Exploring the relevance of digital maturity factors in South African Businesses Qoqanani Mkhwanazi A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management in the field of Digital Business. Johannesburg, 2021 Exploring the relevance of digital maturity factors in South African Businesses Page | i Abstract Digital maturity in recent times has become topical in boardrooms around the world, including South Africa, with significant resources being directed into digital transformation. Various models created by academia and practice have identified numerous factors that are required but few exist on how digital maturity factors manifest in emerging and developing countries. This exploratory qualitative study therefore examines their relevance of those to South African businesses. Through semi-structured interviews with senior leaders across different industries it defines digital transformation and digital maturity as well as the dynamic capabilities that different businesses have developed to achieve it and an understanding of the relationship between the two concepts. The operational and conceptual definitions indicate digital maturity is an holistic organizational concept, thus, business looking to achieve it should develop dynamic capabilities throughout the organization, triggering wide transformation. This suggests that managers should intentionally build dynamic capabilities that address different maturity factors, with those found in the South African context not fundamentally different from those in models and in the developed world. However, importance was placed on what determined the success of digital maturity in a business, including external and internal factors. Government policies, regulation and legislation are vital in driving digital maturity and though models mainly look internally to improve it, the impact of external antecedents cannot be ignored. Keywords: Digital maturity, dynamic capabilities, digital transformation, South Africa, emerging markets, digital maturity factors, strategy, culture, client-centricity, workforce enablement, processes, partnerships and ecosystems, innovation, integration, data analytics, organization, leadership. Exploring the relevance of digital maturity factors in South African Businesses Page | ii Dedication To my parents, siblings, and daughter, Ramadimetja Nomqhele. Exploring the relevance of digital maturity factors in South African Businesses Page | iii Acknowledgement I give my deepest thank-you and appreciation to God, for shining a light on this journey, which was met with many trials and tribulations, all which we conquered through Him. Though taunted to be a journey embarked on alone, many became part of this journey through their support, whether a listening ear or guidance at times when I had hit a brick wall. My thanks go to my supervisor Brian Armstrong for his guidance through this process. To Ms Ayanda Magida and Prof Edwin Bbenkele, whom I called on for guidance and were always willing to give me an ear, ideas, and unwavering support in tackling the elephant in the room, my deepest gratitude. My daughter, Ramadimetja Nomqhele for her patience, empathy and understanding during the journey of this study, words are not enough for me to say thank-you, you have been quite the sport. My family at large, my parents, Albert and Jillian and my siblings, I thank you for your immense support. All my friends and colleagues go without mention, as this would have not materialized without your support and patience. I remain indebted to all of you. Exploring the relevance of digital maturity factors in South African Businesses Page | iv Declaration I, Qoqanani Mkhwanazi, declare that this research report is my own work except as indicated in the references and acknowledgements. It is submitted in partial fulfilment of the requirements for the degree of Master of Management in the field of Digital Business at the University of the Witwatersrand, Johannesburg. It has not been submitted before for any degree or examination in this or any other university. Name: Qoqanani Mkhwanazi Signature: Signed at Melrose On the 16th day of November 2021 Exploring the relevance of digital maturity factors in South African Businesses Page | v Table of Contents ABSTRACT ......................................................................................................................... I DEDICATION ..................................................................................................................... II ACKNOWLEDGEMENT ...................................................................................................... III DECLARATION ................................................................................................................. IV TABLE OF CONTENTS ........................................................................................................ V LIST OF FIGURES .............................................................................................................. IX LIST OF TABLES ................................................................................................................. X CHAPTER 1. INTRODUCTION ............................................................................................. 1 1.1 PURPOSE OF THE STUDY ........................................................................................................ 1 1.2 BACKGROUND AND CONTEXT OF STUDY ................................................................................... 1 1.3 RESEARCH PROBLEM ............................................................................................................ 3 1.4 RESEARCH OBJECTIVES ......................................................................................................... 5 1.5 SIGNIFICANCE OF THE STUDY .................................................................................................. 5 1.6 DELIMITATIONS OF THE STUDY ............................................................................................... 6 1.7 ASSUMPTIONS .................................................................................................................... 6 CHAPTER 2. LITERATURE REVIEW ...................................................................................... 7 2.1 INTRODUCTION ................................................................................................................... 7 2.2 DIGITAL MATURITY AND DIGITAL TRANSFORMATION .................................................................. 7 2.2.1 Digital Maturity ...................................................................................................... 7 2.2.2 Digital transformation ............................................................................................ 8 2.3 THEORETICAL FRAMEWORK ................................................................................................. 10 2.4 DIGITAL MATURITY MODELS................................................................................................. 11 2.4.1 Maturity models: origins and nature ................................................................... 11 2.4.2 Information systems maturity models ................................................................ 12 2.4.3 Digital maturity models ....................................................................................... 12 2.5 DIGITAL MATURITY MODELS CONSTRUCTION ........................................................................... 13 2.5.1 Factors of digital maturity .................................................................................... 13 Exploring the relevance of digital maturity factors in South African Businesses Page | vi 2.5.2 An holistic digital maturity model ........................................................................ 14 2.6 DYNAMIC CAPABILITY THEORY .............................................................................................. 15 2.6.1 Sensing ................................................................................................................. 16 2.6.2 Seizing .................................................................................................................. 17 2.6.3 Transforming ........................................................................................................ 17 2.6.4 Micro-foundations ............................................................................................... 18 2.7 CONCLUSION OF LITERATURE REVIEW .................................................................................... 19 CHAPTER 3. RESEARCH METHODOLOGY .......................................................................... 20 3.1 PHILOSOPHICAL UNDERPINNING ........................................................................................... 21 3.2 APPROACH TO THEORY DEVELOPMENT ................................................................................... 21 3.3 METHODOLOGICAL CHOICE ................................................................................................. 22 3.4 RESEARCH STRATEGY ......................................................................................................... 22 3.5 TIME HORIZON .................................................................................................................. 23 3.6 POPULATION AND SAMPLE .................................................................................................. 23 3.6.1 Population ............................................................................................................ 23 3.6.2 Sampling method ................................................................................................. 25 3.6.3 Sample and Sample Size ...................................................................................... 25 3.7 DATA COLLECTION METHODS .............................................................................................. 26 3.8 THE RESEARCH INSTRUMENT ................................................................................................ 27 3.9 PROCEDURE FOR DATA COLLECTION ...................................................................................... 28 3.10 DATA ANALYSIS AND INTERPRETATION ............................................................................... 29 3.11 TRANSFERABILITY AND DEPENDABILITY ............................................................................... 31 3.11.1 Credibility ......................................................................................................... 32 3.11.2 Transferability .................................................................................................. 32 3.11.3 Dependability ................................................................................................... 33 3.11.4 Confirmability................................................................................................... 33 3.12 ETHICAL CONSIDERATIONS ............................................................................................... 33 CHAPTER 4. PRESENTATION OF RESULTS ......................................................................... 35 4.1 INTRODUCTION ................................................................................................................. 35 4.2 PARTICIPANTS’ DEMOGRAPHICS ........................................................................................... 37 Exploring the relevance of digital maturity factors in South African Businesses Page | vii 4.3 OBJECTIVE 1: DIGITAL TRANSFORMATION .............................................................................. 39 4.3.1 Value Creation...................................................................................................... 39 4.3.2 Response to an external trigger ........................................................................... 41 4.3.3 Holistic business transformation ......................................................................... 