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- Digital Transformation
8 Examples of Innovative Digital Transformation Case Studies (2024)
- Published: January 19, 2022
- Updated: October 3, 2024
With the rapid pace of technological advancement, every organization needs to undergo digital transformation and, most likely, transform multiple times to stay relevant and competitive.
However, before you can reap the benefits of new technology, you must first get your customers and employees to adapt to this change successfully—and here lies a significant digital transformation challenge.
Organizations thriving in this digital-first era have developed digital innovation strategies prioritizing the change management mindset. This paradigm shift implies that organizations should continuously explore improving business processes .
8 Best Examples of Digital Transformation Case Studies in 2024
- Amazon Business
- Under Armour
- Internet Brands®
- Michelin Solutions
8 Examples of Inspiring Digital Transformation Case Studies
While digital transformation presents unique opportunities for organizations to innovate and grow, it also presents significant digital transformation challenges . Also, digital maturity and levels of digital transformation by sector vary widely.
If you have the budget, you can consider hiring a digital transformation consulting company to help you plan your digitization. However, the best way to develop an effective digital transformation strategy is to learn by example.
Here are the 8 inspiring digital transformation case studies to consider when undertaking transformation projects in 2024:
1. Amazon extended the B2C model to embrace B2B transactions with a vision to improve the customer experience.
Overview of the digital transformation initiative
Amazon Business is an example of how a consumer giant transitions to the B2B space to keep up with the digital customer expectations. It provides a marketplace for businesses to purchase from Amazon and third parties. Individuals can also make purchases on behalf of their organizations and integrate order approval workflows and reporting.
The approach
- Amazon created a holistic marketplace for B2B vendors by offering over 250 million products ranging from cleaning supplies to industrial equipment.
- It introduced free two-day shipping on orders worth $49 or more and exclusive price discounts. It further offered purchase system integration, tax-exemption on purchases from select qualified customers, shared payment methods, order approval workflows, and enhanced order reporting.
- Amazon allowed manufacturers to connect with buyers & answer questions about products in a live expert program.
- Amazon could tap the B2B wholesale market valued between $7.2 and $8.2 trillion in the U.S. alone.
- It began earning revenue by charging sales commissions ranging from 6-15% from third-party sellers, depending on the product category and the order size.
- It could offer more personalized products for an improved customer experience.
2. Netflix transformed the entertainment industry by offering on-demand subscription-based video services to its customers.
Like the video rental company Blockbuster, Netflix also had a pay-per-rental model, which included DVD sales and rent-by-mail services. However, Netflix anticipated a change in customer demand with rising digitalization and provided online entertainment, thereby wiping out Blockbuster – and the movie rental industry – entirely.
- In 2007, Netflix launched a video-on-demand streaming service to supplement their DVD rental service without any additional cost to their subscriber base.
- It implemented a simple and scalable business model and infused 10% of its budget in R&D consistently.
- The company has an unparalleled recommendation engine to provide a personalized and relevant customer experience.
- Netflix is the most popular digital video content provider, leading other streaming giants such as Amazon, Hulu, and Youtube with over 85% market share.
- Netflix added a record 36 million subscribers directly after the start of the COVID-19 pandemic.
3. Tesla uses connected car technology and over-the-air software updates to enhance customer experience, enable cost savings, and reduce carbon emissions.
No digital transformation discussion is complete without acknowledging the unconventional ideas implemented by Elon Musk. Tesla was a huge manifestation of digital transformation as the core motive was to prove that electric cars are better than their gasoline counterparts both in looks and performance.
Over the years, Tesla has innovated continuously to improve its product, make itself more economical, and reduce its carbon footprint.
- Tesla is the only auto manufacturer globally, providing automatic over-the-air firmware updates that allow its cars to remotely improve their safety, performance, and infotainment capabilities. For example, the OTA update could fix Tesla’soverheating issues due to power fluctuation.
- Tesla launched an autopilot feature to control the speed and position of the car when on highways to avoid potential accidents. However, the user still has to hold the wheel; the vehicle controls everything else. This connected car technology has created an intelligent data platform and smart autonomous driving experience.
- Tesla further ventured into a data-driven future, and it uses analytics to obtain actionable insights from demand trends and common complaints. A noteworthy fact is that the company has been collecting driving data from all of its first and second-generation vehicles. So far, Tesla has collected driving data on 8 billion miles while Google’s autonomous car project, Waymo , has accumulated data on 10 million miles.
- Tesla’s over-the-air updates reduce carbon emissions by saving users’ dealer visits. Additionally, these updates save consumers time and money.
- Tesla delivered a record 936,172 vehicles in 2021, an 87 % increase over the 499,550 vehicle deliveries made in 2020.
4. Glassdoor revolutionized the recruitment industry by allowing employees to make informed decisions.
Glassdoor is responsible for increasing transparency in the workplace and helping people find the right job by allowing them to see millions of peer-to-peer reviews on employers, including overall company culture, their CEOs, benefits, salaries, and more.
- Glassdoor gathers and analyzes employee reviews on employers to provide accurate job recommendations to candidates and vice-versa. It also allows recruitment agencies and organizations to download valuable data points for in-depth analysis & reporting.
- It further introduced enhanced profiles as a paid program, allowing companies to customize their content on the Glassdoor profiles, including job listings, “Why is it the Best Place to Work” tabs, social media properties, and more. This gives companies a new, innovative way to attract and recruit top talent.
- Glassdoor created the largest pool of interview questions, salary insights, CEO ratings, and organizational culture via a peer-to-peer network, making it one of the most trustworthy, extensive jobs search and recruiting platforms – and one of the most well-recognized review sites
- Glassdoor leverages its collected data for labor market research in the US. Its portfolio of Fortune’s “Best Companies to Work For” companies outperformed the S&P 500 by 84.2%, while the “Best Places to Work” portfolio outperformed the overall market by 115.6%.
5. Under Armour diversified from an athletic apparel company to a new data-driven digital business stream to transform the fitness industry.
Under Armour introduced the concept of “Connected Fitness” by providing a platform to track, analyze and share personal health data directly to its customers’ phones.
- Under Armour acquired several technology-based fitness organizations such as MapMyFitness, MyFitnessPal, and European fitness app Endomondo for a combined $715 million to obtain the required technology and an extensive customer database to get its fitness app up and running. The application provides a stream of information to Under Armour, identifying fitness and health trends. For example, Under Armour (Baltimore) immediately recognized a walking trend that started in Australia, allowing them to deploy localized marketing and distribution efforts way before their competitors knew about it.
- Under Armour merged its physical and digital offerings to provide an immersive customer experience via products such as Armourbox. The company urged its customers to go online and share their training schedule, favorite shoe style, and fitness goals. It used advanced analytics to send customers new shoes or apparel on a subscription basis, offering customers a more significant value over their lifetime.
- It additionally moved to an agile development model and data center footprint with the ERP SAP HANA .
- Under Armour additionally leveraged Dell EMC’s Data Protection and Dell Technologies to help fuel digital innovation and find peak value from its data.
- Under Armour created a digital brand with a strong consumer focus, agility, and change culture.
- With the Connected Fitness app, it provided a customer experience tailored to each consumer.
6. Internet Brands® subsidiary Baystone Media leverages Whatfix DAP to drive product adoption of its healthcare businesses.
Baystone Media provides end-to-end marketing solutions for healthcare companies by providing a low-cost, high-value subscription offering of Internet Brands® to promote their practices digitally. Baystone Media empowers its customers by offering a codeless creation of personalized websites. However, as its userbase is less tech-savvy, customers were unable to make the most of their solution.
The idea was to implement a solution for Baystone Media & its sister companies to enable its clients to navigate its platforms easily. In addition to PDFs and specific training videos, the search was on for a real-time interactive walkthrough solution, culminating with Whatfix .
Baystone media saw a 10% decrease in inbound calls and a 4.17% decrease in support tickets, giving them the runway to spend more time enhancing its service for the clients.
7. Sophos implemented Salesforce to streamline its business and manage customer relations more effectively.
Sophos went live with Salesforce to accelerate its sales process , enhance sales productivity , and increase the number of accounts won. However, the complex interface and regular updates of Salesforce resulted in a decreased ROI.
- Sophos implemented Whatfix to provide interactive, on-demand training that helped users learn in the flow of work. The 24*7 availability of on-demand self-support, contextual guidance, and smart tips allowed Sophos to manage its new CRM implementation effectively.
- It unified internal communications using Whatfix content. First, they created walkthroughs for the basic functionality of Salesforce such as lead management, opportunities, etc. Next, they moved to slightly more complex features that their users were uncomfortable with and created guided walkthroughs and smart pop-ups. Sophos also used Whatfix to align the sales and product management teams by embedding videos and other media to unify product communication instead of relying on various communication tools.
- Sophos experienced a reduction in sales operations support tickets globally by 15% (~12,000 tickets). It saved 1070 man-hours and achieved an ROI of 342%.
8. Michelin Solutions uses IoT & AI to provide customers with a more holistic mobility experience.
The digital strategy of Michelin Solutions has essentially centered around three priorities:
- Creating a personalized relationship with customers and end-users
- Developing new business models
- Improving their existing business processes
- AI is extensively used in R&D, enabling the digital supply chain driven through digital manufacturing and predictive maintenance. For example, connected bracelets assist machine operators with the manufacturing process.
- It deployed sophisticated robots to take over the clerical tasks and leveraged advanced analytics to become a data-driven organization.
- Offerings such as Effifuel & Effitires resulted in significant cost savings and improved overall vehicle efficiency.
- Michelin Solutions carefully enforced cultural change and launched small pilots before the change implementation .
- Effifuel led to extra savings for organizations and doubled per-vehicle profits.
- A reduction in fuel consumption by 2.5 L per 100km was observed which translates into annual savings of €3,200 for long-haul transport (at least 2.1% reduction in the total cost of ownership & 8 tonnes in CO2 emissions).
- Michelin Solutions shifted its business model from selling tires to a service guaranteeing performance, helping it achieve higher customer satisfaction, increased loyalty, and raised EBITDA margins.
Each industry & organization faces unique challenges while driving digital transformation initiatives. Each organization must find a personalized solution and the right digital transformation model when implementing new technology. Their challenges can prepare you better for the potential roadblocks, but the specific solutions will need to be personalized according to your business requirements.
Open communication with your customers and employees will help you spot potential issues early on, and you can use case studies like these as a starting point.
If you would like to learn how you can achieve these results by using a digital adoption platform , then schedule a conversation with our experts today.
Request a demo to see how Whatfix empowers organizations to improve end-user adoption and provide on-demand customer support
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25 Digital Transformation Case Studies [2024]
In a world where technology relentlessly reshapes our world, businesses that fail to adapt are destined for obsolescence. These 15 digital transformation case studies present a thrilling narrative of change, charting the journeys of companies that dared to embrace the digital frontier. Each story unfolds as a high-stakes gamble where traditional practices are disrupted, often under the threat of imminent collapse. These businesses, spanning diverse industries from retail to agriculture, engaged in transformative practices not just to survive but to radically reinvent themselves. As we explore these narratives, consider them as a playbook for disruption, illustrating the necessity of digital evolution and its perils and promises.
25 Digital Transformation Case Studies
1. nordstrom: reinventing retail through digital customer experiences.
Nordstrom, an upscale American chain of department stores, has long been known for its commitment to customer service. As digital technologies evolved, Nordstrom embraced a digital transformation strategy to enhance its customer experience and seamlessly integrate online and in-store shopping.
Transformation
a. Omni-channel Integration: Nordstrom invested heavily in creating a seamless omni-channel experience. They enhanced their capabilities to monitor inventory in real-time both in stores and online, enabling customers to verify product availability and reserve items for in-store pickup.
b. Mobile App Enhancements: The Nordstrom mobile app was enhanced with features like “Style Boards,” a digital tool allowing salespeople to create and share personalized fashion recommendations virtually.
c. Data Analytics: Using advanced data analytics, Nordstrom acquired deep insights into customer preferences and shopping behaviors. This enabled them to tailor their marketing efforts and enhance customer engagement effectively.
The digital initiatives paid off by enhancing customer engagement and satisfaction. The ability to shop seamlessly between online and physical stores improved the overall shopping experience, increasing sales and customer loyalty.
Related: Evolution of Digital Transformation
2. Mayo Clinic: Digital Innovation in Healthcare
The Mayo Clinic is recognized worldwide for its specialized medical care. Faced with the growing need for healthcare modernization and improved patient outcomes, Mayo Clinic initiated a comprehensive digital transformation.
a. Telemedicine: Adopting telemedicine technologies was accelerated, allowing patients to consult with Mayo Clinic specialists remotely. This was specifically crucial during pandemic scenarios
b. Electronic Health Records (EHR): Mayo Clinic implemented a state-of-the-art EHR system to streamline patient information management across all points of care, improving coordination and treatment outcomes.
c. AI and Machine Learning: They embraced AI technologies for diagnostic imaging, predictive analytics, and personalized medicine, aiming to enhance diagnosis accuracy and patient care planning.
The digital transformation at Mayo Clinic has significantly enhanced patient accessibility, care coordination, and efficiency. Telemedicine has expanded its reach, particularly to those unable to travel for medical care, and AI integration has improved diagnostic and treatment precision.
3. Ford Motor Company: Embracing Digital Manufacturing and Connected Cars
Ford, a century-old automotive manufacturer, faced increasing competition from traditional car manufacturers and new tech-driven entrants like Tesla. In response, Ford launched an aggressive digital transformation strategy to revamp its manufacturing processes and product offerings.
a. Smart Factories: Ford introduced advanced manufacturing techniques in its factories, employing robotics, AI, and IoT to enhance production efficiency and flexibility. Using connected sensors and predictive analytics helped minimize downtime and optimize maintenance.
b. Connected Cars: Ford increased its investment in developing connected car technologies, which enable vehicles to communicate with one another and with infrastructure, enhancing safety and driving experiences. Features include remote services, real-time traffic updates, and emergency response systems.
c. Electric Vehicles (EV) Innovation: To align with global sustainability trends, Ford accelerated its development of electric vehicles, supported by a digital ecosystem that offers an integrated network of charging stations and a smart, user-friendly interface for managing vehicle charging.
