Digital business and transformation summary articles
Week 1: Digital transformation: A multidisciplinary reflection and research agenda
Consumers have access to dozens of media channels, actively and effortlessly communicate with
firms and other consumers, and pass through rapidly increasing number of touchpoints in their
customer journey, many of which are digital. At the company level, many traditional firms have been
surpassed by innovative fast-growing digital entrants, and suffered as a result of this. For example,
fast growth of online retailers, such as Alibaba and Amazon, has strongly affected traditional
retailers.
To the best of our knowledge, there has been no multidisciplinary discussion on digital
transformation, which we define as a change in how a firm employs digital technologies, to develop
a new digital business model that helps to create and appropriate more value for the firm. Digital
transformation is multidisciplinary by nature, as it involves changes in strategy, organization,
information technology, supply chains and marketing.
The three objectives of this paper:
1. Identifying the external factors that have strengthened the need for digital transformation.
2. Discuss the strategic imperatives that result from digital transformation regarding
a. Required digital resources
b. Required organizational structure
c. Growth strategies
d. Required metrics
3. Present a research agenda that guides future research on digital transformation
The need for digital transformation is driven by three external factors
- Digital technology: technologies can be very powerful to a firm, and strengthens e-
commerce for example, this has fa-reaching effects on business. The wide entrance of new
digital technologies clearly signals the need for firms to transform their businesses digitally.
Also, digital technologies affects a firm’s cost structure by replacing costlier humans by
robots for example.
- Digital competition: competition has become more global, shifting sales to relatively young
digital firms. The last years, there has been a dramatic rise of digital firms.
- Digital customer behavior: consumers are shifting their purchases to online stores. With the
help of new search and social media tools, consumers have become more connected,
informed, empowered and active. Digital technologies allow consumers to co-create value by
designing and customizing products, perform last-mile distribution activities, and help other
customers by sharing product reviews
Phases of digital transformation
- Digitization: the encoding of analog information into a digital format such that computers
can store process, and transmit such information, so that computers can store process and
transmit such information. For example using digital forms in ordering processes.
- Digitalization: describes how digital technologies can be used to alter existing business
processes, for example, the creation of new online or mobile communication channels that
, allow all customers to easily connect with firms, and which change traditional firm-customer
interactions. This change can only be assessed by digitalization and thus includes process
improvements.
- Digital transformation: affects the whole company and its ways of doing business, it
rearranges the processes to change the business logic of a firm. digital transformation utilizes
digital technologies to enable interactions across borders with suppliers, customers and
competitors. Hence, digital technologies can help to attain a competitive advantage by
transforming the organization to leverage existing core competences or develop new ones
Strategic imperative of digital transformation
- Digital resources: resources represent a firms’ ownership and control of assets and
capabilities. There a few essential digital assets and capabilities needed for digital change:
o Digital assets: like storage of data, information and communication infrastructure.
The endowments made in technologies and data provide the basic ingredients to
leverage existing firm knowledge and other resources to create more value for
customers
o Digital agility: concerns the ability to sense and seize market opportunities provided
by digital technologies. Firms should be digitally agile to continuously modify and
reconfigure existing digitl assets and capabilities. To achieve digital transformation,
digital agility is needed to recombine digital assets with other organizational
resources in order to change the way of doing business, this will enhance the value
created for the customer. This capability is important when you shift to more
advanced phases of digital transformation, for example from digitization to
digitalization.
o Digital networking capability: refers to the firm’s ability to bring together and match
distinct users to address their mutual needs via digital means. The competitive
advantage of a firm is often determined by the strength of partners and ecosystems
they choose to work with. Customers can also be a valuable asset for generating a
competitive advantage, as they can become a brand ambassador for example.
Attracting third parties is important to realize digital transformation.
o Big data analytics capability: the capability to acquire and analyze big data for
decision making is crucial. Firms should have big data teams that have analytical,
data management, data visualization and business skills to constantly use analytics to
tailor new offerings to customers as well as to optimize revenues with dynamic
pricing and revenue management
- Organizational structure: the organizational changes needed to adapt to digital change,
especially regarding organizational structure that is flexible for digital change. The structure
should involve the following elements:
o Separate business units: separate business units allow experimentation and quick
learning, as well as avoiding cannibalization perils and conflicts
o Agile organizational forms: allow for fast responses to constant digital change
instead of using standard, more hierarchical organizational schemes.
o Digital functional areas: increasing reliance on IT and analytical functions. IT must
hereby transform to a proactive and orchestrating role supportive to digital value
creation via fast and explorative responses
- Digital growth strategies: involves the use of digital platforms.