42 4.4 OBJECTIVE 2: DIGITAL MATURITY ......................................................................................... 43 4.4.1 Adapting to changing environment ..................................................................... 44 4.4.2 Digital Embeddedness in the business ................................................................ 45 4.4.3 Measurements of status quo ............................................................................... 47 4.5 OBJECTIVE 3: BUILDING DYNAMIC CAPABILITIES ....................................................................... 48 4.5.1 Sensing ................................................................................................................. 49 4.5.1.1 Mapping the landscape................................................................................ 50 4.5.1.2 Deep client understanding ........................................................................... 52 4.5.1.3 Planning for the digital environment ........................................................... 55 4.5.2 Seizing .................................................................................................................. 56 4.5.2.1 Digital portfolio balance .............................................................................. 57 4.5.2.2 Redefining Solutioning ................................................................................. 58 4.5.3 Transforming ........................................................................................................ 60 4.5.3.1 Digital Ecosystems ....................................................................................... 61 4.5.3.2 Improving digital maturity ........................................................................... 63 4.5.3.3 Internal business redesign ........................................................................... 65 4.5.4 Contextual Factors ............................................................................................... 69 4.5.4.1 External barriers ........................................................................................... 70 4.5.4.2 External triggers ........................................................................................... 74 4.5.4.3 Internal enablers .......................................................................................... 75 4.5.4.4 Internal barriers ........................................................................................... 76 4.6 CONCLUSION OF FINDINGS .................................................................................................. 78 CHAPTER 5. DISCUSSION OF FINDINGS ............................................................................ 79 5.1 INTRODUCTION ................................................................................................................. 79 5.2 OBJECTIVE 1: DEFINITION OF DIGITAL TRANSFORMATION ......................................................... 79 5.3 OBJECTIVE 2: DEFINITION OF DIGITAL MATURITY .................................................................... 82 5.4 OBJECTIVE 3: BUILDING DYNAMIC CAPABILITIES ....................................................................... 84 Exploring the relevance of digital maturity factors in South African Businesses Page | viii 5.4.1 Sensing Capabilities ............................................................................................. 84 5.4.2 Seizing Capabilities ............................................................................................... 88 5.4.3 Transforming Capabilities .................................................................................... 90 5.4.4 Contextual factors ................................................................................................ 93 5.5 CONCLUSION OF DISCUSSION ............................................................................................... 97 CHAPTER 6. CONCLUSIONS AND RECOMMENDATIONS ................................................... 99 6.1 INTRODUCTION ................................................................................................................. 99 6.2 CONCLUSION PERTAINING TO RESEARCH OBJECTIVE 1 ............................................................... 99 6.3 CONCLUSION PERTAINING TO RESEARCH OBJECTIVE 2 ............................................................. 100 6.4 CONCLUSION PERTAINING TO RESEARCH OBJECTIVE 3 ............................................................. 101 6.5 MANAGERIAL IMPLICATIONS.............................................................................................. 103 6.6 GOVERNMENT RECOMMENDATIONS ................................................................................... 103 6.7 ACADEMIC CONTRIBUTIONS .............................................................................................. 104 6.8 LIMITATIONS OF THE STUDY ............................................................................................... 105 6.9 SUGGESTIONS FOR FURTHER RESEARCH ................................................................................ 106 REFERENCES ................................................................................................................. 107 APPENDIX A: INTERVIEW GUIDE ................................................................................... 117 APPENDIX B: COVER LETTER TO PARTICIPANT ............................................................... 120 APPENDIX C: CONSENT FORM ....................................................................................... 121 APPENDIX D: ETHICS APPROVAL ................................................................................... 122 Exploring the relevance of digital maturity factors in South African Businesses Page | ix List of figures Figure 1: South African Sector exposure to Digital Disruption .................................................. 2 Figure 2: Theoretical framework for the study ........................................................................ 11 Figure 3: Frequency of maturity areas utilised in general digital maturity models and industry- specific digital maturity models ............................................................................................... 13 Figure 4: Holistic Digital Maturity Model. ................................................................................ 14 Figure 5: Micro-foundations for building dynamic capabilities. .............................................. 18 Figure 6: Saunders’s Research Onion ...................................................................................... 20 Figure 7: The Digital Vortex, 2019 ........................................................................................... 24 Figure 8: Structure of Thematic Network.. .............................................................................. 30 Figure 9: Strategies for transferability in Qualitative Research............................................... 31 Figure 10: Elements of the business value creation ................................................................ 39 Figure 11: Elements of client value creation ........................................................................... 40 Figure 12: Elements from digital embeddedness. ................................................................... 45 Figure 13: Skills for a digital environment ............................................................................... 56 Exploring the relevance of digital maturity factors in South African Businesses Page | x List of tables Table 1: Results of thematic analysis ....................................................................................... 35 Table 2: Demographics of Participants .................................................................................... 38 Table 3: Sensing codes and categories .................................................................................... 49 Table 4: Seizing codes and categories ..................................................................................... 57 Table 5: Transforming codes and categories ........................................................................... 61 Table 6: Contextual factors codes and categories ................................................................... 70 Table 7: Relevant digital maturity factors for sensing dynamic capabilities ........................... 85 Table 8: Relevant digital maturity factors for seizing dynamic capabilities ............................ 89 Table 9: Relevant digital maturity factors for transforming dynamic capabilities .................. 91 Table 10: Relevant digital maturity factors for contextual factors .......................................... 94 Exploring the relevance of digital maturity factors in South African Businesses Page | 1 Chapter 1. Introduction 1.1 Purpose of the study This exploratory qualitative study explores the relevance of digital maturity factors in South African businesses, achieved through embarking on digital transformation (Thordsen, Murawski, & Bick, 2020b), where the business acquires various significant capabilities (Warner & Wäger, 2019). However, both phenomena of digital maturity and digital transformation still lack agreement on meaning and terminology, hence the study must first look to define the concepts. 1.2 Background and context of study Digital maturity relates to the ways in which organisations are adapting to a continually changing environment driven by technologies (Kane, Palmer, Nguyen-Phillips, Kiron, & Buckley, 2017). Achieving digital maturity is coupled with challenges and relies on eliminating obstacles that may interfere with processes in the digital environment (El-Telbany, Abdelghaffar, & Amin, 2020). The emerging markets’ digital environment is different from that of developed markets. For example, El-Telbany et al. (2020) identified four digital disruptors that differentiated digital from non-digital organisations, namely, the powers of technology, digital trust, human digital talent, information and data. The power of technology relies on consistent upgrades, high speed Internet and broadband, access to information and computer literacy, all typical challenges to businesses operating in a developing country. Businesses have to navigate excess government regulation, insufficient financial resources for system enhancements, lack of collaboration and poor comprehension of client needs. Digital trust is facilitated by having sufficient data protection and data privacy laws and regulations, which have been found lacking in developing countries (El-Telbany et al., 2020). Insufficient learning frameworks for workers and lack of innovation means the power of human talent is impeded, thus leading to resistance of the digital transformation journey (Mannan et al., 2015). Differing digital environments imply capabilities built for digital maturity by businesses Exploring the relevance of digital maturity factors in South African Businesses Page | 2 operating in developed countries might not be relevant or effective for businesses operating in emerging or developing economies (El-Telbany et al., 2020). In keeping with international trends, South African businesses are included in the evolving digital environment and are thus faced with the task of embarking on digital transformation in a quest to achieve a form of maturity. South Africa is an emerging market so the applicability of digital maturity factors may not be in line with more developed countries. South Africa is one of the leading African countries regarding the adoption of information and communication technology (ICT) in government, business, and society. The government’s goal of using ICT as a tool for inclusive digital transformation of government and business is encapsulated by policies and decisions, in line with its National Development Plan. This overarching national development strategy sets the country’s development vision, including that of ICT in the short and long term (Manda & Backhouse, 2018). All sectors are affected by technological disruption, with some more exposed than others, for instance media, insurance, and banking. Figure 1: South African Sector exposure to Digital Disruption: Source: Armstrong and Lee (2021, p.736) Exploring the relevance of digital maturity factors in South African Businesses Page | 3 With digital disruption affecting all sectors in South Africa, digital maturity has become an important element on every business’ executive leadership’s agenda, as increased access to resources, products, and services through the Internet has changed how enterprises are run, along with the labour market, industries, and professions (Grewiński, 2017). 