We explained, “In our engagements, two questions consistently emerge: ‘How can we avoid compliance issues when team members use AI?’ and ‘Will adopting a new AI tool or software solution truly benefit our organization?’ In organizations with fewer than 500 employees, the CFO often oversees compliance alongside their financial duties.”
While the compliance aspect demands a nuanced, in-depth answer centered on organizational structure and AI understanding, the question of AI’s benefits is more straightforward.
Drawing from data on over 2,000 small and midsize organizations, we’ve found that those with higher digital maturity have experienced significant growth in 2022 and are forecasting remarkable savings or revenue boosts for 2023.
This discovery naturally leads us to another crucial question: How can we best measure digital maturity and identify the next actionable steps?
A Simple and Actionable Quest Amid Complexity
Our journey began much like any other, exploring renowned methodologies from giants such as Boston Consulting Group, Deloitte, Gartner, and Nethope, this last one designed for Nonprofits.
We then interviewed leaders at Small and Midsize organizations with up to 500 employees. The feedback was unanimous and loud: Existing methodologies were intricate and often too convoluted.
Consider this — a Forrester Research report highlighted that an overwhelming 74% of business initiatives buckle under the weight of complexity. So one of our design principles was Simplicity.
There’s also a trend of chasing Innovation just for the sake of it. It is essential for Innovation to be purposeful and to address a specific need or problem to be effective. So our second design principle was Actionability.
Hearing the struggles of many leaders, we embraced Simplicity and Actionability as our guiding lights. Under those two principles, our team started a quest to find a straightforward approach to identify digital maturity and AI readiness, create benchmarking data, and offer tactical advice on what software or tool to deploy next.
Introducing a Different Digital Maturity Compass
We focused on a group often on the periphery of large consulting firms’ solutions: organizations with fewer than 500 employees. These businesses and entities are the backbone of economies worldwide, making up 99% of US organizations across the private and nonprofit sectors.
We adopted a simplified and actionable framework. We chose six critical dimensions that most organizations correlated with Revenue or Capacity growth or Cost Reduction, as well as being better prepared to deal with ever-changing economic and competitive environments.
- Operational Efficiency
- Data-Driven Decision Making
- Collaboration and Change Management
- Customer Relationship and Growth
- Security and Compliance
- Team Development and Engagement.
We derived insights from over 80,000 data points gathered from ~2,000 organizations representing a fusion of SMBs, nonprofits, and governmental agencies.
We narrowed down options of 12 or 25 questions to provide flexibility based on the depth needed and mapped practical next steps for each maturity level on each dimension.
Armed with this dataset and design principles, we began validating our model in consulting engagements. The results were consistent and telling: not only could these entities pinpoint their digital maturity and AI readiness, but they also walked away with tailored pragmatic advice. This included clear directives on their subsequent steps, investment projections, and expected ROI.
Our quantitative and qualitative findings continuously underline one core statement: Digital Maturity (including responsible use of AI) correlates to growth.
Why It Matters: Digital Maturity Correlates to Growth
We noticed a clear correlation between the level of digital adoption (and, by extension, AI maturity) and business success.
Our data science exploration led our teams toward a nonlinear correlation, using the characteristics of Richard’s curve to depict the nuanced progression of digital transformation. Interestingly, the halfway mark on our index is around the 60% mark, a point we’ve identified as the “digital ready” phase for effectively harnessing AI. Here, we consistently see a marked difference between peers in terms of success, emphasizing how even a modest progression in digital maturity can result in significant growth.
CEOs and CFOs found resonance with these insights, especially when provided with clear, actionable directions.
“‘What repetitive and tedious tasks can we automate?’ That question was our eureka moment,” shared Liz, the driving force behind a Social Justice organization in Alabama, during one of our discussions.
Based on her query, our model suggested an investment of $750 in a custom add-on for their spreadsheet software coupled with a forecasted $100/yr on OpenAI API calls.
Such a seemingly simple measure has the potential to save the organization over $25K per year, not to mention the invaluable opportunity it presents in reallocating a key team member from tedious back-office tasks to impactful fieldwork.
Evolving our approach for NPOs
While the concepts of reducing costs and augmenting capacity resonate well with leaders at NPOs, we get consistent feedback on an urgent need to go beyond looking at fundraising or operational cost reduction improvements.
Most leaders are asking for benchmarking data related to digital maturity and impact.
But how can we define impact?
The Impact Genome Project has done the best work on mapping impact, but most NPOs lack the sophistication to measure things at that level. We started to explore correlations (not causation) between people served per dollar and the organization’s level of digital maturity.
Where to start?
Embracing digital maturity isn’t just a tech imperative; it’s a growth catalyst. While humble in its design, our AI Compass aims to influence the responsible adoption of AI, guiding organizations to navigate and thrive in this digital age, perfecting their link between Digital Maturity and their Definition of Success.
- Think You Want To Be “Data-Driven”? Insight Is The New Data (forrester.com) – “74% of firms wnat to be data-driven, but only 29% are successful. Yet data-driven organizations are 140% more likely to create a sustainable competitive advantage and 78% more likely to grow revenue.
- Organizations with less than 500 employees in the US represent 99% of all entities and 51% of the employment (Source: US Department of Labor Statistics Tables F and G 2022 – ). SMEs represent about 90% of businesses and more than 50% of jobs worldwide – World Bank SME Finance: Development news, research, data | World Bank