Ford’s digital transformation has improved its manufacturing efficiency and positioned it as a leader in the future mobility space, with advancements in connected cars and a strong focus on electric vehicles. These efforts have helped Ford stay competitive in a rapidly evolving automotive landscape.
4. Singapore’s Public Utilities Board (PUB): Digital Water Management
Singapore’s Public Utilities Board (PUB) is responsible for the collection, development, distribution, and reclamation of water in Singapore, a nation with limited natural resources. The Public Utilities Board (PUB) initiated a digital transformation project aimed at boosting sustainability and efficiency in water management.
a. Smart Water Metering: Implementing smart meters across the city-state enabled real-time water usage monitoring, helping to detect leaks early and educate consumers about their water consumption patterns.
b. Automated Water Quality Monitoring: PUB deployed sensors throughout the water supply network to continuously monitor water quality and operational parameters, utilizing AI to predict and address potential issues before they impact consumers.
c. Virtual Singapore: PUB participated in the ‘Virtual Singapore’ project, which features a dynamic three-dimensional city model and a collaborative data platform incorporating hydrological models to simulate water movements and accumulation. This contribution enhances flood management and urban planning.
These technological advancements have made Singapore’s water management system one of the most efficient and sustainable in the world. The integration of digital tools has enabled PUB to ensure a continuous, safe water supply and effective management of the nation’s water resources, even as demand grows and climate challenges intensify.
Related: Impact of Digital Transformation in Manufacturing Sector
5. Netflix: Pioneering the Streaming Revolution
Netflix started as a DVD rental service by mail but transformed into a global streaming giant. As consumer preferences shifted from physical rentals to digital streaming, Netflix pivoted its business model to focus on online content delivery and original programming.
a. Streaming Technology: Netflix invested heavily in developing robust streaming technology, capable of delivering high-quality video content over the internet. This technology adjusts to the user’s bandwidth, ensuring an uninterrupted viewing experience.
b. Data Analytics and Machine Learning: Utilizing big data analytics and machine learning, Netflix analyzes vast amounts of data on viewer preferences to recommend personalized content and to decide which new series and films to produce.
c. Original Content: Transitioning from licensing to producing original content, Netflix created a wide array of popular shows and movies, becoming a major player in the entertainment industry, with its productions receiving critical acclaim and awards.
Netflix’s focus on technology and data-driven content creation has changed how people consume entertainment and how it’s produced. It has grown into one of the most significant entertainment platforms globally, with a vast subscriber base that enjoys content across many genres and languages.
6. DBS Bank: Leading Digital Banking in Asia
DBS Bank, the biggest bank in Southeast Asia, faced intense competition from traditional banks and new fintech startups. In response, DBS embarked on a comprehensive digital transformation journey to redefine banking in a digital world.
a. Digital-Only Banking: DBS launched Digibank, a mobile-only bank in India and Indonesia, which offers a paperless, signatureless, and branchless banking experience. This initiative aimed to tap into the mobile-savvy population in these countries.
b. API Platform: DBS was one of the first banks in Asia to create a comprehensive banking API platform, allowing businesses to integrate banking services into their applications seamlessly, enhancing customer experiences, and creating new revenue streams.
c. Data-Driven Insights: Leveraging big data, DBS provides personalized financial advice to customers. They use AI to offer tailored investment and savings solutions based on individual spending habits and financial goals.
DBS’s digital initiatives have set a new standard in the banking industry, significantly improving customer satisfaction and operational efficiencies. Their digital-first approach has attracted millions of new customers, particularly among the tech-savvy younger demographic, and has solidified their position as a leader in the digital banking space.
7. Domino’s Pizza: From Pizza Company to Tech Company
Domino’s Pizza recognized the importance of technology in the fast-food industry early and embarked on an ambitious digital transformation to become more than just a pizza company. They aimed to enhance customer experience, streamline operations, and increase sales through digital channels.
a. Online Ordering System: Domino’s developed an innovative digital ordering system with a website, mobile app, and voice-recognition system. This system made ordering pizzas quick and easy for customers.
b. Pizza Tracker: Domino’s introduced the “Pizza Tracker,” a feature that enables customers to follow their orders in real-time from preparation through delivery, thereby increasing transparency and boosting customer engagement.
c. AI and Automation: To reduce delivery times and costs, Domino’s has experimented with artificial intelligence and automation technologies, including chatbots for ordering and robotic units for pizza delivery.
These digital initiatives have transformed Domino’s into a tech-forward company, significantly boosting online sales. They have also improved operational efficiencies and customer satisfaction, keeping Domino’s competitive in a fiercely contested market.
Related: Pros and Cons of Digital Transformation
8. Delta Airlines: Enhancing Travel Experience with Digital Solutions
Delta Airlines, one of the largest airlines worldwide, has consistently sought to leverage technology to better its operational efficacy and customer service. Recognizing the evolving needs of modern travelers, Delta has invested in digital technologies to enhance the passenger experience.
a. Mobile App Innovations: Delta’s mobile app includes features like check-in, boarding pass access, flight tracking, and notifications about gate changes or delays, making travel more manageable and less stressful for passengers.
b. RFID Baggage Tracking: Delta implemented Radio Frequency Identification (RFID) technology for baggage handling. This tech upgrade provides customers with real-time updates on their checked luggage and significantly reduces the rate of lost or misdirected bags.
c. Biometrics for Seamless Travel: Delta has introduced biometric boarding at several airports, using facial recognition technology to speed up the boarding process while enhancing security.
Delta’s digital transformation efforts have improved customer satisfaction by making flying more pleasant less stressful and enhancing operational efficiencies. The use of advanced technology has solidified Delta’s reputation as an innovator in the airline industry.
9. Nike: Revolutionizing Retail with Digital Engagement
Nike, a leading sports apparel and equipment manufacturer, faced the challenge of staying relevant in a rapidly changing retail landscape dominated by digital engagement and e-commerce. Nike embarked on an aggressive digital transformation strategy to maintain its market leadership and connect with a global audience.
a. Nike+ Ecosystem: Nike developed the Nike+ ecosystem, which includes apps for fitness tracking, coaching, and community engagement. These apps collect data that Nike uses to improve customer engagement, tailor marketing efforts, and enhance product development.
b. Direct-to-Consumer (DTC) Sales: Nike boosted its direct-to-consumer channel through its website and mobile app, enhancing the customer shopping experience with personalized recommendations based on user activity and preferences.
c. Augmented Reality: Nike introduced augmented reality features in its app, allowing customers to try on shoes virtually, ensuring a better fit and reducing return rates.
Nike’s focus on digital has dramatically shifted its sales strategy, significantly increasing its direct-to-consumer revenue. The personalized and connected experiences have fostered brand loyalty and enabled Nike to gather valuable customer data to drive future product and marketing strategies.
10. Southern California Edison: Powering Up Grid Modernization
Southern California Edison (SCE), one of the biggest electric utilities in the U.S., needed to address aging infrastructure, regulatory pressures, and increasing demand for renewable energy sources. SCE launched a digital transformation initiative to modernize its electrical grid to improve reliability, efficiency, and sustainability.
a. Smart Grid Technology: SCE implemented a smart grid with advanced metering infrastructure, digital sensors, and automated controls throughout the network. This technology provides SCE with real-time data to manage energy flow and respond to issues efficiently.
b. Renewable Integration: The utility company enhanced its grid to handle more renewable energy sources. Digital tools help manage the variability and intermittency of renewables like solar and wind.
c. Customer Engagement Platforms: SCE developed online tools and mobile applications that give customers detailed insights into their energy usage, helping them manage consumption and reduce costs.
SCE’s digital initiatives have enhanced grid reliability and efficiency, which is crucial for incorporating renewable energy. These initiatives have enabled consumers to take a more active role in managing their energy consumption, supporting broader sustainability objectives and compliance with regulatory standards.
Related: Use of Digital Transformation in Real Estate
11. L’Oréal: Digital Beauty Transformation
L’Oréal, the world’s largest cosmetics company, recognized the need to digitally transform to maintain its leadership and respond to changing consumer behaviors, particularly the rise of e-commerce and digital-first beauty brands.
a. Virtual Try-On Technology: L’Oréal acquired the augmented reality and artificial intelligence company ModiFace, which offered customers virtual try-on features for makeup and hair color, enhancing the online shopping experience.
b. Personalized Marketing: Using AI-driven analytics, L’Oréal was able to offer personalized product recommendations and targeted marketing campaigns, improving customer engagement and satisfaction.
c. E-commerce and Social Selling: L’Oréal expanded its e-commerce presence and integrated social media selling platforms, enabling customers to purchase products directly through social media ads and influencers, tapping into the social commerce trend.
These digital initiatives have improved L’Oréal’s engagement with tech-savvy consumers and boosted online sales significantly. The company has stayed competitive in a rapidly evolving beauty market, ensuring that digital and physical retail strategies complement each other.
12. The New York Times: Navigating the Shift to Digital Journalism
As the media landscape shifted from print to digital, The New York Times faced the challenge of adapting to changing reader habits and the decline of traditional newspaper revenue from ads and subscriptions.
a. Digital Subscription Model: The NYT introduced a digital subscription model, which has become a significant revenue stream. It allows them to cater to global readers online, surpassing the limitations of print distribution.
b. Enhanced Digital Content: The publication expanded its digital offerings, including podcasts, video content, and interactive journalism, providing a more comprehensive media experience that appeals to a broader audience.
c. Data Analytics: Using data analytics, The NYT can understand reader preferences and engagement, tailoring content and marketing strategies to increase subscriber retention and attract new readers.
The shift to a digital-first approach has rejuvenated The New York Times, turning it into a model for successful and effective digital transformation in the media industry. It has stabilized its revenue and expanded its audience globally, showcasing its adaptability and innovation in journalism.
13. DHL: Logistics and Supply Chain Innovation
DHL, a global leader in logistics, faced the challenge of adapting to the rapidly evolving demands of e-commerce and global trade. DHL embarked on a digital transformation journey to streamline operations and improve customer service to maintain its competitive edge.
a. Internet of Things (IoT) and Robotics: DHL invested in IoT technologies to enhance tracking and monitoring of shipments. Robotics solutions were integrated into warehouses to automate sorting and packaging processes, reducing errors and improving efficiency.
b. Predictive Analytics: By implementing predictive analytics, DHL improved its logistics planning capabilities. This technology helps anticipate delays and optimize routes in real-time, significantly reducing delivery times.
c. Customer Interaction Platforms: DHL upgraded its customer service platforms, introducing chatbots and AI-driven support systems to provide quick and reliable customer service around the clock.
These innovations have improved operational efficiencies and enhanced client satisfaction by providing more accurate and timely delivery services. DHL’s adoption of advanced technologies has solidified its position as a leader in the logistics sector, capable of handling the complexities of modern supply chains.
Related: Predictions About the Future of Digital Transformation
14. U.S. Social Security Administration (SSA): Enhancing Public Services Through Digital Outreach
The U.S. Social Security Administration, which provides financial support to millions of Americans, faced challenges in service accessibility and administrative efficiency. The SSA initiated a digital transformation strategy to address these issues and better serve the public.
a. Online Services Expansion: The SSA expanded its online platform to allow users to apply for benefits, manage their accounts, and access services without visiting a physical office. This was particularly vital during the COVID-19 pandemic.
b. Digital Documentation: The transition to digital documentation systems helped reduce paperwork, streamline processes, and increase the speed and accuracy of processing claims and applications.
c. Data Security Enhancements: With increased digital interactions, the SSA invested heavily in cybersecurity measures to protect sensitive personal information and prevent fraud.
The SSA’s digital transformation has significantly improved accessibility to services, allowing beneficiaries to manage their benefits easily and securely from home. These changes have also improved the agency’s efficiency and reduced operational costs, ensuring sustainability and responsiveness to public needs.
15. John Deere: Digital Agriculture and Smart Farming Solutions
John Deere, a leading agricultural machinery manufacturer, identified the potential of digital technologies to revolutionize farming. John Deere embarked on a digital transformation journey to maintain its leadership in the industry and help farmers increase productivity and sustainability.
a. Precision Agriculture: John Deere developed advanced precision agriculture technologies, integrating GPS and IoT sensors into their equipment. These technologies empower farmers to continuously monitor crop health, soil conditions, and weather patterns in real-time, enhancing the efficiency of planting, watering, and harvesting activities.
b. Data Analytics Platforms: The company introduced platforms that analyze data collected from farm equipment to provide actionable insights, aiding farmers make informed decisions about crop management and resource allocation.
c. Autonomous Machines: John Deere invested in developing autonomous tractors and combined harvesters. These machines can operate with minimal human oversight, increasing efficiency and reducing the labor needed for various farming operations.
John Deere’s digital innovations have profoundly impacted the agricultural sector. Farmers using these advanced tools can achieve higher crop yields, reduce waste, and minimize environmental impact. The company’s commitment to integrating digital technologies into its products has solidified its position as a leader in the agricultural machinery industry, ensuring that it continues to match the evolving requirements of modern agriculture.
16. IKEA: Enhancing the Furniture Shopping Experience with Digital Tools
IKEA, known for its flat-pack furniture and home accessories, aimed to bridge the gap between online and in-store shopping to enhance customer experience and streamline operations.
a. Virtual Reality Showrooms: IKEA implemented virtual reality tools that allow customers to see how furniture would appear in their homes before buying, which has improved customer satisfaction and reduced return rates.
b. Online Planning Tools: They developed online tools for room planning and furniture customization, helping customers design their living spaces and make informed decisions remotely.
c. Supply Chain Optimization: Utilizing AI and machine learning, IKEA optimized its supply chain processes, reducing costs and improving delivery times with better inventory management and distribution strategies.