1.3 Research problem Digital maturity is a challenge that businesses in South Africa must tackle, irrespective of its size or nature as it affects all enterprises (van Dyk & Van Belle, 2019). Therefore, they must understand it and its level, as the tipping point has passed and it must be embraced and capitalised on (Hess, Matt, Benlian, & Wiesböck, 2016). The notion of ascertaining the level of digital maturity of a business arises from an attempt to preserve competitive advantage in an increasing digitalised business environment (Thordsen & Bick, 2020), through exploiting potential opportunities and averting potential threats from advancing technologies (Chanias & Hess, 2016). There is no consensus in the definition of digital maturity in literature (Mettler & Pinto, 2018), though several authors regard it as the ability to adapt to a constantly changing digital business environment driven by evolving technologies (Eremina, Lace, & Bistrova, 2019; Kane, Palmer, Phillips, Kiron, & Buckley, 2018). Adapting to the constantly changing digital environment is achieved through digital transformation, which leads to some authors defining digital maturity as the status quo of digital transformation (Chanias & Hess, 2016; Remane, Hanelt, Wiesboeck, & Kolbe, 2017; Thordsen, Murawski, & Bick, 2020a). Varying factors and/or capabilities lead to the achievement of digital maturity, understanding of which has led to an influx of digital maturity models from management consultancy and academia (Chanias & Hess, 2016; Remane et al., 2017; Thordsen et al., 2020a). The intention of the models is to assist managers’ understanding of the level of digital maturity of a business (Remane et al., 2017). Managers can use the outcomes of the models to identify which factors need to be improved or introduced. South African managers look to digital maturity models to understand the capabilities needed within the business, however, whether the factors identified are applicable to a developing Exploring the relevance of digital maturity factors in South African Businesses Page | 4 or emerging country is yet to be established. The adaption of digital maturity factors identified in various models has proved problematic as they are developed in a different context (Jaquire & von Solms, 2017). Developing and emerging economies face their own challenges, including dynamic but unstable political and economic environments, which make digital transformation difficult (Tadeu, Duarte, Taurion, & Jamil, 2019). As a developing economy, South Africa is not without these challenges, with businesses still needing to adapt to a rapidly changing global business environment that is increasingly volatile, uncertain and complex (Teichert, 2019). Digital maturity, as the status quo of digital transformation, implies understanding of the capabilities built during the process and comparison of these to digital maturity factors. Transformation efforts have resulted in the change or overturning of business models (Hess et al., 2016), leading to a set of acquired capabilities by business which put it in good stead to optimise for the new environment (Thordsen et al., 2020a), varying from leadership, culture, learning capabilities to operational capabilities (Kane et al., 2018). Digital transformation requires a business to develop various capabilities whilst implementing digital technology, create and implement a digital transformation strategy, and re-inventing its business models to sustain competitive advantage (Achtenhagen, Melin, & Naldi, 2013; Carcary, Doherty, & Conway, 2016; Ransbotham, Kiron, Gerbert, & Reeves, 2017; Zinder & Yunatova, 2016). As businesses have high expectations linked to digital maturity and start a number of initiatives to change the way value is created, the academic research agenda needs to develop greater understanding of the factors/capabilities involved (Warner & Wäger, 2019). Attaining digital maturity requires a strategic framework for a rapidly changing environment, and one that has gained popularity is the dynamic capabilities framework, where a growing theoretical research stream of strategic management literature has shown how businesses react to fast technology or market changes (Ambrosini & Bowman, 2009; Di Stefano, Peteraf, & Verona, 2014; Eisenhardt & Martin, 2000; Helfat & Raubitschek, 2018; Konlechner, Müller, & Güttel, 2018; D. J. Teece, 2007; D. J. Teece, Pisano, & Shuen, 1997). Firms demonstrate flexibility, timely responsiveness, ability to relocate internal and external expertise (Ambrosini & Bowman, 2009) to achieve positive results, such as competitive advantage (Arndt & Pierce, Exploring the relevance of digital maturity factors in South African Businesses Page | 5 2018). It is evident that there is a connection between a firm’s dynamic capabilities and digital maturity factors, as found in digital maturity models. Therefore, the problem this study investigated was the relevance of digital maturity factors in South African business, typically expressed in the form of models. However, these have been created in developed countries, a digital environment different from that of developing countries. To compound the problem, the models are based on a definition of digital maturity as the status quo of digital transformation, whilst in practice it and digital transformation hold different meanings. To a business, it is about acquiring capabilities aligned to its perceived meaning, thus different factors will hold different levels of significance. To understand the factors/capabilities and why digital transformation journeys were shaped in a certain manner for South African businesses, it was imperative to understand the perceived meanings of both phenomena. 1.4 Research Objectives In order to understand the relevance of digital maturity factors in South African businesses, the study had the following objectives: i. To explore the perceived meaning of digital transformation to South African businesses ii. To explore the perceived meaning of digital maturity to South African businesses iii. To determine the dynamic capabilities South African businesses have developed for digital transformation. 1.5 Significance of the study In exploring the relevance of digital maturity factors in South Africa businesses the significance of the study is: i. To contribute to the discussion to advance knowledge academically on the relevance of digital maturity factors in South African businesses Exploring the relevance of digital maturity factors in South African Businesses Page | 6 ii. To contribute to the body of knowledge in the understanding of dynamic capabilities built for digital transformation in emerging countries iii. To contribute to the literature on digital maturity factors with a valuable link between theory and practice, i.e., understanding the operationalisation of digital maturity factors iv. To contribute to a better understanding of the managerial and practical implications of dynamic capabilities built for digital transformation v. To contribute to the conversation on a conceptual definition of digital maturity in South Africa. 1.6 Delimitations of the study i. The dynamic capability theory includes micro-foundations necessary for dynamic capabilities, but this study will not look for micro-foundations ii. The research will not seek to build a model for the South African environment but rather identify which capabilities exist or are considered by South African businesses iii. The study will focus on digital maturity factors and their relevance, not their relationship with each other or their weightings in achieving digital maturity. 1.7 Assumptions i. Businesses in South Africa have some understanding of digital transformation and digital maturity, and both are under consideration ii. South African businesses have undertaken the process of digitally transforming so some level of digital maturity exists iii. The businesses identified have some structure to their digital maturity quest iv. South African businesses endeavour to continually improve the level of digital maturity they have in order to retain their competitive advantage v. Dynamic capabilities are built on the basis of micro-foundations and ordinary capabilities. These are assumed to be in place. Exploring the relevance of digital maturity factors in South African Businesses Page | 7 Chapter 2. Literature Review 2.1 Introduction This study aimed to explore the relevance of digital maturity factors to South African businesses. In order to build an understanding of their relevance the definition of the terms is necessary. The tools necessary to operate in an environment driven by digital technologies are encapsulated in dynamic capability theory and digital maturity models. The literature review will therefore seek to clarify the key concepts as understood for this study. Digitisation and digitalisation have driven the so-called “fourth industrial revolution,” and as it has gained momentum the terms “digital transformation” and “digital maturity” have come to the fore. Literature repeatedly highlights a divergence in the definitions of these terms. One of the underpinnings has been a rapidly changing business environment, driven by rapidly evolving technologies in the digital, physical, and biological fields. The implication is that businesses are required to operate in a volatile environment and continue to deliver superior performance across all domains. Dynamic capability theory is a lens through which the capabilities to sense, seize and transform for such an environment can be identified. 2.2 Digital Maturity and Digital Transformation 2.2.1 Digital Maturity There is no commonly agreed definition for the concept of “digital maturity” (Mettler & Pinto, 2018), with some authors regarding it as the ability to adapt to a constantly changing digital business environment, with change driven by evolving technologies (Eremina et al., 2019; Kane et al., 2018). Driven by evolving technology, it is also regarded as an IT-induced phenomenon (Thordsen & Bick, 2020). The process of enabling businesses to adapt to a digital environment is achieved through its transformation, which involves producing a set of acquired capabilities for the organisation, to enable it to continue performing in its new environment (Thordsen et al., 2020a). These Exploring the relevance of digital maturity factors in South African Businesses Page | 8 include leadership, culture, learning and operational capabilities (Kane et al., 2018). The process of acquisition of these capabilities is known as digital transformation, thus a need arises to understand its status quo (Chanias & Hess, 2016; Remane et al., 2017; Thordsen et al., 2020a), a definition found in extant literature. The primary importance of transformation is its impact on business, with digital maturity being the ability of an organisation to change and apply innovation in order to remain competitive (Deloitte, 2019; Eremina et al., 2019). It is therefore not a static target but a set of dynamic capabilities that a learning organisation develops over time. Warner and Wäger (2019) posited the dynamic capability framework was a powerful lens for examining the digital transformation of incumbent firms, and in order to survive in the digital economy they had to build strong dynamic capabilities to ensure the rapid creation, implementation and transformation of business models. The implication of this is that for a business to be viewed as digitally mature it must have an ability to build dynamic capabilities and readily adapt to a constantly changing environment (Teichert, 2019). The environment is driven by technology which continually evolves but does not reach a state of completion or perfection. Digital maturity is thus a relative concept with regards to the environment and time, and a learned characteristic of an entity that represents an ability to respond appropriately to the environment in which it operates (Mettler & Pinto, 2018). 