lee Frederiksen: Yes. When I look at trends and how persistent they might be, the first question I usually ask is, are the factors driving that trend likely to change? Are they likely to abate? And I look at the factors driving that, and I think not yet. So I don't think that this is a trend that's likely to abate. I don't think we're going to go into a period where things become much more predictable, much more stable and things are changing as– quite the opposite.
We're probably in a time when there's going to be a lot of ongoing adaption, adaptation. And there's going to be a lot of new ways and new business models for accessing talent that you need for the amount of time you need it. And again, we've seen that in the marketplace over the last decade or two where those sorts of models have proliferated, and I think they're not done yet. I think we'll see more of it.
Tim Butara: Well, if anything, I think it's more likely that we're about to see much more digitalization and more innovation in these spheres because of what the pandemic has accelerated.
Lee Frederiksen: Yes, indeed.
Tim Butara: Now, maybe let's explore a little bit more in depth this connection between digital maturity and digital transformation. Which one comes first or I'm guessing this is maybe sort of a chicken or egg type of question?
Lee Frederiksen: Right. Exactly. I think it is. The process of going through a digital transformation will offer you the opportunity to increase your digital maturity. Just the learning that you do going through it and the adoption of more digital processes and so forth will also accelerate. So I think it is a sort of hand and glove thing. They work together. If you say, which comes first, I think it's almost logically some sort of transformation and some step forward has to lead the way to get to the maturity because it's very difficult to become more mature without a transformation, without some kind of change, without doing something different. So that struggle through the development and adaptation of something I think is one of the things that helps drive digital maturity.
Tim Butara: Yeah. That's very well said. I would just add that, on the other hand, it's also– you need to transform to achieve maturity, but you haven't fully transformed until you've achieved that level of maturity. So it's really intrinsically connected.
Lee Frederiksen: Right. You can't have one without the other.
Tim Butara: What about maybe if we go more practical and maybe I want to ask you for some practical advice maybe for those leaders who are trying to make their business more digitalized, trying to help their teams achieve digital maturity. But maybe they spotted misalignment in certain parts of their businesses. Or maybe, whether that's due to silos or whatever. What would your advice to such leaders be? How should they go about improving this?
Lee Frederiksen: Yes. Well, there are many ways you can, but what I would often recommend is start with a smaller project. Start with something that most people agree is an issue. It's an annoyance to people. So there's motivation to do something about it. And it's not such a large project that it will take an extremely long time, or you have a high risk of failure. So, in other words, get some small successes and demonstrate to yourself and the organization that, yes, you can do this. There are benefits. And we found when firms do that, that's one thing that's helpful.
A second thing that's helpful is as you're expanding, you may want to look at multiple kinds of projects around one theme. For example, one thing that we do a lot of work with companies is what we call a digital marketing transition. And you're looking at your marketing, you realize, we can't go face to face as we have before. So we need to rethink our marketing. That's a perfect time to perhaps put in an ERP system and look at marketing automation and how those two things are going to work together. So that's as you get a little bit more ambitious kind of focus it within a sector.
And then the third thing I would recommend with people is to really find the talent you need to be successful at it. A good strategy, and the talent you need to execute it will always pay off much better than attempts to try and, well, let's just do this in house, even though we don't quite know what we're doing, we'll save a little money, and that almost never goes well. So if you're going to do a project, make it a small enough project so you can do it right. You can get the right kind of resources and be successful at it. So small projects, focus them within the area and use enough resources to make sure you get it right the first time.
Tim Butara: I think these are some great points of advice, and they actually tie back to a lot of the points that we've discussed in this episode so far. We mentioned in the beginning that marketing is one area that really has to be digital. And if you were to start your digital initiatives with marketing, that would definitely not be a bad place to start. And the people, we discussed things like partnerships, outsourcing, doing things this way. So yeah, I think, I'm sure that our listeners were able to get some great points of advice. And yeah, maybe before we wrap up the call, Lee, if our audiences would like to learn more about you or reach out to you, what's the best way for them to do that?
Lee Frederiksen: The best way is to go to our website, it's hingemarketing.com. And so that's probably the most straightforward way to do it. Otherwise, you can access us on LinkedIn, Twitter or other forms of social media.
Tim Butara: Awesome. I'll make sure to add all the relevant links in the episode show notes and Lee, thanks so much for joining us. It's been a wonderful discussion. It's been great having you here, and yeah, I hope you enjoyed it as well.
Lee Frederiksen: I did indeed. It's been a pleasure.
Tim Butara: And to our listeners, that's all for this episode. Have a great day, everyone and stay safe.
Thanks for tuning in. If you'd like to check out our other episodes, you can find all of them at agiledrop.com/podcast as well as on all the most popular podcasting platforms. Make sure to subscribe so you don't miss any new episodes and don't forget to share the podcast with your friends and colleagues.