These digital strategies have markedly boosted IKEA’s online sales and enhanced customer engagement. By providing immersive and interactive digital tools, IKEA has improved the shopping experience, leading to greater customer loyalty and market competitiveness.
Related: Digital Transformation Statistics
17. HSBC: Digital Transformation in Global Banking
HSBC, one of the world’s largest banking and financial services organizations, faced the challenge of modernizing its services to meet the expectations of a digitally savvy customer base and to compete with emerging fintech companies.
a. Global Banking App: HSBC launched a new mobile banking app providing a comprehensive range of services, including foreign currency exchange, global transfers, and real-time account management.
b. Blockchain for Trade Finance: They adopted blockchain technology to streamline and secure international trade finance processes, significantly reducing the time and cost of transactions.
c. AI-Driven Fraud Detection: Implementing cutting-edge AI algorithms, HSBC enhanced its security measures by predicting and preventing fraudulent transactions in real-time.
HSBC’s digital transformation has led to a more agile and secure banking experience, attracting a younger demographic and enhancing global customer satisfaction. Integrating advanced technologies has also positioned HSBC as a leader in digital innovation within the banking sector.
18. Adobe: Transforming Creative Industries with Cloud-Based Solutions
Adobe, a leader in creative software, recognized the need to transition from traditional desktop applications to a more flexible, cloud-based model to cater to the evolving demands of creative professionals globally.
a. Adobe Creative Cloud: Adobe shifted its suite of creative tools, such as Photoshop and Illustrator, to a subscription-based service, Adobe Creative Cloud. This shift allowed users to access their tools and files from any device and facilitated real-time collaboration.
b. AI and Machine Learning Enhancements: Incorporating AI technologies like Adobe Sensei, Adobe enhanced features across its products to improve user experience, offering capabilities such as automated image editing and smart design suggestions.
c. Education and Community Building: Adobe expanded its training resources and community features, providing extensive tutorials, live sessions, and a platform for creatives to share work and insights, fostering a collaborative environment.
Adobe’s shift to the cloud has revolutionized how creative content is produced, shared, and monetized, significantly enhancing productivity and creativity among professionals. This transformation has solidified Adobe’s leadership in the digital creative market, broadening its user base and increasing customer engagement.
19. Walmart: Revolutionizing Retail with Omnichannel Strategies
Walmart, the world’s largest retailer, aimed to integrate its vast network of physical stores with digital technologies to provide a seamless shopping experience and compete with e-commerce giants like Amazon.
a. Enhanced E-commerce Platform: Walmart upgraded its online platform to facilitate an efficient, user-friendly shopping experience, featuring a robust mobile app that integrates with in-store services.
b. Advanced Inventory Management: Utilizing IoT and AI, Walmart implemented advanced inventory systems to optimize stock levels and logistics, ensuring product availability and rapid fulfillment.
c. Pickup and Delivery Services: They expanded their pickup and delivery options, allowing customers to order online and choose convenient, flexible methods for receiving their purchases, including curbside pickup and same-day delivery.
Walmart’s digital transformation has significantly enhanced customer convenience, driving increased online and in-store sales. By leveraging technology to bridge the gap amidst physical and digital retail, Walmart has strengthened its market position and customer loyalty, setting a new standard in the retail sector.
Related: Digital Transformation in Telecom Case Studies
20. Siemens: Advancing Industrial Automation with Digital Twin Technology
Siemens, a global powerhouse in electrical engineering and electronics, recognized the need to innovate in industrial automation to maintain its leadership in the market. They aimed to leverage digital technologies to enhance manufacturing processes and product development.
a. Digital Twin Implementation: Siemens implemented digital twin technology, which generates virtual models of physical systems to simulate, forecast, and enhance the performance of machines and processes before their actual deployment.
b. IoT and Edge Computing: They integrated IoT with edge computing in their manufacturing operations to gather and analyze data at the source, improving real-time decision-making and operational efficiency.
c. Customizable Automation Solutions: Siemens developed a range of customizable automation solutions tailored to the particular needs of industries, facilitating greater flexibility and efficiency in production processes.
Siemens’ adoption of digital twin technology and IoT has revolutionized its approach to industrial automation, significantly decreasing time to market and operational costs while improving product quality and innovation. This strategic digital transformation has solidified Siemens’ position as a leader in smart industrial solutions, driving growth and sustainability in the sector.
21. Toyota: Pioneering Mobility Solutions with Connected Vehicle Technology
Toyota, a leading global automaker, sought to enhance vehicle safety, efficiency, and user experience by integrating advanced digital technologies into their vehicles, aiming to transition from a car manufacturer to a mobility solutions provider.
a. Connected Car Platform: Toyota developed a connected car platform that integrates telemetry, real-time data monitoring, and vehicle management systems to enhance the driving experience and improve vehicle maintenance.
b. Autonomous Driving Development: They significantly increased their investment in research and development for autonomous driving technologies to develop safer and more efficient transportation solutions.
c. Sustainable Mobility Solutions: Emphasizing sustainability, Toyota expanded its hybrid and electric vehicle offerings, supported by digital tools that help manage energy efficiency and reduce carbon emissions.
Toyota’s digital transformation has significantly improved vehicle functionality and safety, increasing customer satisfaction and loyalty. Their focus on connected and autonomous technologies has positioned Toyota at the forefront of the next generation of mobility solutions, driving innovation in the automotive industry.
22. Unilever: Digital Sustainability and Supply Chain Innovation
Background .
Unilever, a global leader in consumer goods, aimed to enhance its sustainability practices and supply chain efficiency by embedding digital technologies. This initiative supports their commitment to environmental sustainability and efficient resource management.
a. Sustainable Sourcing Platform: Unilever developed a digital platform to trace the sourcing of raw materials, ensuring they meet sustainability standards. This system helps manage supplier relationships and certifications, promoting ethical sourcing practices.
b. AI-Driven Demand Forecasting: Leveraging AI to improve demand forecasting accuracy, Unilever optimized production and inventory management, reducing waste and improving delivery timelines.
c. Eco-Efficient Operations: By implementing IoT devices in manufacturing facilities, Unilever monitors and reduces energy usage, water consumption, and carbon emissions, enhancing the environmental impact of its production processes.
Unilever’s digital sustainability and supply chain management initiatives have improved operational efficiencies and significantly advanced its corporate responsibility goals. These efforts have helped Unilever reduce its environmental footprint, increase transparency in its supply chain, and strengthen its brand reputation among eco-conscious consumers.
Related: Digital Transformation in Finance Case Studies
23. Philips: Transforming Healthcare with Connected Care Solutions
Philips, a global leader in health technology, focused on transforming the healthcare industry by integrating digital solutions into its products and services. This strategic change was designed to improve patient care and boost operational efficiency in healthcare facilities around the globe.
Transformation
a. Connected Health Devices: Philips expanded its line of connected health devices, including wearable technology for remote patient monitoring, that allows healthcare providers to track patient vitals and conditions in real time.
b. Cloud-Based Platforms: They developed cloud-based platforms that facilitate the sharing and analyzing of health data across systems, improving collaboration between healthcare professionals and enabling more informed decision-making.
c. AI-Enhanced Diagnostics: Implementing artificial intelligence in diagnostic equipment, Philips has improved the accuracy and speed of patient diagnostics, aiding in early detection and personalized treatment plans.
Philips’ digital transformation has significantly improved patient care and healthcare efficiency. Their connected care solutions have made health services more accessible, particularly in remote areas, and enhanced the ability of medical professionals to provide timely and effective treatment. This strategic digital integration supports Philips’ mission to improve billions of lives through meaningful innovation.
24. BASF: Driving Chemical Innovation with Digital Lab and Process Optimization
BASF, one of the largest chemical producers in the world, aimed to enhance innovation and efficiency in its chemical processes and product development by leveraging digital technologies. This initiative was a key component of their wider strategy to maintain a competitive advantage and promote sustainable operations.
a. Digital Labs: BASF implemented digital labs that use virtual simulations and modeling to accelerate chemical research and development, reducing the time and resources required for experimental trials.
b. Process Automation and IoT: They enhanced their manufacturing processes through advanced process automation integrated with IoT sensors, enabling for real-time monitoring and control of chemical processes, which improves safety and efficiency.
c. Predictive Maintenance: BASF implemented predictive maintenance capabilities in their facilities using machine learning algorithms. This technology anticipates equipment failures before they happen, reducing downtime and extending the life of their machinery.
BASF’s adoption of digital technologies in its laboratories and production facilities has significantly boosted innovation and operational efficiency. These advancements have enabled BASF to produce higher-quality chemical products faster and more sustainably, reinforcing its position as a leader in the global chemical industry.
25. Coca-Cola: Refreshing Consumer Engagement with Digital Marketing and Analytics
Coca-Cola, one of the world’s most iconic beverage brands, recognized the need to adapt to changing consumer behaviors and expectations, particularly in the digital age. They aimed to engage consumers more effectively and personalize their marketing efforts.
a. Digital Engagement Platforms: Coca-Cola developed digital platforms and mobile applications to engage directly with consumers, offering personalized promotions, loyalty rewards, and interactive brand experiences.
b. Data-Driven Marketing: Leveraging big data analytics, Coca-Cola refined its marketing strategies to target consumers more precisely based on their preferences and behaviors. This approach allowed for more effective ad placements and campaign optimizations.
c. Social Media Integration: Coca-Cola enhanced its presence by creating dynamic and interactive content tailored to global markets, increasing engagement and loyalty.
Coca-Cola’s digital transformation in marketing has significantly increased consumer engagement and brand visibility. Their use of advanced analytics and digital platforms has enabled more personalized and effective marketing campaigns, reinforcing Coca-Cola’s position as a leading global brand in the beverage industry.
Related: Digital Transformation in Aviation Case Studies
The stories of these 15 companies culminate in a powerful testament to the transformative impact of digital technology. Each case study highlights the pivotal role of innovation in securing market leadership and underscores the broader implications for industries at large. Through their transformative journeys, these firms reveal that achieving digital excellence is a challenging endeavor, yet it is abundant with opportunities for growth and reinvention. This collection serves as both a beacon and a warning: embracing change isn’t optional to thrive in the digital era; it’s imperative.
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Digital Transformation Case Studies: 3 Successful Brand Examples
Learn how three companies—Walmart, Ford, and Anheuser-Busch InBev—successfully transformed their business through digital initiatives to improve the customer experience.
Originally published on March 30, 2022
3 digital transformation case studies
Overcoming common digital transformation challenges, tips for building a digital transformation strategy, always focus on your customers.
Digital transformation is a process in which a company invests in new digital products and services to position it for growth and competition. A successful digital transformation improves the customer experience and enhances the way a company operates behind the scenes.
During a digital transformation, your business deploys new products and technologies and develops new ways to connect with your customers. Once the investment in digital begins, your business can use feedback and data to identify growth opportunities.
The three case studies below—from Ford, Walmart, and Anheuser-Busch InBev (AB InBev)—show how legendary companies went beyond simply creating an app and truly re-thought how digital transformation efforts supported sustainable growth for the business.
- A digital transformation is a major business transformation that employs technology to meet business goals and fundamentally change how companies operate.
- A digital transformation drives new products and services that improve the customer experience.
- A digital transformation gives you more informative behavioral data and more touchpoints with the customer.
- AB InBev, Walmart, and Ford invested in digital technology to accelerate internal processes and develop new digital products, which gave them valuable data on the customer experience and influenced future business investments.
Here are three examples of digital transformation. These leading companies carefully considered how new technology could generate data that made internal processes more efficient and produced insights about how to grow customer value.
Brewing company AB InBev underwent a digital transformation while compiling its network of independent breweries into a unified powerhouse . One of the team’s priorities was moving all their data to the cloud . By doing so, AB InBev enabled all employees to quickly and easily pull global insights and use them to make data-backed decisions.
For example, more accurate demand forecasting means AB InBev teams can match supply with demand, which is essential for such a large company with a complex supply chain. Access to big data from all the breweries means employees can experiment faster and roll out changes that improve business processes.
Gathering more data and opening up that data to internal teams was just the first step of the process, though. AB InBev capitalized on its digital investments by launching an e-commerce marketplace called BEES for its SMB customers—the “mom-and-pop shops”—to order products from. With the BEES platform, AB InBev found that their small and medium-sized businesses browsed the store on the mobile app and added items to their cart throughout the day. However, they only made the final purchases later in the evening.
Based on this behavioral data, the BEES team started sending push notifications after 6:00 p.m. recommending relevant products, which led to increased sales and greater customer satisfaction. Through these efforts, BEES gained over 1.8 million monthly active users and captured over $7.5B in Gross Merchandise Volume.
By closely monitoring metrics such as user engagement and purchasing patterns on the BEES platform, AB InBev has made a big impact with its marketing strategies and improved customer retention.
Jason Lambert, SVP of product at BEES, credits their success with the hard data that told them how their customers behaved and what they needed: “It turned out to be a thousand times better than any of our previous strategies or assumptions.” BEES used behavioral analytics to respond quickly, changing the buying experience to match the needs and habits of their retailers.
As a traditional brick-and-mortar retailer, Walmart began a digital transformation by opening an online marketplace. However, digital transformation is an ongoing process—it doesn’t end at the first website. A digital transformation means companies refocus their operations around digital technology. This usually happens both internally and in a customer-facing way.
To drive more customer value through digital touchpoints, Walmart set up mobile apps and a website to enable customers to purchase goods online. After analyzing customer behavioral information from its app, Walmart added more services such as same-day pickup, mobile ordering, and “buy now, pay later.”
These changes were made to meet customer expectations and improve the customer experience. Walmart’s introduction of a seamless online shopping experience represents a pivotal step in digital innovation, setting new standards for retail convenience and efficiency.