2.2.2 Digital transformation Several authors view digital maturity as a measure of the status quo of digital transformation (Chanias & Hess, 2016; Remane et al., 2017; Thordsen et al., 2020a), therefore in order to understand it, it is imperative to understand the meaning of digital transformation. Though digital transformation is different from digital maturity the term is sometimes used interchangeably with it (Teichert, 2019). Several concepts, including digitisation and digitalisation are labelled digital transformation, an indicator of its breadth (Reis, Amorim, Melão, & Matos, 2018). In literature there is no consistent definition of digital transformation, as found by Warner and Wäger (2019) when they conducted a summative content analysis of strategy consultancy reports. Broad inconsistencies and ambiguities centred on processes and outcomes exist, Exploring the relevance of digital maturity factors in South African Businesses Page | 9 whilst empirical evidence has shown that it varies from an individual and an organizational perspective. It consists of varying themes, including a cultural orientation that recognizes fast and flexible decision-making, awareness of digital technologies, changing consumer behaviour, developing business models and a capability-building process. One of the major contributors to differing perspectives on the meaning stems from different terminology used to discuss a variety of themes relating to how awareness, preparedness, and responsiveness are built to address this phenomenon (Warner & Wäger, 2019). Digital transformation is a technology-driven change, affecting different levels of the organisation and is a two-pronged approach, involving the exploitation of digital technologies for the improvement of processes as well as exploration of digital innovation in an attempt to transform digital models (Berghaus & Back, 2016). The process is arduous but has to be undertaken for survival and competitive advantage (Reis et al., 2018), it involves the business redefining itself to be able to adapt in a constantly changing environment (Teichert, 2019; Vial, 2019b). The spectrum of influence ranges from changes in countries and industries, societies and organisations (Vial, 2019b). Authors agree that digital transformation is building and orchestrating several digital capabilities within the organisation to deliver value to stakeholders (Berghaus & Back, 2016; Deloitte, 2019; Reis et al., 2018). As it involves several capabilities and affects several levels in the organisation it is viewed as a holistic concept, so how the company is run from the top becomes highly important (Teichert, 2019). It can be concluded that there is no consensus in defining digital transformation or in the breadth of the concept. The differences in the definition of digital maturity and digital transformation lead to the first two research objectives: Research Objective 1: To explore the perceived meaning of digital transformation to South African businesses. Research Objective 2: To explore the perceived meaning of digital maturity to South African businesses. Exploring the relevance of digital maturity factors in South African Businesses Page | 10 2.3 Theoretical framework In identifying the digital maturity factors relevant to South African businesses, the study used dynamic capability theory and digital maturity models. Understanding digital maturity to be the status quo of digital transformation, assessing it translates to a complex exercise involving different aspects of the organisation. An ontology to measure digital maturity with the intention of identifying the shortcomings in the organisation and defining a pathway to improve digital maturity should reflect the different aspects of the organisation (Sandkuhl, Shilov, & Smirnov, 2019). Digital maturity models demonstrate these different aspects through several constructs and dimensions that diagnose the maturity of different capabilities across the organisation. The difficulty lies in measuring capabilities from different domains, which have different formalisms and terminology and summarising into a single measure (Sandkuhl et al., 2019), thus a multi-aspect ontology that captures the dynamism of the different capabilities of organisation where digital maturity needs to be utilised. Warner and Wäger (2019) theorise the dynamic capabilities framework is a powerful lens through which to examine digital transformation, a multi-faceted organisational concept that requires different capabilities to develop simultaneously. Digital maturity defined to be the status quo of digital transformation would therefore look at the status quo of the capabilities that have been built by the business in the process of transforming. Thus, the dynamic capability theory framework can be used to examine digital maturity factors. A closer look at digital maturity models shows these are created generically to consist of measures, indicators, factors, dimensions, and outcomes, as shown in Figure 2 (below). The dimensions are consolidated to determine the level of digital maturity. Exploring the relevance of digital maturity factors in South African Businesses Page | 11 Figure 2: Theoretical framework for the study Adapted from: Armstrong and Lee (2021, p.768) This study argues that the capabilities built for digital transformation are aspects of digital maturity factors. 2.4 Digital maturity models 2.4.1 Maturity models: origins and nature On the assumption of predictable patterns, maturity models are a representation of how business capabilities can evolve from one stage to another along a well-defined logical path, hence they are also termed stage-of-growth models, stage models, or stage theories. The ideology of maturity models can be traced to Maslow’s hierarchy of human needs in 1954, Kuznets’ economic growth in 1965 and the Nolan’s progression of IT organization in 1973 and 1979. Nolan’s stage model led to the early emergence of maturity models based on staged sequence levels (Pöppelbuß & Röglinger, 2011). By their nature they look at the maturity of a domain based on a comprehensive set of criteria (De Bruin, Rosemann, Freeze, & Kaulkarni, 2005) and are a reference tool that is conceptual and normative (Becker, Niehaves, Poeppelbuss, & Simons, 2010). The outcomes from maturity models could be either Exploring the relevance of digital maturity factors in South African Businesses Page | 12 descriptive, prescriptive, or comparative, depending on the purpose for which they are designed (De Bruin et al., 2005). In their prescriptive form maturity models are set to identify gaps in capabilities that can be improved through a set of actions (Lahrmann, Marx, Mettler, Winter, & Wortmann, 2011). However, a concern, is that most fail to describe how the users of their models can effectively perform prescriptive actions based on the outcomes (Lahrmann et al., 2011). Maturity models are important tools to assist the organisation in informing strategy and defining a path of evolution for the organisation. However, they struggle with being grounded in theory, the theory of emergence and the theory of diffusion of innovation can offer foundations for maturity models (Lahrmann et al., 2011). 2.4.2 Information systems maturity models In more recent times the phenomenon of maturity models has been extensively used in the field adjacent to digital maturity, that of information systems, where they are a tool to inform continuous evolution of systems, provide benchmarking or to be used for self-assessment purposes (Lasrado, Vatrapu, & Andersen, 2015; Mettler, Rohner, & Winter, 2010). The most well-known of the maturity model in this field is the Capability Maturity Model, introduced in the early 1990s. It is a major contributor to the broad acceptance of maturity models in the information systems community (Mettler et al., 2010), widely accepted and adopted to address an extensive range of problems in the organisation (Lasrado et al., 2015). However, maturity models within the information systems arena are not flawless and suffer some challenges, including measuring distance between maturity level, scale of measurement discrepancies, dealing with additivity, and how the dimensions used in these models are derived (Lasrado et al., 2015). 2.4.3 Digital maturity models Within the digital landscape, maturity models are a tool for an organisation to assess the current situation of various capabilities that it has built, acquired and introduced over time (Becker et al., 2010). Digitisation affects all areas of the organization and as such it is often difficult to define an optimal digitisation strategy (Schwer, Hitz, Wyss, Wirz, & Minonne, Exploring the relevance of digital maturity factors in South African Businesses Page | 13 2018). Models assist in looking at the digital maturity level of the organisation as they take an overview and identify specific areas in which it can optimize digitisation (Schwer et al., 2018). 2.5 Digital maturity models construction 2.5.1 Factors of digital maturity Figure 3 (below) illustrates the number of times different areas are considered in 23 digital maturity models. Figure 3: Frequency of maturity areas utilised in general digital maturity models and industry-specific digital maturity models. Source: Teichert (2019) Across the digital maturity models, from industry-specific models to more generalised ones, there is a range of factors used (Teichert, 2019), some of which are considered more frequently than others. The derivation of the various areas to be considered for inclusion in digital maturity models is largely unclear, as shown through gaps in addressing every facet of the organisation. In a study to understand how digital maturity variables impact the enterprise architecture layers, from 15 models studied of 147 variables, it was found that no model addressed all aspects of the enterprise’s architecture (Schwer et al., 2018). The greatest concern with digital maturity models is that they deal with the business side of the organisation but are limited in addressing the technical side, including technology, physical, 7 2 5 3 1 1 4 3 5 4 8 3 8 12 5 2 2 3 4 4 5 6 8 9 9 9 9 10 11 12 Products and Services Digital Business Models Compliance and Security Digital Ecosystems Leadership Vision Governance Customer Insight and Experience Digital Strategy Organisation Digital Skills Innovation Operations and Processes Technology Digital Culture Frequency of areas addressed in digital maturity models General Models Industry Specific Exploring the relevance of digital maturity factors in South African Businesses Page | 14 implementation, and migration (Schwer et al., 2018). Digital transformation is an IT-induced phenomenon and thus the level of organisational IT becomes a key factor for digital maturity (Thordsen & Bick, 2020). However, Thordsen and Bick (2020) found digital maturity models disregarded IT dimensions in determining an organisation's level of digital maturity. 