Week 1: Digital transformation: A multidisciplinary reflection and research agenda
Consumers have access to dozens of media channels, actively and effortlessly communicate with
firms and other consumers, and pass through rapidly increasing number of touchpoints in their
customer journey, many of which are digital. At the company level, many traditional firms have been
surpassed by innovative fast-growing digital entrants, and suffered as a result of this. For example,
fast growth of online retailers, such as Alibaba and Amazon, has strongly affected traditional
retailers.
To the best of our knowledge, there has been no multidisciplinary discussion on digital
transformation, which we define as a change in how a firm employs digital technologies, to develop
a new digital business model that helps to create and appropriate more value for the firm. Digital
transformation is multidisciplinary by nature, as it involves changes in strategy, organization,
information technology, supply chains and marketing.
The three objectives of this paper:
1. Identifying the external factors that have strengthened the need for digital transformation.
2. Discuss the strategic imperatives that result from digital transformation regarding
a. Required digital resources
b. Required organizational structure
c. Growth strategies
d. Required metrics
3. Present a research agenda that guides future research on digital transformation
The need for digital transformation is driven by three external factors
- Digital technology: technologies can be very powerful to a firm, and strengthens e-
commerce for example, this has fa-reaching effects on business. The wide entrance of new
digital technologies clearly signals the need for firms to transform their businesses digitally.
Also, digital technologies affects a firm’s cost structure by replacing costlier humans by
robots for example.
- Digital competition: competition has become more global, shifting sales to relatively young
digital firms. The last years, there has been a dramatic rise of digital firms.
- Digital customer behavior: consumers are shifting their purchases to online stores. With the
help of new search and social media tools, consumers have become more connected,
informed, empowered and active. Digital technologies allow consumers to co-create value by
designing and customizing products, perform last-mile distribution activities, and help other
customers by sharing product reviews
Phases of digital transformation
- Digitization: the encoding of analog information into a digital format such that computers
can store process, and transmit such information, so that computers can store process and
transmit such information. For example using digital forms in ordering processes.
- Digitalization: describes how digital technologies can be used to alter existing business
processes, for example, the creation of new online or mobile communication channels that
, allow all customers to easily connect with firms, and which change traditional firm-customer
interactions. This change can only be assessed by digitalization and thus includes process
improvements.
- Digital transformation: affects the whole company and its ways of doing business, it
rearranges the processes to change the business logic of a firm. digital transformation utilizes
digital technologies to enable interactions across borders with suppliers, customers and
competitors. Hence, digital technologies can help to attain a competitive advantage by
transforming the organization to leverage existing core competences or develop new ones
Strategic imperative of digital transformation
- Digital resources: resources represent a firms’ ownership and control of assets and
capabilities. There a few essential digital assets and capabilities needed for digital change:
o Digital assets: like storage of data, information and communication infrastructure.
The endowments made in technologies and data provide the basic ingredients to
leverage existing firm knowledge and other resources to create more value for
customers
o Digital agility: concerns the ability to sense and seize market opportunities provided
by digital technologies. Firms should be digitally agile to continuously modify and
reconfigure existing digitl assets and capabilities. To achieve digital transformation,
digital agility is needed to recombine digital assets with other organizational
resources in order to change the way of doing business, this will enhance the value
created for the customer. This capability is important when you shift to more
advanced phases of digital transformation, for example from digitization to
digitalization.
o Digital networking capability: refers to the firm’s ability to bring together and match
distinct users to address their mutual needs via digital means. The competitive
advantage of a firm is often determined by the strength of partners and ecosystems
they choose to work with. Customers can also be a valuable asset for generating a
competitive advantage, as they can become a brand ambassador for example.
Attracting third parties is important to realize digital transformation.
o Big data analytics capability: the capability to acquire and analyze big data for
decision making is crucial. Firms should have big data teams that have analytical,
data management, data visualization and business skills to constantly use analytics to
tailor new offerings to customers as well as to optimize revenues with dynamic
pricing and revenue management
- Organizational structure: the organizational changes needed to adapt to digital change,
especially regarding organizational structure that is flexible for digital change. The structure
should involve the following elements:
o Separate business units: separate business units allow experimentation and quick
learning, as well as avoiding cannibalization perils and conflicts
o Agile organizational forms: allow for fast responses to constant digital change
instead of using standard, more hierarchical organizational schemes.
o Digital functional areas: increasing reliance on IT and analytical functions. IT must
hereby transform to a proactive and orchestrating role supportive to digital value
creation via fast and explorative responses
- Digital growth strategies: involves the use of digital platforms.