In 2024, Walmart announced an AI-powered logistics product called Route Optimization. This product uses AI to find the most straightforward driving routes, pack trailers efficiently, and reduce miles traveled. In addition to using this product internally, Walmart plans to offer it to other businesses that need to employ more efficient supply chain and logistic processes.
Aside from improving customer experience and logistics, Walmart’s head of mobile marketing , Sherry Thomas-Zon, also notes the importance of data—and access to data—in digital transformations. “Our marketing and product teams are always looking at numbers,” Thomas-Zon said. “It keeps our teams agile despite our size and the increasing amount of data we collect and analyze.”
Ford has embraced several digital transformation initiatives, including using technology to transform and improve manufacturing at one of its biggest automotive factories.
Not having the correct parts available holds up workers and slows down the production process. Ford introduced a material flow wireless parts system so they could track the quantities of different parts and make sure there were enough available. Ford’s use of automation has significantly improved its inventory management process by reducing manual tasks and enhancing worker efficiency.
In 2016, Ford also introduced a digital product for its customers: the FordPass app . It enables Ford owners to control their vehicles remotely. For example, drivers can check their battery or fuel levels and lock or unlock their cars from their phones.
In 2024, Ford took its digital transformation even further when it launched the Ford and Lincoln Digital Experience . Key features include personalized vehicle settings, real-time traffic updates, and seamless integration with smart home devices. The platform also provides advanced navigation, remote control of vehicle functions via the FordPass app, and in-depth vehicle health monitoring.
To capitalize on these digital touchpoints, Ford uses data from its app to improve user experiences . With the ability to capture and analyze data in real-time, Ford’s leadership can now make quicker, more informed decisions that directly enhance operational efficiency and customer satisfaction.
Ford’s success is grounded in the same process as Walmart and AB InBev. They used their digital transformation to gather detailed information about how customers interact with their products. Then, they made data-driven decisions to provide more value.
It’s not called a transformation for no reason. You’re changing the way your business operates, which is no easy feat. Planning and effective change management strategies are key to overcoming digital transformation challenges.
Create a digital transformation strategy roadmap that outlines your integration strategy and details how this will affect your teams, processes, and workflows. Once you’ve created your plan, share it with the entire company so everyone can use it as a single reference point. Use a project management tool that enables team members to get a big-picture overview and see granular details like the tasks they’re responsible for.
It takes time for teams to onboard and move away from what was successful under the previous system, for example, shifting from heavyweight to lightweight project planning. Make sure you factor some breathing space into your roadmap—giving everyone a chance to get used to the new way of operating.
As part of a digital transformation, you’ll want your team to develop new skills as well. Upskill your team by incorporating digital skills into your employee development plans . Provide people with opportunities to learn and then track their progress. Promote platforms like LinkedIn Learning to help your teams understand the nuances of digital transformation and boost their skills.
If you believe there’s an end-state to digital transformation, more challenges will arise. New technology and consumer behaviors are always emerging, meaning digital transformation is ongoing. It’s not something you’ll complete in a week. Rather, it’s a continuous state of experimentation and improvement.
At Amplitude, we refer to this process as digital optimization . If digital transformation brings new products, services, and business models to the fold, then digital optimization is about improving these outputs. Both digital transformation and digital optimization are important—digital transformation signals the start of new investments, and digital optimization compounds them.
Examine how each part of the transformation will affect your customers and your employees. Then, you can be intentional and introduce initiatives that positively impact your business.
Diagnose what you want from a digital transformation first
There are different ways of approaching a digital transformation. Some companies prefer to implement an all-inclusive digital strategy, transforming all parts of their organization at the same time. Others opt for a less risky incremental strategy. Every company is different. To choose the best approach, examine your whole organization and analyze where digital systems could help.
Consider your business goals. Investigate how a digital transformation could impact the customer experience. What new products could you provide? How could you improve your services? For example, you might use artificial intelligence to create a chatbot that reduces customer service wait times—or purchase software that does the same.
You’ll also want to review your business processes. How could a digital transformation speed up your current workflows, improve your operations, or enable more collaboration between teams? Asking these questions lets you challenge the way you operate and will help you identify problems in your organization that you might not have noticed before. For example, perhaps your deliveries are often delayed, and you could make delivery smoother by digitizing elements of your supply chain .
Get cross-team involvement
Though different teams may work separately, your customers are affected by each department. Collaboration elevates everyone’s work because it means people can make informed decisions.
Make sure you get input from all of the right stakeholders when you create your digital transformation strategy. Ask:
- What processes hold you up?
- Where are the bottlenecks?
- What data would be useful for you?
Enable everyone to access the data they need without input from anyone else. Help your employees improve their data literacy . Start by training all your employees to use your organization’s data tools and software. To help everyone in your organization access and analyze data, adopt easy-to-use self-service tools (e.g., an analytics tool and a CRM). Then, lead by example. Provide inspiration by using data storytelling in your presentations to explain the decisions you make.
Encourage collaboration between teams by creating shared resources so they have spaces to present insights and submit suggestions. This could be as simple as creating a Google Doc for brainstorming that multiple teams can access or sharing charts directly within your analytics solution, like with Amplitude Notebooks . Then, you can start to experiment and make improvements to the digital customer experience like Walmart, Ford, and AB InBev did.
Once your digital transformation is moving, a digital optimization strategy is an opportunity to generate growth. Your digital transformation initiatives will continue in parallel, and the process will become a feedback loop:
- Deploy new digital systems and products.
- Analyze the data that comes forth from these investments. Use it to draw insights about your customers or processes.
- Make decisions based on the data and make changes.
Keep customer needs at the heart of your work. Let them guide you as you undergo digital transformation. As you gather more data about how your customers interact with your new digital products, use it to make the experience even better for them. This will lead to more trust and loyalty and, ultimately, more recurring revenue.
To continue your learning about digital transformation and optimization, join an Amplitude workshop or webinar or read our Guide to Digital Optimization .
- MIT Sloan. How to build data literacy in your company
- Ernst & Young. How global supply chain strategy is changing and what comes next
- Datanami. From Big Beer to Big Data: Inside AB InBev’s Digital Transformation
- Predictable Profits. How Ford Embraced Digital Transformation
- APMG International. Heavyweight vs Lightweight Management
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More best practices.
What is a Data Warehouse?
The guide to data accessibility, what is a product roadmap a definitive guide, new amplitude + snowflake integration delivers the modern data stack, digital optimization vs. digital transformation explained, 6 essential digital optimization skills you need, test-driven development (tdd) - what it is and how to implement it, use the games of product activity to define your engagement strategy.
30+ Digital Transformation Case Studies & Success Stories
Digital transformation has been on the executive agenda for the past decade and ~ 90% of companies have already initiated their first digital strategy. However, given the increasing pace of technological innovation, there are numerous areas to focus on. A lack of focus leads to failed initiatives. Digital transformation leaders need to focus their efforts but they are not clear about in which areas to focus their digital transformation initiatives.
We see that digital transformation projects focusing on customer service and operations tend to be more heavily featured in case studies and we recommend enterprises to initially focus on digitally transforming these areas.
Research findings:
- Outsourcing is an important strategy for many companies’ digital transformation initiatives.
- Most successful digital transformation projects focus on customer service and operations
Michelin-EFFIFUEL
Michelin, a global tire manufacturer, launched its EFFIFUEL initiative in 2013 to reduce the fuel consumption of trucks. In this context, vehicles were equipped with telematics systems that collect and process data on the trucks, tires, drivers habits and fuel consumption conditions. By analyzing this data, fleet managers and executives at the trucking companies were able to make adjustments to reduce oil consumption.
- Business challenge : Inability to improve customer retention rates to target levels, due to trucks’ fuel consumption and CO2 emissions .
- Target customers : Fleet managers and operations managers at truck companies in Europe
- Line of business function : Customer success management and sales.
- Solution : By using smart devices, truck and tire performance degradation is detected and maintained from the start. The solution also nudges truck drivers into more cost and environmentally friendly driving.
- Business result : Enhanced customer retention and satisfaction. EFFIFUEL has brought fuel savings of 2.5 liters per 100 kilometers per truck. The company also reduced the environmental costs of transportation activities. According to Michellin, if all European trucking companies had been using the EFFIFUEL initiative, it would have caused a 9 tons of CO2 emission reduction.
Schneider Electric-Box
Schneider Electric is a global company with employees all over the world. Prior to the Box initiative , which is a cloud-based solution, business processes were relatively slow because it is difficult to process the same documents from different locations at the same time. Schneider Electric also needed a way to provide data management and security for its globally dispersed workforce. So Schneider Electric outsourced its own custom cloud environment that integrates with Microsoft Office applications to Box. The platform also ensures tight control of corporate data with granular permissions, content controls and the use of shared links. Thanks to this initiative, the company has moved from 80% of its content hosted on-premises to 90% in the cloud and has a more flexible workforce.
- Business challenge : Inability to increase operational efficiency of the global workforce without capitulating to data security.
- Solution : Outsourcing company’s cloud-based platform to Box, that ensures data security and integration with Microsoft Office programs to ensure ease of doing business.
- Business result : Schneider Electric connects its 142.000 workers within one platform which hosts 90% of its documents.
Thomas Pink-Fits.me
British shirt maker Thomas Pink, part of the Louis Vuitton Moet Hennessey group, has outsourced the development of its online sales platform to Fits.me Virtual Fitting Room . The aim of the initiative was to gain a competitive advantage over its competitors in e-commerce. Thanks to the online platform developed, customers can determine how well the shirt they are buying fits them by entering their body size.
The platform also helps Fits.me gain better customer insight as previously unknown customer data, including body measurements and fit preferences, becomes available. In this way, the platform can offer customers the clothes that fit them better.
- Business challenge : Lack of visibility into online sales and customers’ preferences.
- Target customers : Online buyers and users.
- Line of business function : Sales and customer success management.
- Solution : Outsourcing the development of the online platform to Fits.me Virtual Fitting Room .
- Business result : Improved customer satisfaction and engagement. Thomas Pink reports that customers who enter the virtual fitting room are more likely to purchase a product than those who do not. There are many successful digital transformation projects from different industries, but we won’t go into every case study. Therefore, we provide you with a sortable list of 31 successful case studies. We categorized them as:
- System Improvement : changing the way existing businesses work by introducing new technologies.
- Innovation : creating new business practices, based on the latest technology.
Type of Project | Company | Initiative | Industry | Business Function | Case Study | Results |
---|---|---|---|---|---|---|
System Improvement | Apple | CarPlay | Automotive | Customer Service | 37 million sales estimation in 2020 | |
System Improvement | Audi | Audi City | Automotive | Marketing and Sales | ||
Innovation | BMW | DriveNow | Automotive | Mobility Services | ||
Innovation | Daimler | Moovel | Automotive | Mobility Services | Moovel has more than 1 million customers. | |
System Improvement | Michellin | EFFIFUEL | Automotive | Customer Service | ||
Innovation | Tesla | Automotive | Customer Service | Saving $2.7 billion for manufacturers. Improving customer experience. | ||
System Improvement | Thomas Pink | Fits.me | Retail | Operations | 29.6% higher conversion rate | |
Innovation | Lego | Entertainment | Operations | |||
System Improvement | General Electric | Digital Windfarm | Energy | Operations | ||
System Improvement | Schneider Electric | Box | Electricity | Operations | ||
Innovation | Hospitals* | Ginger.io | Healthcare | Operations | ||
Innovation | Cohealo | Healtcare | Operations | Improving clinical outcomes while reducing healthcare costs. | ||
Innovation | Pager | Healthcare | Customer Service | |||
System Improvement | Airbus | Transportation | Manufacturing | Using 3D printers for manufacturing plane parts | ||
System Improvement | Disney | Disney's Magic Bands | Entertainment | Customer Service | Improved customer experience. Over 9 million visitors give positive feedback. | |
System Improvement | Spotify | Entertainment | Customer Service | |||
System Improvement | Communication | Operations | Improved customer experience | |||
Innovation | Blippar | Technology | Operations | 45% revenue growth. | ||
System Improvement | Start-ups* | Bolt.io | Consulting | Operations | ||
System Improvement | Duolingo | Education | Operations | Delivering personalized education through its AI-powered language-learning platform. | Improved customer experience. More than 100 million users. | |
System Improvement | Accredia | Accreditation | Customer service | Increased web traffic. Users find the desired information quicker. | ||
Innovation | EdgePetrol | Palladium** | Analytics/Oil | Product development | ||
Innovation | Mayflex | Palladium** | Security | Operations | ||
Innovation | Starbucks | Beverages | Operations | Improved customer experience | ||
System Improvement | Unilever | FMCG | Operations | |||
System Improvement | Keller Williams | KW Labs | Real Estate | Operations | Over 20% y-o-y sales volume increase | |
Innovation | IndusInd Bank | Banking | Operations | Creating digital branches and enabling social media banking transactions | Valued at approx.$1.5 billion and up 46% in value yoy | |
System Improvement | Monsanto | Climate FieldView | Climate/Agriculture | Operations | Farmers benefit from better yields, lower risks and higher profitability. | |
System Improvement | BBVA | Banking | Customer Service | |||
System Improvement | Nokia | QPR ProcessAnalyzer | Telecommunication | Operations | Shortened lead time due to increased efficiency in running processes | |
System Improvement | Eneco Group (Joulz) | QPR Suite | Energy | Operations |
If you are ready to start you digital transformation journey, you can check our data-driven and comprehensive list of digital transformation consultant companies .
To find out more about digital transformation, you can also read our digital transformation best practices , digital transformation roadmap and digital transformation culture articles.
You can also check our sustainability case studies article which include ESG related success stories.
For any further assistance please contact us:
This article was drafted by former AIMultiple industry analyst Görkem Gençer.