2.5.2 An holistic digital maturity model Digital transformation goes beyond functional thinking to consider holistically the comprehensive factors that must be in place for exploiting the opportunities or avoiding the threats that stem from digital technologies (Warner & Wäger, 2019). Existing models do not provide an holistic view on the path towards digital maturity, that is, digital transformation, and through a comparison with established IT maturity models, significant shortcomings were identified in them (Thordsen & Bick, 2020). The gaps in the models fail to extract the full value of digital transformation, to acknowledge that it is an IT-induced phenomenon, or that the level of IT maturity is a key factor of digital maturity (Thordsen & Bick, 2020). Figure 4: Holistic Digital Maturity Model. Source; Armstrong and Lee (2021, p. 791) Exploring the relevance of digital maturity factors in South African Businesses Page | 15 Armstrong and Lee (2021), suggest an holistic model shown in Figure 4, which looks at all aspects of the organisation and splits the assessment into two main components mainly leadership and strategy, and digital application and impact. The digital maturity factors found within each of these components are not only found in other models but are also suggested as capabilities in the dynamic capability theory (see 2.6). 2.6 Dynamic capability theory The theory of dynamic capability argues that organisations cannot survive on traditional sources of competitive advantage, that is, baseline capabilities, but it was imperative to build a super-capability for change which would enable the organisation to sense, seize and shape new market opportunities, more specifically in an environment characterised by rapidly changing technology and market volatility (D. J. Teece et al., 1997). This super-capability, known also as dynamic capability, enables a business to transform in periods of rapid change (Denrell & Powell, 2016). Strong dynamic capabilities are vital for businesses facing dynamic competition as market disruption occurs on a regular basis and in some instances arise from outside their traditional industry (D. J. Teece, 2016). The strength of a business’s dynamic capabilities can benefit it by producing not only superior profits but also differentiated products and services that are more suitable to the new business environment (D. J. Teece, 2016). The speed by which the business can align and realign its resources to this new environment is determined by the strength of its dynamic capabilities, strengthening of which involves developing and orchestrating resources in response. This can be achieved if the business is able to continuously sense, seize and periodically transform (D. J. Teece, 2016). Warner and Wäger (2019) believe the dynamic capabilities framework is useful for examining digital transformation, given the disruptive nature of digitisation. Digital maturity as the status quo of digital transformation can also be examined through the lens of the dynamic capabilities’ framework. Businesses need to build strong dynamic capabilities to respond rapidly in order to maintain relevance in the emergent digital economy. Core to implementing changes needed for a business to be in a position to optimize opportunities within its business environment is leadership (D. J. Teece, 2016). Coupled with vision it is essential to mobilising the business to share strategic vision, align business activities with strategy and ignite a desire Exploring the relevance of digital maturity factors in South African Businesses Page | 16 to succeed. Thus leadership, strategy and vision are core elements of a business’s dynamic capabilities and the quality of these elements are central to the strength and weakness of its dynamic capabilities (D. J. Teece, 2016). These elements are also found in digital maturity factors as seen in Figure 4 and Figure 3. Dynamic capabilities evolve around doing the right thing at the right time and require an assessment of the business environment, along with technological opportunities, strong leadership, and the building of a change-oriented culture. Leadership and culture are the cornerstone of digital maturity, with digital maturity models identifying them as factors to measure in the assessment of digital maturity. Teichert (2019), identifies knowledge sharing, empowerment, risk and failure tolerance, collaboration and more importantly change-ability as some of the main culture categories needed for digital maturity. The abilities to sense, seize and transform are essential for long-term sustenance of the business in an environment in which customers, competitors and technology are changing and engagement with each cluster of factors is not continuous or semi-continuous, nor necessarily sequential (D. Teece, Peteraf, & Leih, 2016). 2.6.1 Sensing Sensing is paramount to the business being able to adapt to volatile markets, technological uncertainty and competitors (Day & Schoemaker, 2016). It is inherently a set of factors that give the business an ability to explore technological opportunities, probe the market, listen to customers and scan the business ecosystem (D. J. Teece, 2019), and helps with identifying threats and opportunities by scanning the external environment for unexpected trends that could disrupt the business (Warner & Wäger, 2019; Weritz, Braojos, & Matute, 2020). Sensing encapsulates the intricate understanding of customer needs such that the business is able to identify, develop, co-develop, and assess technological opportunities to meet these needs. It involves looking for trends and is supported by strong utilization of data analytics from which managers can build and test hypotheses about market and technology evolution, including recognizing latent customer needs (D. J. Teece, 2019). Further to data analytics the speed of sensing is increased by speedy information gathering, which can be achieved through an innovation capability (Roy & Khokle, 2016). Sensing also involves making exploratory Exploring the relevance of digital maturity factors in South African Businesses Page | 17 investments in the right technologies and having timely intelligence about every part of the business ecosystem (Day & Schoemaker, 2016). Figure 3 and Figure 4, refer to the factors of customer insights and experience, customer orientation and engagement which are factors that look to what extent businesses utilise data analytics to understand its client’s needs as well as what channels it uses to deliver these to clients (Armstrong & Lee, 2021; Teichert, 2019) Once the business has a deeper understanding of its environment along with the impact of the changing landscape, the question is how it utilizes this to enhance the business. 2.6.2 Seizing Seizing involves the mobilization of resources to address needs and opportunities, and as a result capture value from these opportunities (D. J. Teece, 2016). Seizing concerns itself with implementation (D. Teece et al., 2016), elements of which include new products, processes and services which require investment in development and commercialization activity (D. J. Teece, 2007). Investments and their timing are central to the seizing stage, as this determines if the business has an ability to invest heavily in technologies and designs that will achieve marketplace acceptance and can stay ahead of the competition. Strategy around investments and their timing, leveraging products and services and building on increasing return are important during the seizing stage (D. J. Teece, 2007). Selection or creation of a business model that will define the commercialization strategy and investment priorities is an important element of seizing. Business model design is a part of organisational innovation and business success depends on it as much as the selection of technology. Business models implicate processes and incentives, and are vital in supporting innovation (D. J. Teece, 2007). 2.6.3 Transforming Transforming arises when the need to fully realize the full commercial potential of business opportunities created by the sensing and seizing capabilities requires execution of a new strategy which can only be achieved through business transformation. It involves continued renewal and forms the third pillar of the dynamic capability theory (Day & Schoemaker, 2016; Exploring the relevance of digital maturity factors in South African Businesses Page | 18 D. J. Teece, 2016). It speaks to the ability of the business to change itself as well as how it navigates and shapes the external environment (D. Teece et al., 2016). The transforming capability is characterised by an agile, entrepreneurial mind-set within the business and a broad expansive partnership externally (Day & Schoemaker, 2016). Thus, the components of transforming include organisational redesign and external shaping. 2.6.4 Micro-foundations Within the context of the dynamic capabilities’ theory exists the term “micro-foundations,” which are the factors that support the development of dynamic capabilities. The micro- foundations are varied as shown in Figure 5 (below), and include elements of operations, governance, customer needs, business models, investment prioritization, and innovation (Teece, 2007). Micro-foundations support the development of dynamic capabilities, these begin to tie in with factors identified across different digital maturity models that have been created in academia and practice. Figure 3 and Figure 4 identify digital maturity factors concerned with governance, operations, investments, processes as well as investments and innovation. Figure 5: Micro-foundations for building dynamic capabilities. Source: D. J. Teece (2007) Exploring the relevance of digital maturity factors in South African Businesses Page | 19 The literature suggests there is a strong relationship between the dynamic capabilities that a business builds for a changing environment and digital maturity factors. Thus, looking at the dynamic capabilities acquired by the business for digital maturity should provide a lens to understand the relevance of digital maturity factors to South African businesses. This leads to the following: Research Objective 3: To determine the dynamic capabilities South African businesses have developed for digital transformation. 2.7 Conclusion of literature review The literature review has looked at the definition of digital maturity and digital transformation and found no universal definition of this term or a common one. In an analysis of digital maturity models, it was revealed that the language used for the factors to drive maturity is not a common one, with some models referring to constructs, other to dimensions, and some to factors. In expressing the level of digital maturity some models use stages, some use archetypes, and others use levels. It was further discovered that they are not rooted in theory, and some authors have begun to suggest theories for their possible grounding. It was further found that digital maturity models do not fully consider all the organisation's aspects, more specifically when the factors the models consider are compared to the scope of enterprise architecture. The research aimed to understand the relevance of factors driving digital maturity proposed by various authors within the South African context, through the lens of the dynamic capability theory. The research objectives were - i. To explore the perceived meaning of digital transformation to South African businesses. ii. To explore the perceived meaning of digital maturity to South African businesses. iii. To determine the dynamic capabilities South African businesses have developed for digital transformation. Exploring the relevance of digital maturity factors in South African Businesses Page | 20 Chapter 3. Research Methodology The research aimed to explore which digital maturity factors were relevant to South African businesses. Digital maturity was defined for this research as the status quo of digital transformation, however, neither term has no single universally accepted definition. The researcher's departure point was therefore to gain an understanding of how South African firms perceived them. This chapter describes the research methodology used to explore the research objectives, depicted by the research onion shown in Figure 6. Figure 6: Saunders’s Research Onion. Source: Saunders, Lewis, & Thornhill (2016) Figure 6 depicts the choices concerning philosophy, approach to theory development, methodological choice, research strategy, time horizon before deciding on data collection and data analysis (Saunders et al., 2016). It provided the framework for formulating the research design. Exploring the relevance of digital maturity factors in South African Businesses Page | 21 3.1 Philosophical underpinning Five major philosophies exist in business and management research, namely positivism, critical realism, interpretivism, postmodernism and pragmatism, as illustrated in Figure 6. The research philosophy utilised fell into the interpretive paradigm, characterised by creating new, richer understandings and interpretations of social worlds and contexts. In a business and management environment this involves looking at business from the viewpoint of different groups of people (Saunders et al., 2016). The study aimed not to generate new theories but to determine if factors already identified through digital maturity models in extant literature applied to South African businesses. The study further sought to make sense of the phenomena of digital maturity and digital transformation within the South African context, based on an understanding of the world from the subjective experiences of individuals (Antwi & Hamza, 2015). The use of an interpretive and exploratory approach is seen in studies by Weritz et al. (2020) and Warner and Wäger (2019), which also investigated the relevant dynamic capabilities and digital culture aspects which may influence digital transformation and maturity. 