The higher a company’s level of digital maturity, the better its financial performance is likely to be.

New digital technologies like social media, mobile and analytics are advancing rapidly on the economic landscape. These innovations are used widely by consumers and employees alike. Facebook alone has more than one billion users, and there are more than six billion mobile phones. What do traditional businesses do when employees have better digital solutions at home than they do at work, and customers are more technology savvy than the people trying to sell to them?

Executives in every industry — from media to electronics to paint manufacturing — face a bewildering array of new digital opportunities. These executives are paying attention, but they have few signposts to guide them. Most stories in the business media focus on fast-moving startups like Zynga and Pinterest, or on a few large high-tech companies like Apple, Google or Amazon. Unfortunately, to many leaders, stories of these nimble and innovative firms just do not make sense for traditional companies that are older, larger and burdened with inflexible legacies.

In phase two of our research on digital transformation for large businesses, the MIT Center for Digital Business and Capgemini Consulting studied nearly 400 large companies for two years. We found they are using technologies like social media, mobile analytics and embedded devices to change their customer engagement, internal operations and even their business models. But few firms have positioned themselves to capture the real business benefits. Our research points to a real “digital advantage” to those that do.

We’ve developed a digital maturity model to show how different companies are reacting to technological opportunity.

Digital maturity combines two separate but related things. One is digital intensity, the level of investment in technology-enabled initiatives meant to change how the company operates. The other is transformation management intensity, the level of investment in the leadership capabilities needed to create digital transformation within an organization.

Transformation intensity consists of the vision to shape a new future, governance and engagement to steer the course and IT/business relationships to implement technology-based change.

The Four Levels of Digital Maturity

Companies can have four levels of digital maturity: high digital and transformation management intensity, low digital and transformation management intensity, or a mix of the two.

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