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To embody the vision of becoming a technology leader, the DBS team adopted the mnemonic GANDALF, representing the giants of the tech industry: "G" for Google, "A" for Amazon, "N" for Netflix, "A" for Apple, "L" for LinkedIn, and "F" for Facebook. The central "D" symbolizes DBS aspiration to join the league of iconic technology companies. Drawing inspiration from The Lord of the Rings , GANDALF became the powerful rallying cry for their ambitious digital transformation journey. Throughout these efforts, DBS kept the focus firmly on the customer.
To scale up capabilities, McKinsey aided DBS in building its new operating model around platforms. DBS created 33 platforms aligned to business segments and products. Each platform had a “2-in-a-box” leadership model, which meant each one was jointly led by a leader from the business and one from IT.
“Digital transformation has been instrumental in driving growth, delivering significant financial outcomes across all business segments and markets. By transforming rigid systems into nimble technology stacks, we have gained a sustainable advantage, enabling us to scale with agility.” – Jimmy Ng, Chief Information Officer and Group Head of Technology & Operations, DBS
Keeping solutions centered around customers, DBS introduced a program called Managing Through Journeys. It scaled to include over 60 impactful customer journeys, each led by a senior leader, addressing major pain points like account opening and ATM waiting times. Simultaneously, DBS scaled up cloud migration, invested in automation, and developed microservices to support modular architecture, allowing components to be swapped out upon aging.
Partnering with McKinsey, DBS transformed its data-driven operating model, aiming to leverage data for innovative outcomes and widespread AI adoption. With McKinsey AI experts' support, they established a program that reduced end-to-end AI deployment time from 18 months to less than 5 months. The goal is to reduce that even more, to just a few weeks, which the bank considers essential to fully scaling AI. Today, there is an industrialized platform that enables AI deployment called ALAN, which is instrumental to achieving this accelerated deployment.
“We need an innovation culture, which doesn’t create itself. You must deliberately drive that and put in the processes and frameworks to encourage innovation, risk-taking, and entrepreneurship—it’s about knowing it”s OK to try and fail.’ – Piyush Gupta, Chief Executive Officer, DBS
DBS’ ability to achieve all of this was made possible through fundamental shifts in its culture, operational and technical expertise, and a transformative operating model. To recruit and retain digital talent, they adopted innovative strategies like hackathons and established three technology hubs to foster collaboration. DBS used AI to predict potential employee exits, enabling timely HR intervention. Moreover, they invested in institutional learning through Digify a module-based learning pathway to train employees in concepts such as agile, big data, and journey thinking, and launched DBS Academy to train technologists in a DBS-specific curriculum. Making the transformation successful required a significant shift in leadership mindsets and behaviors. With support from McKinsey, DBS scaled T-Sprints (Transformation Sprints) to build top team alignment and new leadership skills across both the top of the house as well as different business, support, platform and geographic units within the bank.
The bank put in place systems to measure outcomes from the digital transformation. The digital value capture framework was co-developed with McKinsey to quantify benefits of acquiring, transacting, and engaging with digital customers. This allowed them to become one of the first banks in the world to showcase powerfully to investors the higher revenue, lower cost to serve and higher ROE from serving digital customers over traditional customers. The underlying methodology also allowed the bank to bake initiatives needed to drive value creation through digitization into the scorecards and performance management framework of the bank. This has translated into consistent shareholder gains, especially as innovation and data-driven transformation further accelerate both the growth trajectory and profitability (ROE) of the franchise.
Making GANDALF a reality at DBS has taken more than the wave of a magic wand. It required hard work, addressing culture changes, and consistent engagement at all levels, but it has transformed a top-tier bank into a top-tier tech company.
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Digital Innovation at Toyota Motor North America: Revamping the Role of IT
An in-depth description of a firm’s approach to an IT management issue (intended for MBA and executive education)
Recognizing that digital was changing the landscape for automobile manufacturers, the IT unit at Toyota Motor North America took a leadership role in introducing digital innovation into the company’s products and services. To instill a culture of innovation—beyond Toyota’s longstanding Kaizen practices—IT leaders first encouraged innovation within IT. As those efforts blossomed, the IT unit was able to reach out to other parts of the company. Toyota wanted to be ready to seize the opportunities presented by such diverse technological developments as autonomous driving, social analytics, and the Internet of Things. This case reviews the process by which the IT unit established credibility for its efforts and fostered enthusiasm for digital innovation throughout the company.
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Case study: technology modernization, digital transformation readiness and it cost savings.
“Digital Distinction” is a major trend for growing, medium-sized organizations, with growth requiring a well-executed digital platform enabled by foresight, leadership and accountability that helps ensure that societal needs are addressed with limited input resources. 1
This digital distinction story was performed with limited resources in a multiservice urban Aboriginal agency (the Agency) providing holistic, culture-based programs and services for Aboriginal children and families. The Agency strives to provide a life of quality, well-being, healing, and self-determination for children and families in the Toronto, Ontario, Canada, urban Aboriginal community by implementing a service model that is culture based and respects the values of Aboriginal people, the extended family and the right to self-determination.
The Agency faced considerable technology challenges at the start of the pandemic-induced lockdowns. The mandatory move to a remote service model stressed the existing IT infrastructure to such an extent that it exposed issues such as network bottlenecks, Wi-Fi interruptions and landline unreliability, all of which compromised the ability of social workers to perform their duties. It had become evident to management that the Agency needed significant digital transformation as part of the journey toward the increasing virtualization of social services and a much-needed modernization of its base IT infrastructure.
To be effective, however, digital transformation must build on an IT foundation that ensures reliable and sustainable outcomes. While IT modernization is a necessary condition for digital transformation readiness, 2 it is not a sufficient condition. Readiness must identify and address all IT operating model gaps 3 before innovation; unfortunately, many organizations undertaking transformation are not ready for innovation. 4
An unprepared organization is likely to see its digital transformations flounder;
…barely one in eight are successful. Even worse, only 3 percent of … 1,733 business executives … report any success at sustaining the change required for successful digital transformation…. 5
Thus, the Agency needed improved digital capabilities to support its growth and to increase its agility in response to the pandemic, so it engaged an experienced digital transformation consultancy with one executive from the group serving in the role of interim chief information officer (CIO).
The CIO title of the 1980s 6 has evolved to become one of vision as part of enterprise strategy, of managing risk as part of enterprise risk and of managing a governed high-performance team to sustain today’s ever more complex IT ecosystems. The modern CIO creates new operating models and helps the organization become data-driven. 7 The CIO takes the organization forward “… in ways that extract the maximum value from the information on hand…to make better decisions, faster” 8 as articulated in the new data strategy.
This case study articulates all the listed requirements of the modern CIO from vision to risk management to creating high performance teams as part of IT operating model modernization. Furthermore, down the road, there will be sufficient material for a future case study to document the path of the organization to achieving fit-for-purpose data for data-driven decision-making and improved reporting efficiency.
THE AGENCY’S INTERIM CIO’S FIRST STEP WAS…TO ESTABLISH THE ORGANIZATION’S CURRENT STATE TO DETERMINE ITS STATE OF READINESS FOR THE REQUIRED DIGITAL TRANSFORMATION.
The challenge: assessing the current state.
One cannot create a strategy without knowing the current state. The Agency’s interim CIO’s first step was, therefore, to establish the organization’s current state to determine its state of readiness for the required digital transformation. While tools facilitating readiness include staff surveys, 9 benchmarking and determining the business case for IT change, a survey was selected as the right tool to learn about the organization’s IT challenges (what the users experience), its IT priorities (what the users want fixed first) and its IT value chain performance (how IT creates value for the organization) through the lens of four different levels of stakeholders. The survey was distributed to staff at all levels; the output presented an end-user view of the organization’s current state.
The four key findings from the survey across these categories were:
- The organization’s executives had different perceptions of the frequency of the top IT challenges compared to the rest of the staff complement ( figure 1 ). This could be given that they were more aware of the negative impact of various IT failures on their mandate.
- The frontline staff were the most supportive of prioritizing all of the top items compared to management, who saw the priorities differently ( figure 2 ). This highlights the importance of engaging with people most actively using technology and not to depend only on management feedback for insights in this respect.
- The supervisor level experienced the severity of most of the shortcomings along the IT value chain ( figure 3 ).
- One of the major challenges experienced by end users was that it took too long for IT to fix IT issues, with users perceiving that it was getting worse. The same held for the network; network reliability was decreasing ( figure 4 ).
The fact that the survey highlighted IT challenges such as poor service request and incident management (the service desk item in figure 1 ) is more important than it may seem at first glance. As part of the journey to making IT more approachable and customer-centric, it is important that the service desk works flawlessly, as it is a major driver of staff (customer) satisfaction, which, incidentally, should be a key IT metric for any CIO.
A comparison of the actual ratio with the benchmark ratios above confirmed a historical underinvestment in IT. Reducing underinvestment in IT and addressing the associated risk areas while building future IT capabilities should be high, not only on the CIO’s agenda via IT governance, but on the board’s agenda, given the implications for enterprise governance.
The Solution: Addressing the Priority Current State Shortcomings
As a result of the current state findings, the CIO reconsidered improvements and developments that may impact the entire IT operating model. A restitution strategy was developed to address as many of the identified priority shortcomings as possible in the shortest possible time.
ADDRESSING THE NETWORK SHORTCOMINGS REQUIRED SIGNIFICANT PLANNING AND ACTIVITY, GIVEN THAT THE NETWORK WOULD NEED TO BE MODERNIZED WHILE THE AGENCY WAS STILL PERFORMING ITS MANDATE.
Restitution is about partnerships, though, another modern CIO imperative. Non-IT senior leaders are just as accountable for decisions and the delivery of ongoing IT services. 12 In other words, restitution is an organizational challenge rather than only an IT challenge, a fact that impacted the nature of the stakeholders identified to oversee the initiative. The more a CIO engages in stakeholder relationships with the goal of forging partnerships, the more effective the broad diversity of IT initiatives within the CIO’s portfolio must almost automatically become.
In this case, restitution was performed in 1) a technology stream and 2) an IT governance stream. (A data governance stream was also recently introduced but will not be explored further here.) The relationship between the CIO and IT governance took a major leap forward a decade ago when it was explicitly considered in South Africa’s King III code for corporate governance. 13 However, more than five years later, the focus still tended to be on the use of IT in regulation and compliance, 14 rather than being about the organizational performance and value creation mechanism it is meant to be.
Aligned with digital transformation principles, specifically around the operating model readiness, 15 restitution was not only about technology, but also about other important components of the organization’s operating model, such as people, process and governance.
Technology Stream
From the current state analysis, the Agency’s legacy technology landscape suffered extended maintenance, support, integration, security, and agility risk and constraints. Technology modernization projects ( figure 5 ) were identified for the Agency to address these issues while also addressing most of the user-defined IT priorities identified in the survey.
One of the CIO’s primary objectives was to measure the benefits of each IT intervention, whether they be through enhanced activity, cost savings, risk mitigation or potentially even revenue generation. Cost and activity benefits, where the interventions are complete, are highlighted for the various interventions the Agency undertook.
Network Remediation The annual operating cost of the Agency’s new network is 48 percent of the cost of the old network—savings driven largely by deploying a modern network technology with standardizing network devices using a modern network protocol.
The old network had nonstandard devices that were unmaintained, outdated with no active support, not configured according to industry best practices and had no redundancy. Furthermore, it suffered bottlenecks, single points of failure and cybersecurity vulnerabilities, with costly management implications.
Addressing the network shortcomings required significant planning and activity, given that the network would need to be modernized while the Agency was still performing its mandate. It involved an initial network discovery process that, for example, identified Internet Protocol (IP) addresses, the devices linked to the IP addresses, the functions and roles of various servers, the portfolio of critical applications, and network-based processes that needed to be mapped out and well understood. Backout plans and vendor escalation processes were created. Replacing more than 50 switches and several firewalls within a 36-hour window was challenging, especially for a new network topology in an overall process that took up to a year when including the planning and vendor identification/selection processes.
Network remediation addressed technical cybersecurity vulnerabilities, fault tolerance and failover readiness with redundancy. It also provided greater bandwidth, scalability and manageability, with Software-Defined Wide Area Network (SD-WAN) technology proving to be more secure and providing higher performance compared to the Multiprotocol Label Switching (MPLS) technology it replaced. While bandwidth demand tripled during the pandemic, it was all reliably and seamlessly accommodated within the new network architecture.
Strategically, the organization seeks to share its IT environment with smaller social services agencies that might be insufficiently funded to develop appropriately functional IT platforms. The Platform as a Service (PaaS) aspiration required a network architecture designed to handle traffic at scale and the recognition that an additional network engineer would be needed to bring this aspiration to life.
Human Productivity Tools The annual operating cost of the Agency’s new human productivity tools (HPTs) is 39 percent of the cost of the old HPTs.
The old portfolio of HPTs was a disparate set of vendor solutions that were difficult to support, offered relatively little functionality, challenged the implementation of integrated security, and were costly to manage.
A key consideration was to ensure that all data stayed within Canada. A hybrid approach was followed leveraging Active Directory Federation Services (AD FS) with Azure that allowed for failover from on-premises to the cloud, while moving all users’ mailboxes and enabling the additional functionality into production. This parallel process took six months from planning and vendor identification to deployment.
The Agency’s new Software as a Service (SaaS) HPT offered vast improvements in functionality across multiple end-user devices, such as facilitating engagement and teamwork; application interoperability; and facilitating a single approach to cybersecurity by means of integrated identity and access management. This deployment is a critical lever for successful digital transformation given benefits such as performance, scalability, security, and reliable and integrated support from the vendor. 16
Case Management A single case management system to integrate the agency’s two case management systems was identified ( figure 5 ). Two systems were deployed as a means to address the data collection shortcomings in each. To address this, a thorough business requirements document (BRD) will be created to facilitate a request for proposal (RFP) process to identify whether an integrated case management tool is available. (This will not be discussed further as it is a separate, significantly larger project that has only recently been instantiated.)