3.2 Approach to theory development There are three main approaches to theory development, namely deduction, abduction, and induction, as illustrated in the second layer of the research onion in Figure 6. The research followed an abductive approach to theory development, one which oscillating from theory to data, effectively combines the deductive and inductive approaches (Saunders et al., 2016). The interrogation of the relevance of digital maturity factors was achieved by asking questions constructed using the dynamic capability theory as a framework and aligning the dynamic capabilities to elements of digital maturity factors found in digital maturity models. The research required the researcher to build patterns, categories and themes relating to the dynamic capabilities from the bottom up through organising information gathered about the business from the interviewee (Creswell & Creswell, 2017). This approach of building the themes to illustrate the dynamic capabilities was an inductive methodology. The portion of the research relating emerging dynamic capabilities to the elements of digital maturity factors Exploring the relevance of digital maturity factors in South African Businesses Page | 22 to determine the relevance of these factors introduced a deductive approach to the research (Creswell & Creswell, 2017). The combination of the inductive and deductive approaches resulted in the research following an abductive approach as it oscillated from theory to data and back to theory. 3.3 Methodological choice As the study was interpretative and abductive, the appropriate methodological approach was qualitative, conducted when phenomena need to be explored (Creswell & Poth, 2016). Research objectives that reflect the identified phenomenon are used to direct the course of the research (Ryan, Coughlan, & Cronin, 2007). The first two objectives dealt with the meaning of both digital maturity and digital transformation to South African businesses. Without consensus on the definition of digital maturity and digital transformation, a more complex and in-depth understanding of the phenomena is required (Creswell & Poth, 2016). Although often perceived to be biased, small-scale, and lacking rigour, qualitative research is unbiased, in-depth, valid, reliable, credible, and rigorous (Crick, 2020). The last research objective was to investigate the relevant dynamic capabilities which may influence digital maturity. In order to conduct the investigation, the dynamic capability theory was applied to frame questions to determine the capabilities built for sensing, seizing, and transforming in response to a continually changing digital environment. Prior research has lacked in adapting and connecting dynamic capabilities to digital maturity factors, so a complex, detailed understanding was required (Creswell & Poth, 2016). As the study concerned itself with emerging economies, which have different challenges to developed economies, minimal research exists on the relevant digital maturity factors. El-Telbany et al. (2020) focused on looking at the gap in digital transformation in Egypt using qualitative research, as in this study. 3.4 Research Strategy Several strategies are exclusive to a qualitative research design, namely ethnography, action research, grounded theory, narrative inquiry, and phenomenology (Creswell & Creswell, Exploring the relevance of digital maturity factors in South African Businesses Page | 23 2017; Saunders et al., 2016). The research adopted a phenomenological approach. According to (Davidsen, 2013), the aim of a phenomenological approach is “to capture as closely as possible how the phenomenon is experienced within the context in which the experience takes place”. This approach best fitted the purpose of this qualitative study, which was to explore the relevance of digital maturity factors in the South African context by understanding the lived experiences of executives that influence digital maturity. Digital maturity is an ongoing socio-technical phenomenon, whilst digital transformation is a context-specific phenomenon and can take distinctive paths (Remane et al., 2017). This research was thus a phenomenological study to determine the views of executives on the dynamic capabilities necessary for digital maturity. The units of analysis were discrete statements extracted from interview data regarding digital transformation resources, capabilities, and results (El-Telbany et al., 2020). Phenomenology does not reveal generalisable situations but provides examples, explanations and experiences to better understand the phenomenon, an approach by Marks, AL-Ali, Atassi, Abualkishik, and Rezgui (2020), in their study to understand the practitioners' views on the maturity and challenges of digital transformation. 3.5 Time horizon According to Figure 6 there are two possible types of time horizons in a study, namely, longitudinal, which is a representation over a period in time, or cross-sectional, an instance in time. The research looked at the objectives at a point in time, making the time horizon cross-sectional (Saunders et al., 2016). The time horizon was determined by time constraints of the study as well as the definition of digital maturity. It was assumed that digital maturity was the status quo of digital transformation, at a point in time, specifically for the third objective, which looked at the dynamic capabilities that had been built along its journey. 3.6 Population and Sample 3.6.1 Population The population for this study was board members or senior executives who occupy active roles in multiple businesses in South Africa, since they had the most knowledge about Exploring the relevance of digital maturity factors in South African Businesses Page | 24 company-wide related aspects of digital transformation (Weritz et al., 2020). Both old corporates and born-digital businesses were considered in the population. Whilst it is counterintuitive to include born-digital companies, they are under constant pressure from new disruptors to reinvent themselves using emerging technologies (Li, 2020). Though digital native companies held an advantage over traditional companies the differences were already becoming blurred before the pandemic. COVID-19 made these distinctions irrelevant as it introduced a new disruption for all businesses. Traditional companies accelerated digital changes that were already underway. In the “new normal” dispensation, the expectation is that distinction will be between those businesses that successfully manage to continually transition to new technologies, new business models, new organisational designs and those lagging (Li, 2020). Different sectors were vital to the study as industries experience digital transformation differently, thus, some sectors were more digitally mature. The “digital vortex” illustrates how industries are all being drawn into the vortex of technology disruption at different paces, as shown in Figure 7 (below). This implies that different sectors could have different capabilities, so a comprehensive analysis entailed including various sectors. Figure 7: The Digital Vortex, 2019: Source: Armstrong and Lee (2021, p.734) Exploring the relevance of digital maturity factors in South African Businesses Page | 25 3.6.2 Sampling method The study required participants with broad and in-depth knowledge of the organisations in which they are employed. The sampling technique, therefore, targeted the organisations' top managers and executives who were intricately involved in strategic planning for the development of digital innovation and could highlight the variables and constructs that might directly or indirectly affect the level of digital maturity (El-Telbany et al., 2020). Purposive and snowball sampling techniques were both suited as the methods were dictated by the phenomenon, including the type of participants (Groenewald, 2004) A purposive, non-probabilistic sampling was used to select individuals within the chosen organisation to participate. The research strategy informed the choice of the sampling method. In phenomenology, purposive sampling is used because it selects individuals with knowledge of the phenomena concerned and allows an understanding of their lived experiences (Mapp, 2008). It is also practical when the research intends to reveal or illuminate key themes (Saunders et al., 2016). Further, the sample was based on the researcher's judgement and purpose for the research, explicitly including participants experiencing digital transformation and digital maturity (Groenewald, 2004). The main disadvantage of purposive sampling is that the computation of results for that organisation will not be generalisable (Lennon-Dearing & Neely-Barnes, 2014), as the individuals will be selected based on what the researcher perceives their role entails. Though purposive sampling managed to assist the researcher with securing some interviews it was noted that the target population for the research was relatively small, so snowball sampling was also applied. The researcher asked for referrals from participants to peers who held similar roles in other businesses. By its nature, snowballing allows for the expansion of samples by allowing informants or participants to recommend others for interviewing (Moser & Korstjens, 2018). 3.6.3 Sample and Sample Size In order to gain the perspective of different sectors the sample covered different industries and roles within a business, drawn from the population for this study. Different roles within Exploring the relevance of digital maturity factors in South African Businesses Page | 26 the organisation are essential to digital maturity as it affects the whole organisation. The eligible participants were individuals who occupied a crucial role in businesses, who were willing to participate and who had an influence on corporate strategy and business models. Eleven senior leaders took part. For non-probability sampling techniques the sample size is ambiguous, and there are no rules. Saunders et al. (2016) recommend a sample size of 5-25 for a study that utilised semi- structured interviews or in-depth interviews. The sample size depends on comparison the research intends to take, the heterogeneity or homogeneity of the population, and how wide- ranging the research is (Saunders et al., 2016). Mapp (2008) suggests that the number of participants in phenomenological research should be small to allow scrutiny of each experience in depth. As the aim of the study was not to generalise the results a large number of participants was not a requirement. El-Telbany et al. (2020) used a sample size of five to explore the digital transformation gap in Egypt, looking for the presence of nine factors and restricting it to the telecommunications sector. In another study to explore the antecedents of digital transformation through the lens of digital capability theory, the study interviewed eight participants (Weritz et al., 2020). According to (Warner & Wäger, 2019), in their study that aimed to look at digital transformation through the lenses of dynamic capability theory, interviews with 13 companies, in particular companies of more than one person, there were 18 in-depth interviews across eight industries. Creswell and Poth (2016) recommend that the sample size for a phenomenological study can vary from three to 15 participants. 