Document Management A document and content management system— coupled with appropriate workflows and governance—was needed to manage the intranet; perform as a repository for digitized, historical paper-based case files; perform document management; and provide a basis for operational metadata management and the organization’s data dictionary. A feasible tool and functionality was included in the software package provided for the HPT stream, coming in as a cost saving relative to the next best alternative. A decision was taken to use this tool given this cost benefit. A configuration and deployment plan was not yet in place at the time of writing.
Incident Management An incident management tool had been deployed at the Agency but without supporting processes or governance. There was no ticket escalation process, no ticket auto-allocation process and no feedback loop to the requester that a ticket had been received. The following were established as part of the Agency’s IT department’s emerging ITIL- alignment aspirations to improve incident management performance:
- Defined incident management processes
- Defined incident management responsibilities
- Feedback loops with workflows
- Service-level agreement (SLA)-driven ticket auto-escalation
The operational impact of these changes is evident in figure 6 . Within seven months after implementation and as the subject of continuous improvement during that time and beyond, the average ticket closing time had decreased from 34 days to three days according to the system logs, and the average ticket assignment time had decreased from 140 minutes to nine minutes according to the same logs. There are further initiatives to use more of the functionality of the selected tool in the future.
Additional service desk functionality deployed at the Agency includes IT asset management and a configuration management database.
THE ANNUAL OPERATING COST OF THE AGENCY’S NEW MONITORING AND PATCHING SYSTEM IS 30 PERCENT OF THE COST OF THE OLD VENDOR SOLUTION.
Monitoring and Patching System The annual operating cost of the Agency’s new monitoring and patching system is 30 percent of the cost of the old vendor solution.
Driven by continuity risk factors such as poor outage monitoring and alerting, poor device monitoring, and poor vendor responsiveness, as well as cybersecurity risk factors such as poor patching, the Agency sought and deployed a tool to fulfill these requirements with remote management capability.
The technology was selected based on a review of this specific technology landscape according to various IT research organizations. Then, deploying the monitoring tool required making changes to the firewall to allow agents to communicate. Furthermore, a cache server was set up to reduce the bandwidth implications of all the computers in the Agency requiring similar updates, thereby reducing the possibility of network congestion. Planning, vendor identification and deployment took less than three months.
Cloud The annual operating cost of the Agency’s new cloud data center is 45 percent of the cost of the on-premises data center, driven by the higher support and equipment costs of maintaining an on-premises environment.
THE ANNUAL OPERATING COST OF THE AGENCY’S NEW CLOUD DATA CENTER IS 45 PERCENT OF THE COST OF THE ON-PREMISES DATA CENTER.
The Agency had historically entered into a five-year contract for its data center, with further expenditure required for power to eight servers, hosting facilities and equipment, an uninterruptible power supply, and management time for maintenance and management. The risk of the data center being an operational bottleneck was considerable. The real push for a work-in-progress cloud migration was driven by the pandemic.
The selection of the cloud vendor was based on a review of the findings by various IT research organizations and the need to ensure interoperability between the various tools that were about to be deployed in the cloud. For the software tools, a primary driver was the effectiveness of the solution to serve well in a Software as a Service (SaaS) paradigm, which will be the foundation for the type of incremental transformational functionality envisaged as a strategic driver of future IT at the Agency.
Configuring a cloud infrastructure requires configuration activities such as subscribing to the services, creating virtual machine(s), the virtual private network (VPN) and the VPN gateway. Additional services that were migrated to the cloud or deployed to the cloud include the HPTs, the monitoring and patching services, and the mail system. The planning, vendor identification and deployment was performed within four months.
The operational, scale and cost advantages of the cloud at a stated availability of 99.999 percent were implemented as a desirable alternative to on-premises services, given that the modern CIO’s role is to create an environment that facilitates on-demand technology and related services. 17 The potential of this migration for future Platform as a Service (PaaS) services, virtual computing, storage and on-demand functionality positions the organization well for an enhanced digital future.
Telephony Telephony depends on a stable network, and the organization is now ready to address its telephony shortcomings. An architecture and plan to migrate between the current state and the proposed state for telephony is being developed, with the major goals being scalability as part of the PaaS vision for the organization and redundancy, given, the always- on requirement of child welfare services.
Financial Summary IT underinvestment introduces significant risk and inefficiencies into an organization. The technology modernization stream not only addressed technology risk at the Agency, it also eliminated architectural inefficiencies and high-cost structures, as demonstrated by the annual cost savings achieved ( figure 7 ).
While cost savings of up to 13 percent are expected in technology modernization, 18 savings of 18 percent were realized.
IT Governance Stream
IT governance ensures that IT produces the value expected of it. While IT governance was introduced as a mechanism for CIO oversight of the technology deployments, less tangible activities were also established by means of the IT governance stream to help establish a vision for IT, to reduce IT risk and to extend the people capabilities of the IT department.
The following sections detail the measures taken to help ensure reduced-risk value delivery from IT.
Policies and Processes Procedural and cybersecurity-related updates were made to the Agency’s IT policy. Processes were also co-created with human resources (HR) (e.g., onboarding, offboarding) and with operations (e.g., IT-facilitated process design for the handling of all possibilities of incoming telephone calls) to ensure that handovers to IT and back to HR and operations were clear, and that people had been identified in the process to accept handovers.
If an operational process needs engagement with IT, operations must co-design the process with IT to manage expectations and to reduce operational risk. Failing to do this will result in failed processes, given no awareness or clarity of IT’s role in the process.
AS A RISK CONTROL, A PASSWORD VAULT WAS CREATED FOR ALL APPLICATION AND SYSTEM PASSWORDS, SUPPORTED BY A PROCESS THAT COULD BE ACCESSED BY THE EXECUTIVE TEAM IN AN EMERGENCY.
Risk Management Risk management is a key pillar of effective IT governance. Together with policies and procedures as a critical part of effective risk management, 19 IT implemented a risk management process—Identify, Assess, Respond, Control, Monitor—with a living risk register as a monitoring and communication tool as a means to help minimize potentially negative differences between expected IT outcomes and the actual IT outcomes. The process emphasized assigning responsibility for a risk control at the point where risk is realized. Periodic IT governance meetings were established as a means to monitor changes in IT environment risk and to monitor the effectiveness of the risk controls.
Key administrator passwords held in people’s heads was a major operational and sustainability risk. As a risk control, a password vault was created for all application and system passwords, supported by a process that could be accessed by the executive team in an emergency.
Structure and People People are the most critical part of IT because they determine whether something is done well. To effect and to sustain digital transformation, IT staff must have digital mindsets; 20 be inclined to testing and learning, innovation, and agility; 21 have diverse technology knowledge, deep data skills, rich process skills, and end-to-end mindsets that includes teamwork, courage, and change management. 22
Sustainable digital transformation, thus, requires “t- shaped” people—staff with deep knowledge of their areas of expertise and broad knowledge that they can apply to solve the types of new problems that emerge under transformation. 23 T-shaped people are especially important in small IT teams, where broad knowledge overlap mitigates the continuity risk of a small staff complement.
Digital transformation demands agility—people fluidly structuring around problems or challenges in cross-functional teams 24, 25 rather than constrained within traditional organizational structures. Compromising on IT competence has been described as a subtle and even a dangerous issue in digital transformation. 26
“Build the organization,” “run the organization” and “transform the organization” 27 was adopted as the IT structure paradigm. Bespoke definitions for “run the organization” and “build the organization” were developed to define their purpose and scope for the organization ( figure 8 ).
While the Agency’s IT organization managed day-to-day operations (run) and performed technology modernization projects (build) like those in figure 8 , it had unsustainable transformation. Given the organization’s growth and expansion aspirations, “transform the organization” was established as a full-time role, and an experienced leader was recruited to focus on strategy and architecture to help define the organization’s broader digital capabilities.
Strategy and Architecture The current state of the Agency was such that it had no clear IT strategy and no clear IT architecture. Many different applications had been acquired from a wide variety of vendors over time to serve specific point purposes but with no consideration for aspects such as architectural fit, integrated cybersecurity management and interoperability. The historical approach to IT tended to be tactical, with no consideration of how the tactical deployments would impact the Agency’s overall IT risk profile.
While this worked reasonably well in a low-stress IT environment, the diverse flaws in the approach quickly became apparent at the start of the pandemic—especially to end users who suffered service interruptions—when network volumes escalated significantly under work-from-home orders.
All interventions documented in the Technology Stream section were part of a significantly more architected approach—specifically around cybersecurity and interoperability—that included business cases as part of the supporting documentation and a comparison with next-best technology alternatives.
THE HISTORICAL APPROACH TO IT TENDED TO BE TACTICAL, WITH NO CONSIDERATION OF HOW THE TACTICAL DEPLOYMENTS WOULD IMPACT THE AGENCY’S OVERALL IT RISK PROFILE.
It is useful to note that unarchitected IT is a primary driver of technology debt; 28 an unwelcome gift to current IT management from former IT management as experienced in the Agency’s current IT state. While appropriate IT vendor diversity should be supported in the interest of good IT risk management, this should occur within a strategically architected framework. IT strategy and IT architecture can sustainably reduce IT risk and improve business continuity.
Data Governance Stream Digital transformation consumes data and produces more data that not only serves general reporting and decision-making, but also potentially serves government policy direction. While data were not initially identified as a problem at the Agency, a data strategy has been developed in response to some data issues identified ( figure 9 ), and in line with a vision for data for the organization. (The data strategy will not be covered further in this case study beyond the limited discussion that follows.)
CIOs strive for data consistency, data availability, information resource control and information flow visibility. 29 Not addressing data challenges results in delayed and/or incorrect data-driven decision- making and productivity compromises, and incurs unnecessary IT effort to resolve issues arising from bad data.
As a first step toward addressing data challenges, the Agency articulated its unique perspective of the drivers of a data culture as an output of a facilitated workshop series. Some of the behavioral considerations include:
- Mistrust about what data could communicate; could they show performance levels that are lower than perceived?
- That data have not been seen as something that can add value
- That data are removed from the people whose lives they represent
- That data capture is only seen as a necessary part of getting the job done, rather than as a vital part of the data value chain
- That data are not seen as distinct from IT, with operational and strategic best practices distinct from those applicable to data
It is important that ways to address these behavioral considerations are included in the organization’s data strategy. The implementation of the cultural aspect is an overarching workstream for the data work that needs to be performed over the upcoming years to create an environment rich in fit- for-purpose data. Overall, IT culture is the single greatest risk—and, therefore, critical success factor (CSF)—not only for IT governance, 30 but possibly for data governance, too.
Key Results and Benefits
As outlined, successful digital transformation requires the barriers to an effective digital strategy—processes, technology, people and governance, in that order 31 —to be addressed. Without a sound IT operating model foundation, digital transformation will exacerbate IT operating model shortcomings with predictable consequences. Figure 10 summarizes the major IT outcomes achieved. Note that the column “Technology and/or Governance Intervention” in the figure refers to the relevant item in the Technology Stream section or the Governance Stream section.
Figure 10 item 10 refers to technical cybersecurity vulnerabilities. However, the Desjardins breach in Canada 32, 33 is a shocking reminder of the scale of breach possible in the presence of even the best technological responses. People vulnerabilities are, thus, addressed through the newly established SOC at the Agency, mandated to address people matters such as cybersecurity training and to perform vendor due diligence. This closes the loop on the cybersecurity vulnerabilities identified as part of the network remediation workstream.
Other noteworthy outcomes include digital forms with workflows for efficient forms processing compared to paper forms, and improved secure video conferencing.
What Is Next?
With many of the primary activities in figure 10 having been achieved in six months across nearly 20 regional sites, there is still more work to do, with some of the major considerations being:
- Telephony, as discussed
- Case management, as discussed
- Laptop standardization, all staff
- Addressing stable and reliable power
- Modernizing the data infrastructure as the foundation required for the implementation of an organizationwide data strategy
DIGITAL DISTINCTION’ AND COST SAVINGS WERE ACHIEVED WITH LIMITED RESOURCES IN A LIMITED TIMEFRAME, AN UNUSUAL ACHIEVEMENT IRRESPECTIVE OF ORGANIZATION SIZE OR RESOURCES.
Of these, the data infrastructure will likely be the highest cost future intervention. This will require not only technology, but a full data operating model to support the growing day-to-day requirements for data and reporting in the organization. From a CIO perspective, formally aligned organizational strategy and IT strategy interventions ultimately help minimize digital strategy execution gaps, 34 the difference between what an organization aspires to achieve strategically, and what it actually achieves.
Organizations trust the CIO to ensure that the technology ecosystem is a functional and reliable enabler of the organization’s operations. 35 This means that the role has significant fiduciary responsibilities requiring high performing, t-shaped people. Digital transformation needs executive support and visibility, and credit is due to the head of the organization, the head of finance and administration, and the head of human resources (HR) for their encouragement during some of the darkest hours of this process. Thanks are due also to the extraordinary performance of a small, but mighty and highly motivated IT team willing to go so significantly beyond the extra mile for months on end.
This case study details the types of CIO leadership needed for digital transformation readiness and technology modernization, aligned with an approach published in ISACA ® Journal . 36 “Digital distinction” and cost savings were achieved with limited resources in a limited timeframe, an unusual achievement irrespective of organization size or resources. The organization is now positioned to increasingly redirect IT spend from operations to digital innovation 37 as reward for its courageous efforts.