3.7 Data Collection Methods In an exploratory phenomenological study, both an in-depth and a semi-structured interview are helpful in understanding the background, the current status, and the context of the study (Saunders et al., 2016). Both formats are acceptable in phenomenological research, as they allow the researcher to obtain detailed descriptions or interpretations from the participants (Padilla-Díaz, 2015). The primary data source for this study was semi-structured interviews Exploring the relevance of digital maturity factors in South African Businesses Page | 27 based on previous studies with a similar aim, for instance those of (El-Telbany et al., 2020; Warner & Wäger, 2019; Weritz et al., 2020). 3.8 The research instrument A guideline was developed for the semi-structured interviews based on the aim to explore the relevance of digital maturity factors in South Africa. The guide allowed for a predominantly fluid informal interview interaction that facilitated the discovery of unexpected and new insights (Eppich, Gormley, & Teunissen, 2019). The interview was structured to last between 60 and 90 minutes. Dynamic capability theory gave the main areas in which an organisation must build capabilities in response to a rapidly evolving environment. These provided the guidelines for the open-ended interview questions (Saunders et al., 2016), therefore the main themes that were covered during the interview were: (1) the definition of digital transformation and digital maturity; (2) the dynamic capabilities built for scanning the environment for threats and opportunities; (3) the dynamic capabilities built for seizing opportunities; (4) the dynamic capabilities built for transforming the business; and (5) the challenges faced and how to improve digital maturity. The main theme questions were supported by follow-up questions for the participants to understand more easily and steer the dialogue towards the study subject (Kallio, Pietilä, Johnson, & Kangasniemi, 2016). The follow-up questions in certain instances followed the predesigned ones and, in some instances, were spontaneous. Various probing techniques were applied when asking follow-up questions, including both verbal (expressing interest with a verbal agreement or repeating or summarising the participant's points) and non-verbal techniques (nodding and allowing the participant to go on further with their point) (Kallio et al., 2016). Probing was necessary as the study intended to: i. achieve significance and depth to the data obtained ii. adopt an interpretivism approach that sought to understand the meaning that different participants assigned to digital maturity and digital transformation and what needed to be in place within an organisation to achieve certain levels of digital maturity or improve the current levels of digital maturity (Saunders et al., 2016). Exploring the relevance of digital maturity factors in South African Businesses Page | 28 Three pilot interviews were conducted to anticipate the discussion's length and refine the interview questions and techniques (Saunders et al., 2016). The pilot testing involved field testing, with the researcher simulating an actual interview (Kallio et al., 2016). This was chosen over internal testing and expert assessment as the researcher was conducting solo research and had no access to specialists in the field. Based on feedback obtained, questions were refined and re-ordered to achieve a better flow. An example of this semi-structured interview guide is attached (Appendix A). 3.9 Procedure for data collection The study required access to professionals in senior positions with in-depth knowledge of the digital transformation in their business and various elements of the organisations. Two routes were taken to identify participants, approaches on a social media platform and referrals from others in those positions. Different social media platforms exist for a mixture of general interaction and entertainment, however, one created in 2003 to connect professionals in various fields was used, named LinkedIn (Murphy, Hill, & Dean, 2014). The researcher initially approached individuals directly to establish rapport, followed by requests for an interview. An email was sent with attachments, notably: i. A covering letter described the research, an introduction to the researcher, and the reason for the research. (Appendix B). ii. The ethics certificate obtained from the university's Research Ethics committee with the following ethics protocol number; WBS/BA2029630/336. (Appendix C). iii. The semi-structured interview guideline, which allowed the participants to have time to prepare for the responses. This proved to be appreciated by the participants. (Appendix A). iv. Consent form for the interview, asking for permission for it to be recorded and indicating that interview participation was voluntary, and the participant could withdraw at any moment. (Appendix D). On securing a participant’s time, data collection was conducted using online meetings, a version of traditional methods using Internet venues that have gained prominence with digital Exploring the relevance of digital maturity factors in South African Businesses Page | 29 societies accelerated in use by the COVID-19 pandemic (Lobe, Morgan, & Hoffman, 2020). The preferred platform for online interviews, Zoom, which has already been extensively used for research purposes as it carries the advantages of rapport, convenience, simplicity, and user-friendliness (Archibald, Ambagtsheer, Casey, & Lawless, 2019). The time for the interviews remained flexible and was according to the preference of the participants. They began with an introduction to build rapport, such that the participants felt at ease before sharing their experiences (Moser & Korstjens, 2018). They were recorded with the permission of the participant, having been informed of the commencement of recording at the beginning of the interview. The interview audio recordings were subsequently downloaded for verbatim transcription (Sutton & Austin, 2015) by a professional transcriber in preparation for data analysis. The researcher then de-identified by removing any names of the participants or references to other individuals by name in the organisation, removing names of companies and any other identifiable variables in the transcript (Stuckey, 2014). To verify the correctness of the transcripts the researcher listened to the audio recording and ensured it had been accurately captured (Sutton & Austin, 2015). Essential documents from the interview and transcribing process were filed on a password- protected computer in the researcher's home in a research folder containing the following subfolders: meeting recordings, meeting transcripts, cover letters, electronic consents, and participants information sheets. 3.10 Data analysis and interpretation The choice of research design lent itself to interpretive phenomenological analysis, which entails multiple readings of the transcripts, making and transforming notes into emergent codes, seeking relationships, and clustering codes into categories and themes (Pietkiewicz & Smith, 2014). A crucial step for the researcher was interpreting the narrative given by the participants into notes. In order to identify patterns within data (notes), analyse and report the themes, thematic analysis was applied. Discrete statements collected from interview data regarding digital maturity, digital transformation, and dynamic capabilities built by the business were used to derive codes, followed by categories and ultimately themes (El-Telbany Exploring the relevance of digital maturity factors in South African Businesses Page | 30 et al., 2020). Thematic analysis revealed salient themes in the notes at different levels, and thematic networks allowed the structuring and depiction of these terms (Attride-Stirling, 2001). The structure of a thematic network started with a basic theme followed by an organising theme and ultimately a global theme, as shown in Figure 8 (below). Figure 8: Structure of Thematic Network. Source: Attride-Stirling, (2001). The global theme was essentially digital maturity, identified by the organising themes (factors and capabilities) and the basic themes (aspects of capabilities or factors). The analysis of the transcripts involved the following steps: i. Note making – In certain instances the respondent narrated a story to which the researcher assigned meaning and made notes ii. Coding – Coding was carried out relatively close to the data, with identified topics, issues, similarities, and differences in the participants' responses (Sutton & Austin, 2015) iii. Categories - The codes were reduced to categories by searching for patterns and the universal nature of experience amongst the participants and grouping them. The Exploring the relevance of digital maturity factors in South African Businesses Page | 31 categories were evaluated against the research questions to create themes and subthemes iv. Themes – Themes were developed as aggregate units that presented the unit of analysis, and which described and explained the phenomena thoroughly. The themes that emerged from the study are based on the participants’ lived experiences as seniors in facilitating digital transformation or with oversight of digital transformation. They are presented in chapter 4. 3.11 Transferability and dependability The role of transferability and dependability is to judge the quality of the research (Saunders et al., 2016). In quantitative research, reliability and validity are well established, however, their appropriateness to a qualitative interpretive study is considered philosophically and technically inappropriate (Saunders et al., 2016). There are several techniques that Creswell and Poth (2016) suggest a researcher can follow to establish rigour within qualitative research, which looks at validation through three different lenses, as shown in Figure 6 (below). Figure 9: Strategies for transferability in Qualitative Research. Source: Creswell & Poth, (2016) Exploring the relevance of digital maturity factors in South African Businesses Page | 32 The three lenses shown in Figure 9 are the reader or reviewer, the researcher, and the participant. Each of the techniques establishes transferability, credibility, dependability, or confirmability of the study. Some of these strategies were implemented and are discussed in the sections that follow. 3.11.1 Credibility Credibility in qualitative research is synonymous with internal validity in quantitative research. There are three methodologies in which credibility can be established, namely: i. Triangulation – The researcher utilised notes made during the interviews as well as the interview recordings to triangulate. This was an application of validation through the researcher’s lens as shown in Figure 9. ii. Seeking participants’ feedback – transcripts were provided to the participants for feedback and their views on any findings and interpretations (Creswell & Poth, 2016; Tobin & Begley, 2004). This was an application of validation through the participant’s lens as shown in Figure 9. iii. Peer reviews (Creswell & Poth, 2016; Tobin & Begley, 2004) - This involves having a peer review or debriefing of data and research process, as the study was conducted under a supervisor, this is implicit in the study. This was an application of validation through the reviewer’s lens as shown in Figure 9. 