1 El Tarabishy, A.; “The Top 10 Micro, Small, and Medium Enterprises Trends for 2021,” International Council for Small Business, 6 July 2020, https://icsb.org/toptrends2021 2 Avanade, “IT Modernization: Critical to Digital Transformation,” March 2017, https://www.avanade.com/-/media/asset/white-paper/avanade-it-modernization-whitepaper.pdf 3 Pearce, G.; “Digital Transformation Governance: What Boards Must Know,” Governance Institute of Australia, vol. 72, no. 5, 2020, https://www.governanceinstitute.com.au/resources/governance-directions/volume-72-number-5/digital-transformation-governance-what-boards-must-know/ 4 Bendor-Samuel, P.; “Four Guidelines for Success in Innovation in Digital Transformation,” Forbes , 23 July 2019, https://www.forbes.com/sites/peterbendorsamuel/2019/07/23/four-guidelines-for-success-in-innovation-in-digital-transformation/#61401a511aa9 5 Pearce, G.; “Attaining Digital Transformation Readiness,” ISACA ® Journal , vol. 1, 2020, https://www.isaca.org/archives 6 Rivier University Nashua, New Hampshire, USA, “The Growing Importance of a CIO in Today’s Evolving Business World,” Boston Business Journal , 16 March 2020, https://www.bizjournals.com/boston/news/2020/03/16/the-growing-importance-of-a-cio-in-today-s.html 7 Op cit McLaughlin 8 Op cit Rivier University 9 Ibid. 10 Morley, L.; “How Much Should a Company Spend on IT?,” Techvera, https://blog.techvera.com/company-it-spend 11 Avasant Research; “IT Spending as a Percentage of Revenue by Industry, Company Size, and Region,” Computer Economics , https://www.computereconomics.com/article.cfm?id=2626 12 CIO Journal , “The Role of Senior Leaders in IT Governance,” The Wall Street Journal , 22 June 2015, https://deloitte.wsj.com/articles/the-role-of-senior-leaders-in-it-governance-1434945783?tesla=y 13 IT Governance Network; “The CIO and IT Governance,” https://www.itgovernance.co.za/3/index.php/general-articles/176-the-cio-and-it-governance 14 De Haes, S.; A. Joshi; T. Huygh; S. Jansen; Board Level IT Governance Research Project , Antwerp Management School, Belgium, September 2016, https://assets.kpmg/content/dam/kpmg/be/pdf/2018/05/Corporate_Governance_Codes_and_Digital_leadership.pdf 15 Op cit Pearce, “Attaining Digital Transformation Readiness” 16 Sharma, A.; “Application Modernization: One of the Critical Levers of Digital Transformation,” CIO , 30 July 2020, https://cio.economictimes.indiatimes.com/news/strategy-and-management/application-modernization-one-of-the-critical-levers-of-digital-transformation/77253867 17 Dogan, C.; From the Basement to the Cloud: The Role of the CIO Over Four Decades , Deloitte Consulting, USA, 2018, https://www2.deloitte.com/content/dam/Deloitte/ar/Documents/technology/THE-ROLE-OF-THE-CIO-OVERF-OUR-DECADES.pdf 18 Op cit Avanade 19 Amadei, L.; “Why Policies and Procedures Matter,” Risk Management , 1 November 2016, http://www.rmmagazine.com/2016/11/01/why-policies-and-procedures-matter/ 20 Op cit Dogan 21 Annacone, A.; “The Four Types of Digital Transformation,” TechNexus on Linkedin, 19 June 2019, https://www.linkedin.com/pulse/4-types-digital-transformation-andrew-annacone/ 22 Davenport, T. H.; T. C. Redman; “Digital Transformation Comes Down to Talent in Four Key Areas,” Harvard Business Review , 21 May 2020, https://hbr.org/2020/05/digital-transformation-comes-down-to-talent-in-4-key-areas 23 Rowles, D.; T. Brown; Building Digital Culture , Kogan Page, United Kingdom, 2017 24 Ghosh, A.; “Digital Transformation of the Workplace,” India Inc., 19 November 2020, https://indiaincgroup.com/digital-transformation-of-the-workplace/ 25 Penfold, P.; “HR Strategies That Help Digital Transformation Succeed,” People Matters, 22 November 2019, https://www.peoplemattersglobal.com/article/hr-technology/hr-strategies-that-help-digital-transformation-succeed-23829 26 Op cit Rowles and Brown 27 Apptio, IT Financial Metrics Primer , USA, https://dsimg.ubm-us.net/envelope/151893/296392/1390318118_WP_-_Apptio_IT_Financial_Metrics_Primer.pdf 28 Dalal, V.; R. Patenge; K. Krishnakanthan; “Tech Debt: Reclaiming Tech Equity,” McKinsey Digital, 6 October 2020, https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/tech-debt-reclaiming-tech-equity# 29 Op cit Dogan 30 Pearce, G.; “The Sheer Gravity of Underestimating Culture as an IT Governance Risk,” ISACA Journal , vol. 3, 2019, https://www.isaca.org/archives 31 Op cit Pearce, “Attaining Digital Transformation Readiness” 32 The Canadian Press, “Desjardins Says Employee Who Stole Personal Data Also Accessed Credit Card Info,” BNN Bloomberg, 10 December 2019, https://www.bnnbloomberg.ca/desjardins-says-employee-who-stole-personal-data-also-accessed-credit-card-info-1.1360652 33 The Canadian Press, “Series of Gaps Allowed Massive Desjardins Data Breach, Privacy Watchdog Says,” CTV News, 14 December 2020, https://www.ctvnews.ca/business/series-of-gaps-allowed-massive-desjardins-data-breach-privacy-watchdog-says-1.5230179 34 Pearce, G.; “Digital Governance: Closing the Digital Strategy Execution Gap,” ISACA Journal , vol. 2, 2020, https://www.isaca.org/archives 35 Edelman, D. J.; “CIO in Focus: A Global Study,” USA, 2020, https://www.edelman.com/expertise/technology/cio-in-focus 36 Op cit Pearce, “Attaining Digital Transformation Readiness” 37 Halfteck, D.; “Six Steps to Ensure IT Readiness to Drive Digital Transformation,” Access IT Automation, 16 May 2019
Guy Pearce, CGEIT, CDPSE
Has served on governance boards in banking, financial services and a not-for-profit, and as chief executive officer (CEO) of a financial services organization. He has taken an active role in digital transformation since 1999, experiences that led him to create a digital transformation course for the University of Toronto School of Continuing Studies (Ontario, Canada) in 2019. Consulting in digital transformation and governance, Pearce shares more than a decade of experience in data governance and IT governance as an author and as a speaker. He was awarded the ISACA® 2019 Michael Cangemi Best Author award for contributions to IT governance, and he is chief digital officer and chief data officer at Convergence.Tech.
Richard Fullerton, AWS CSA, ITIL, MCAAA, VCP-DCV
Is the IT manager at Native Child and Family Services of Toronto, Ontario, Canada. He is a solutions-oriented IT professional with more than 20 years of experience in the organization and delivery of end-to-end IT projects involving data migrations, server upgrades and configurations, and enterprise-scale software and hardware installations. His areas of expertise include cloud (AWS, Azure, Office 365), virtualization (VMware, Hyper-V, Citrix), and identity and access management. Fullerton is an experienced technical team leader in matrix organizations. He is the recipient of multiple Distinguished Service and Project Leadership awards, and the recipient of a Service Excellence award.
Findings from the 2019 Digital Business
Global executive study and research project.
Accelerating Digital Innovation Inside and Out
Agile teams, ecosystems, and ethics, june 04, 2019, by: gerald c. kane, doug palmer, anh nguyen phillips, david kiron, and natasha buckley, executive summary.
For the past five years, MIT Sloan Management Review and Deloitte 1 have investigated digital maturity, focusing on the organizational aspects of digital disruption rather than the technological ones. We’ve examined companies at the early, developing, and maturing stages of digital transformation and have seen increasing signs of separation between more and less mature organizations. This year’s research finds that the gaps can often be explained by a company’s approach to innovation: Digitally maturing companies are not only innovating more, they’re innovating differently.
This innovation is driven in large part by the collaborations established externally through digital ecosystems and internally through cross-functional teams. Both ecosystems and cross-functional teams increase organizational agility. The risk of this increased agility, however, is that it can lead a company’s innovation efforts to outpace its governance policies. It is particularly important, then, that these organizations have strong policies in place regarding the ethics of digital business.
MIT Sloan Management Review and Deloitte’s fifth annual study of digital business is based on a global survey of more than 4,800 managers, executives, and analysts and 14 interviews with executives and thought leaders. The report presents the following findings:
- Digitally maturing companies innovate at far higher rates than their less mature counterparts. Eighty-one percent of respondents from these companies cite innovation as a strength of the organization, compared with only 10% from early-stage companies. Maturing organizations invest more in innovation and constantly drive toward digital improvement in ways that less mature companies do not. Notably, innovation happens throughout digitally maturing enterprises; it isn’t caged in labs or R&D departments. Digitally maturing companies are more likely to participate in digital ecosystems, and their employees are often organized in cross-functional teams.
- Employees of digitally maturing organizations have more latitude to innovate in their jobs — regardless of what those jobs may be. Nearly five times as many survey respondents from maturing companies as from early-stage companies report that their organizations provide them sufficient resources to innovate. This year’s research also finds a strong relationship between a company’s rate of digital innovation and its staffers’ confidence that the organization will be stronger in the future, thanks to digital trends.
- Digitally maturing companies are far more likely than their less mature counterparts to collaborate with external partners. While 80% say their organizations cultivate partnerships with other organizations to facilitate digital innovation, only one-third of early-stage companies do the same. The nature of collaboration also differs depending on maturity level. Digitally maturing organizations tend to form alliances that involve less formal, controlled relationships; they rely more on relational governance and less on detailed contracts. Formal partnerships can still serve a vital role in collaboration and often exist as part of larger business ecosystems.
- Cross-functional teams are another important source of digital innovation. Not only are digitally maturing companies more likely to use cross-functional teams, those teams generally function differently in more mature organizations than in less mature organizations. They’re given greater autonomy, and their members are often evaluated as a unit. Participants on these teams are also more likely to say that their cross-functional work is supported by senior management. For more advanced companies, the organizing principle behind cross-functional teams is shifting from projects toward products.
- Digitally maturing companies are more agile and innovative, but as a result they require greater governance. Organizations need policies that create sturdy guardrails around the increased autonomy their networking strength allows. Digitally maturing companies are more likely to have ethics policies in place to govern digital business. Policies alone, however, are not sufficient. Only 35% of respondents across maturity levels say their company is talking enough about the social and ethical implications of digital business.
- When asked to predict whether their company will be stronger or weaker moving forward, respondents from digitally maturing and early-stage companies show striking differences. The former believe their organizations have the power to adapt to changes wrought by digital disruption and expand their capabilities, while the latter see disruption as a result of market forces they cannot control.
Accelerating Innovation Through Digital Ecosystems
Choosing a health plan can be tough, especially if you’re one of the nearly 60 million seniors receiving Medicare benefits. With thousands of private insurers vying to administer Medicare plans to people older than age 65, many seniors have difficulty identifying an appropriate plan, one that optimizes the right mix of costs, physician access, and health coverage.
Enter California-based Enroll Hero, a startup that calls itself a concierge for Medicare. 2 The company’s online tool compares Medicare health insurance plans and offers customized recommendations to its users. Enroll Hero recently joined forces with insurer MetLife to promote its service in seven-plus states. The promotion reached thousands of MetLife customers but did not recommend a single MetLife health plan. The reason: MetLife doesn’t offer a Medicare health plan, and even if it did, Enroll Hero’s mission is to be an unbiased platform. It wouldn’t tout a plan unless it were the right one for that customer.
Why do it, then? For Enroll Hero, the partnership was an opportunity to expand the reach of its service, develop its product, and grow its business. For MetLife’s part, by analyzing customer response rates, it learned more about the interests of one of its most valuable customer segments — those who may be receiving retirement benefits via MetLife.
The unusual collaboration between Enroll Hero and MetLife emerged from a larger effort within MetLife to propel innovation in its Fortune 50 business. In 2018 the insurance company teamed up with Techstars, a Colorado-based organizer of business accelerators, to house an insurance technology accelerator at MetLife’s global technology campus in Cary, North Carolina.
Enroll Hero was one of 10 companies chosen to participate in the accelerator’s inaugural program, officially dubbed the MetLife Digital Accelerator powered by Techstars. The program connected digital insurance-related startups with leaders from MetLife and mentors from Techstars. Along with representatives from the other emerging companies, Enroll Hero cofounders Mark Lee and Bryan Kocol relocated to the tech center of North Carolina for 13 weeks of intensive development and mentorship. Within that time, they were able to create and run a working pilot program, something they had previously expected would take a year.
MetLife has operations in more than 40 countries and total annual revenues of more than $60 billion, but for Greg Baxter, the company’s chief digital officer, working with startups through Techstars is sound strategy. It helps ensure that MetLife can succeed in what Baxter calls the critical phases of innovation: ideation, incubation, and implementation. “Innovation is synonymous with growth,” he notes.
The Techstars-MetLife venture typifies the approach to innovation that digitally maturing companies embrace, according to the research that supports the 2019 MIT Sloan Management Review and Deloitte report on digital business.
In this year’s research, we found that digitally maturing companies are far more likely to encourage digital innovation throughout their enterprises. Yet it isn’t just that these companies do more innovation; they also innovate differently from other companies. Digitally maturing organizations are more inclined to rely on external partnerships for innovation. While organizations at all maturity levels report these partnerships to be vital, those developed by digitally maturing companies are generally organic and fluid rather than carefully contracted and structured. These organizations are also more likely to use cross-functional teams as a mechanism for driving innovation. What’s more, their teams operate differently: They’re offered greater autonomy, are evaluated as a unit, and are given a more supportive environment for success. These internal and external sources of innovation increase digitally maturing companies’ abilities to respond quickly to changes in a competitive environment.
Our research also uncovered risks to that increased agility, which can lead a company’s innovation efforts to outpace its governance policies. With the proper ethical guardrails in place, however, digitally maturing organizations are well-prepared to thrive in the face of digital disruption. Their innovation efforts will be critical as technologies and market conditions continue to evolve. As John Bungert, MetLife’s assistant vice president for innovation, says of his industry, “There’s a lot of effort, energy, and capital flowing into people and companies that are interested in forming new business models, new experiences, and new products around insurance. We can go the way of Bethlehem Steel 3 and ignore it, or we can find ways to work together and be the incumbent that delivers all of those new values to our customers.”