3.11.2 Transferability Transferability in qualitative research is synonymous with external validity or generalisation in quantitative research. However, generalisation is not the aim of qualitative research but the applicability of the findings and interpretations. In the paradigm of interpretivism, transferability can be achieved through the generation of rich, thick descriptions (Lincoln & Guba, 2013). A high level of transferability was achieved within semi-structured interviews by clarifying meanings and exploring responses from different angles. Each of the questions posed to the participants probed for more in-depth insights from the participants, ultimately producing detailed, thick descriptions. Thus, validation was provided through a reviewer’s lens (Figure 9). Exploring the relevance of digital maturity factors in South African Businesses Page | 33 3.11.3 Dependability Dependability in qualitative research is synonymous with reliability in quantitative research and concerns itself with consistency and dependency of the process of deriving findings and interpretations (Lincoln & Guba, 2013). Dependability was achieved through an audit trail, where the researcher kept a self-critical account of the research process, including internal and external dialogues (Tobin & Begley, 2004). 3.11.4 Confirmability Confirmability in qualitative research is synonymous with objectivity in quantitative research. It refers to how findings and interpretations are a result of a dependable process of enquiry as well as data collection (Lincoln & Guba, 2013). Triangulation can serve a dual purpose of establishing both confirmability and credibility. For the study, triangulation served both purposes. Other techniques for assessing confirmability included an audit and a reflective journal. Confirmability is also usually established once credibility, transferability and dependability are achieved (Ryan et al., 2007). 3.12 Ethical considerations The right to privacy and wellbeing of the participants was of the utmost importance. The researcher prioritised protecting the participants, thus, the application of appropriate ethical principles was critical. As such, commitment to adherence to ethical research procedure through informed consent was assured. The following measures were put in place to safeguard the participants: i. The research objectives were communicated to the participants through letters written requesting permission to interview them (see Appendix B). The contents of the letter informed the participants of voluntary participation, assurance of anonymity and confidentiality. The letter also provided an overview of the aim of the research. Exploring the relevance of digital maturity factors in South African Businesses Page | 34 ii. A consent form, re-iterating voluntary participation and indicating the meeting was being recorded and that quotes would be used anonymously, was to be filled in by each respondent. (see Appendix D) iii. The respondents were given sight of the ethics certificate granted by the university to undertake the research. (see Appendix C) iv. At the beginning of the interview, the researcher asked for permission again to record the interview and alerted the interviewees that notes were being taken in order by the researcher v. The researcher described the next steps after the interview, that is, transcribing, data analysis and write up the research report vi. Names, positions in the business, and business names were excluded to guarantee anonymity, and the research focused only on responses gathered during the interviews. Participants were comfortable continuing with the discussion being recorded after giving the various assurances. Giving assurances of honesty and confidentiality in results helps enhance sincerity in the responses and insights extracted from the interviews (Sanjari, Bahramnezhad, Fomani, Shoghi, & Cheraghi, 2014). Exploring the relevance of digital maturity factors in South African Businesses Page | 35 Chapter 4. Presentation of results 4.1 Introduction This chapter presents the key findings from in-depth, semi-structured interviews with key individuals who occupy various senior positions in different South African businesses. The following research objectives assisted in drawing insights from the different participants who participated in the study: i. To explore the perceived meaning of digital transformation to South African businesses ii. To explore the perceived meaning of digital maturity to South African businesses iii. To determine how South African businesses built dynamic capabilities in order to achieve digital maturity. The research findings are based on thematic analysis of the interview responses and the researcher's observation of the participants. The thematic analysis conducted on the interview data generated the codes outlined in Table 1. Table 1: Results of thematic analysis Codes Categories Themes Objective Scale business Leverage Technology Business value creation Value creation R esearch o b jective 1 : P erceived m ean in g o f d igital tran sfo rm atio n Transform and improve processes Create a competitive advantage Modernisation of technology Deliver value proposition Client value creation Omni-Channels Exploring the relevance of digital maturity factors in South African Businesses Page | 36 Codes Categories Themes Objective Client Centricity Define client engagement models Response to external trigger Holistic business transformation Adapting to a changing environment R esearch o b jective 2 : P erceived m ean in g o f d igital m atu rity Account for value created by digital Understand how to leverage technology Digital Embedded ness Process automation Technology adapted for core functions Process exceptions automation Enabled workforce Acceptance of technology Digital as normal activity Measurement of status quo Continuous market scanning Mapping the landscape Sensing R esearch O b jective 3: D yn am ic cap ab ilities b u ilt fo r d igital m atu rity Screening competitors Identify trends (market, technology, clients) Client relationship management Deep client understanding Understanding client journeys Client data analytics Formulating digital strategies Planning for the digital environment Identifying skill sets for the future Role of partnerships Digital portfolio balance Seizing Balancing internal and external options Exploring the relevance of digital maturity factors in South African Businesses Page | 37 Codes Categories Themes Objective Enhancing external options Redefining solutioning Promoting innovation Prototyping Joining a digital ecosystem Digital ecosystems Transform ing Having a partnership network Promoting digital citizenry Improving digital maturity Employing digital natives Optimising operations through data transformation and digitisation Central digital and data offices Internal structure business redesign Emphasising integration Redesigning teams Lack of enabling environment External barriers Contextual Factors Lack of client digital skills Changing client behaviour External triggers Contextual Factors R esearch O b jective 3: D yn am ic cap ab ilities b u ilt fo r d igital m atu rity COVID-19 Disruptive competitors and technologies Executive Support Internal enablers Enabling culture Fear and resistance to change Internal barriers Lack of skills Legacy systems 4.2 Participants’ demographics The study interviewed executives from businesses within the private sector of different sizes and ages, as shown in Table 2. This study looked at five industry sectors in South Africa and conducted 11 semi-structured interviews, at which point saturation was reached as the Exploring the relevance of digital maturity factors in South African Businesses Page | 38 narratives by the participants became repetitive and no new categories were found in the data. Table 2 shows participants were skewed towards males, making up eight of the 11. The sample also skewed itself to financial services, with seven participants from financial services, however, the businesses within financial services varied, consisting of banking, insurance, investments, and professional education. The primary cause of the skewness was lack accessibility to senior executives in other sectors by the researcher. Seven of the businesses were listed on the Johannesburg Stock Exchange (JSE), whilst only four were not. The age of the businesses ranged from three years to 150 years, with four of the businesses being over one hundred years old, three over 45 years and four below ten years old. Only three of the non-listed organisations did not disclose the profits of the previous year-end for the business but described themselves as medium enterprises. The participants all occupied senior positions within the company and had oversight of the business and not only the area of the respondent's role. Table 2: Demographics of Participants Participants Gender Business Sector Business Age (Years) Profit to previous year end JSE Listed Position of the Respondent Respondent 1 Male Financial services - Professsional Development 100 n/a Head - Marketing and Business Development. Respondent 2 Male Consumer Discretionary 130 R6.2b Senior Manager - Special Projects Respondent 3 Male Financial Services - Banking 3 R6.0b Chief Design Officer Respondent 4 Male Healthcare Services 7 n/a Chief Executive Officer Respondent 5 Female Financial Services - Banking 3 R6.0b Former Programme Manager Respondent 6 Male Financial Services - Insurance 8 n/a Board Chairman Respondent 7 Female Integrated Chemical and Mining 70 R-24.0bn Head - Growth and Innovation Respondent 8 Male Financial Services - Insurance 130 R16.0b Head - Insurance, Southern and Central Africa Respondent 9 Female Management Consulting 48 R4.5b Expert Partner Respondent 10 Male Financial Services - Investments 70 R9.2b Chief Technology Officer Respondent 11 Male Financial Services - Insurance 150 R16.0b Executive Head - Insights, Content and Digitisation Exploring the relevance of digital maturity factors in South African Businesses Page | 39 4.3 Objective 1: Digital Transformation The first research objective sought to explore the perceived meaning of digital transformation to South African businesses. Different meanings emerged from the results. The three themes found in the results were (1) value creation; (2) response to an external trigger; and (3) a holistic business transformation. 4.3.1 Value Creation All the participants expressed digital transformation in terms of value created for either the business or the client. The results pointed to different aspects around business value creation derived from digital transformation, as shown in Figure 10. Figure 10: Elements of the business value creation. Source: Author (2021) Figure 10 shows that although one of the perceived meanings of digital transformation was business value creation, there were various elements that participants pointed to. The first element was leveraging technology to (a) scale the business, and (b) transform the business and improve processes. The second element was creating a competitive advantage and, finally, the modernisation and integration of technology. The following narrative captured all the aspects of leveraging technology, which was collaborated by other participants: Business Value Creation Leveraging Technology Scale business Transform and improve proceses Create a competitive advantage Modernisation of technology Exploring the relevance of digital maturity factors in South African Businesses Page | 40 Respondent 10: “Digital transformation for me talks to, one, transforming your business model