Connecting Innovation With Digital Maturity
The companies we surveyed this year are classified into one of three digital maturity categories: early (24%), developing (44%), and maturing (32%). (See Figure 1.) Eighty-seven percent of digitally maturing organizations say they have moved closer to their ideal digital state over the past three years versus 60% of developing companies and 22% of early-stage ones. Our research reveals increasing signs of separation between the more mature and the less mature enterprises, and much of this separation surrounds innovation. Digitally maturing companies innovate at far higher rates than less mature businesses, in large part by cultivating a culture of innovation and providing the resources to support it.
Digitally maturing companies are more successful at driving innovation than their less mature counterparts. (See Figure 2.) Eighty-one percent of respondents from maturing companies cite innovation as a strength of the organization, compared with 36% from developing outfits and only 10% from early-stage companies. They invest more in innovation, too, with executives and managers from 74% of maturing companies saying their organizations provide sufficient resources for innovation versus 39% of developing companies and 15% of early-stagers.
Maturing companies also allocate time to enable their employees to innovate. Eighty-six percent of respondents from digitally maturing companies say that 10% or more of their time at work involves the opportunity to experiment or innovate. At these companies, continual improvement is the new normal, and staying at the forefront of digital innovation demands repeated self-reinvention. By contrast, more than 40% of early-stage respondents report that less than 10% of their time, or no time at all, involves experimenting or innovating. (See Figure 3.)
In addition, digitally maturing enterprises are far more likely than their less mature counterparts to encourage innovation by forming vital digital partnerships with external partners and supporting the internal development of cross-functional teams.
Ecosystems: A Fertile Source of Innovation
Partnerships with external organizations are a key source of digital innovation, especially for digitally maturing companies. (See Figure 4.) At digitally maturing companies, 80% of respondents say their organization is cultivating innovation via partnerships. At developing organizations, that number drops to 59%, and at early-stage organizations it falls further still to 33%. Digitally maturing companies are (thus) more than twice as likely to work with external organizations to innovate, compared with the least digitally mature businesses.
This gap does not exist because less mature companies fail to recognize the importance of partnerships to innovation. Nearly 80% of respondents across all maturity groups consider partnerships vital to their innovation efforts. Of course, as any frustrated dieter can tell you, believing something and acting on that belief are two different things. Early-stage companies, in particular, are less willing to commit resources to innovation. As we saw in our opening example, creating an innovation accelerator requires significant executive time commitments and resources for scaling successful innovation projects with external partners.
Digitally maturing companies also take a different approach to their partnerships, compared with their less mature counterparts. They use partnerships to support multiple dimensions of the innovation process and emphasize wide-ranging, capability-building ecosystems that address both short-term and long-term objectives.
Part of the reason for this emphasis, says Youngjin Yoo, the Elizabeth M. and William C. Treuhaft Professor of Entrepreneurship and professor of information systems at the Weatherhead School of Management, Case Western Reserve University in Cleveland, is that ecosystems enable organizations to operate more flexibly, providing access to more collaborators and potential innovations.
The term ecosystem is rooted in ecology and the work of early 20th-century botanist Arthur Tansley. It originally denoted a community of biological, chemical, and physical components that function as a unit; a beaver pond is an oft-used example. In the business context, it has come to mean a group of companies that cooperate to achieve shared goals, with or without formal ties. While a digital ecosystem 4 can include traditional partnerships and consortia, the term covers a wide array of relationships with external organizations and people. These include academic institutions, government entities, nonprofits, startups, customers, and even competitors (to name a few).
Our interviews with corporate executives revealed several ways that ecosystems feed innovation. Two stand out. Integrating platform companies is one. Platform companies often end up as the hubs in innovation ecosystems, notes Geoffrey Parker, professor of engineering at Dartmouth College and coauthor of Platform Revolution . 5 Platform companies, like Amazon and PayPal, are at least partly “open, and they often have default contracts that allow anybody to participate,” says Parker. That openness attracts “value-added partners that you don’t have to pre-identify and you don’t necessarily have to vet.” In contrast, old-school partnerships typically imply “a lot of due diligence, potentially contracts, cross-ownership, and a long-term relationship.” Dave Otten, CEO and founder of online video software platform JW Player, adds: “A platform can be part of the ecosystem. And a platform can enable a broader ecosystem. If you look at a platform company like YouTube, they are also a big part of the video ecosystem.”
Ecosystems also contribute to innovation through their collective access to diverse customers. In online video software development and distribution, Otten says, technologies like JW Player come together with advertising technology companies and advertising partnerships. All of them, along with the audiences they gather from across the broader web, form a collective ecosystem. Their combined understanding of audience feedback and behavior can play a critical role in the innovation process.
Distinct ecosystems contribute to different steps in the innovation process, especially for platform companies. On the basis of his research on digital platforms, Yoo observes that platforms comprise multiple layers, each of which can be managed by different participants. Accordingly, value creation in a platform is not linear: Organizations choose to participate in one or more layers of activity, providing complementary resources where appropriate or allowing others to provide them (car owners supply the cars in Uber’s ride-sharing platform, for example). Layers can involve a variety of offerings, including content, services, networks, or devices. “You could say,” Yoo adds, “that the company at the center of an ecosystem builds the beaver dam, and that, in turn, creates a pond that attracts other creatures, who also thrive there. The key strategic question is which strategic layer will the platform company control and which ones will it open to others?”
Working with external partners presents difficulties, even to digitally maturing companies. We asked survey respondents to share their biggest challenges with leveraging partnerships and networks to increase innovation. Nearly half (46%) of all respondents cite challenges related to creating a collaborative culture and to aligning goals across an ecosystem. These results are consistent regardless of maturity level. When it comes to culture, companies struggle with employees and leaders who aren’t naturally inclined to collaborate with external partners.
This problem deepens when trying to develop goals that are acceptable to all parties within the network. JW Player’s Otten acknowledges the challenge but advises companies to “balance the need to hold on to the core of your culture, while letting go of the things you need to in order to grow up.” When companies are navigating these issues, Amy Smith, senior vice president of product at Techstars, notes that “executive leadership is really, really important.” Leaders ultimately create credibility around enterprise strategy that facilitates participation in the ecosystem.
Buying In to Cross-Functional Teams
Ecosystems are critical to digitally maturing companies’ externally focused innovation activities. Internally, digitally maturing companies depend on cross-functional teams to advance their innovation efforts. Eighty-three percent of digitally maturing companies say they use cross-functional teams, compared with 71% of developing companies and 55% of early-stage outfits.
The differences among maturity groups are even more pronounced when respondents are asked how they deploy cross-functional teams. (See Figure 5.) Executives and managers at digitally maturing companies, compared with developing and early-stage ones, say these teams are more likely to have considerable autonomy regarding how to accomplish goals (69% versus 53% and 38%, respectively), to be evaluated as a group (54% versus 33% and 20%), and to have their senior leaders create a supportive environment for their teams (73% versus 48% and 29%). These distinctive aspects of cross-functional teams found in digitally maturing companies echo the flexible, organic aspects of the ecosystems we observed in external partnerships, and they likely drive innovation in similar ways.
A cross-functional team starts with people from multiple departments. Rather than answering to whichever line manager they’re officially assigned to, they might be accountable to a project manager or a corporate innovation executive. What are the benefits of cross-functional teams? Survey respondents cite enhanced access to resources, such as diverse perspectives, broader skill sets, and new ideas, as the most important one.
Operating via cross-functional teams may pose new kinds of management challenges, however. More than half of respondents cite problems with team alignment and an unsupportive culture as the biggest barriers faced by cross-functional teams. To overcome these challenges, companies must secure buy-in via clear and copious communication with employees, says Matt Schuyler, chief human resources officer at Hilton, the McLean, Virginia-based global hospitality company. For Hilton’s part, he says, “we see great benefit to our business and our culture when our team members work cross-functionally, so we spend a lot of time challenging our teams to think outside of their own subject-matter expertise. To encourage a more collaborative mindset, we invest time reminding them that you can have it all here and that communicating outside your silo is, in some ways, more important than within your silo.”
Michael Arena, former chief talent officer at General Motors and author of Adaptive Space: How GM and Other Companies Are Positively Disrupting Themselves and Transforming Into Agile Organizations , cautions that, while cross-functional teams are an important source of innovation at his former company and other digitally maturing ones, they’re not a panacea. Innovation is a process, and it occurs in stages. “For organizations to be adaptive,” he says, “the very first thing we need to do, especially as we’re talking about org design and practices, is to ditch the one-size-fits-all mindset.”
Arena studies organizational network analysis and the impact of organizational design on innovation. He notes that cross-functional teams may be brought together to address one aspect of innovation (say, ideation), but team members may have a different role when it comes to other aspects of the innovation process (say, diffusion). “It could be that for six weeks we’re pulling people together for a specific purpose,” Arena explains. “They’ve got these milestones, and for six weeks they’re dedicated to getting something across the finish line. And that’s the design for that six-week interval. Then those team members are going back to their steady-state jobs where we’re going to ask them to help diffuse this out across the broader organization.”
“When you’re talking about diffusion of new ideas, having proximity is absolutely essential. Passion spreads face-to-face.” – Michael Arena, former chief talent officer, General Motors; author, Adaptive Space: How GM and Other Companies Are Positively Disrupting Themselves and Transforming Into Agile Organizations
As an example of the benefits of designing teams for both ideation and diffusion of ideas, Arena offers up Motorola’s invention of the Razr mobile phone. 6 The Razr was a stylish, best-selling device in the years just before smartphones. Motorola, a mobile-phone pioneer, had been pushing for a breakthrough but had faltered until assigning a cross-functional team to the challenge. “They actually forced this arrangement in their innovation lab in Chicago where they brought the individual development groups — design was there, engineering was there, marketing was there — and they put them all in the room together,” Arena says. “They kept them in their clusters, so they could do the deep-dive work and develop new concepts. But then they could synchronize with the broader functions in the room much more in real time so that they were testing and diffusing ideas and responding based on the feedback they were getting.” Cross-functional teams matter a lot in discovery, he adds. “It matters even more in diffusion.”
One question companies wrestle with is whether to colocate cross-functional team members or to let them interact virtually. The project’s stage can be a deciding factor, with colocation less critical, in Arena’s view, during the discovery phase. But “when you’re talking about diffusion of new ideas, having proximity is absolutely essential,” he says. “Passion spreads face-to-face.”
Learning Cheap and Fast
CarMax, the Richmond, Virginia-based auto retailer, has embraced cross-functional teams so thoroughly that its technology organization has basically dispensed with traditional planning. Instead, CarMax expects innovations to bubble up through its product teams, says Shamim Mohammad, the company’s chief information and technology officer (CITO) and a senior vice president.
“If you think about how fast technology is changing and how fast customer expectations are changing, to deliver what the customers are looking for, you have to organize as cross-functional teams,” he says. “No single-function team can really deliver at the speed the customer is expecting.”
CarMax’s product teams are small — typically seven to nine people — and their members are colocated. A team can pull in staffers from any pertinent function or department, but every team must include a product manager, a lead engineer or developer, and a user-experience expert, roles Mohammad considers nonnegotiable.
CarMax executives give the teams goals but not elaborate instructions. As Mohammad describes it, “We tell them what to achieve but not how.” Progress toward goals is closely monitored, with the teams expected to give 10- to 15-minute presentations every two weeks in an open-house format. The presentations address how the teams are tracking against their goals, what experiments they’ve done, what worked or didn’t work, and what they’ve learned. Anyone at CarMax can attend the presentations, and top company executives often do so.
“We have this mindset of learn cheap and learn fast,” Mohammad explains. “Because we are conducting two-week sprints, it’s easier for the teams to conduct many experiments without adding significant risk for the business. They are encouraged to take smaller risks, learn from them, and adapt quickly.”
Team members are evaluated both as part of their teams and as individuals. They’re expected to know and monitor their key performance indicators. Teams are accountable to CarMax’s chief marketing officer, CITO (Mohammad), and chief operating officer. 7
Mohammad says the cross-functional teams were critical to the December 2018 launch of CarMax’s omni-channel experience 8 in Atlanta, a new approach to buying and selling cars that the retailer intends to roll out nationwide: “Basically, if you’re a customer, you can buy a car from anywhere in the Atlanta market and have the car delivered to you at home or at your workplace.” If customers wish, they can now complete an entire purchase from home, with the test-drive delivered to their driveway. With the arrival of online-only competitors like Carvana and Vroom and with more consumer choice in transportation options (Uber, Lyft, Zipcar, and car subscription services), CarMax’s continued growth depends on the company continuously innovating its offerings.
Its embrace of cross-functional teams has changed CarMax’s managerial mindset around technology planning. Executives and managers no longer think and talk in terms of projects and project budgets. Rather than asking, “Hey, do we need X million dollars?” notes Mohammad, they say, “How many product teams are you going to fund next year and what are our business outcome goals?” He considers that a game changer for the company: “We moved away from this annual project-based kind of mindset to a product-based mindset, where the product teams are delivering results, and we’re tweaking them along the way.”
Loose Coupling Versus Tight Controls
Organizations that excel at external collaboration and cross-functional teaming embrace organizational theorist Karl Weick’s notion of “loosely coupled systems.” As Weick explained in a much-cited 1976 article in Administrative Science Quarterly , a loosely coupled organization eschews hierarchies and excels at adaptation. 9 “If all of the elements in a large system are loosely coupled to one another, then any one element can adjust to and modify a local unique contingency without affecting the whole system,” he wrote. “These local adaptations can be swift, relatively economical, and substantial.”
Traditional corporate teams are tightly coupled and cleanly divided. Staffers in, say, information technology work closely together and let their technical expertise guide their work. When they need to tap into the knowledge of other departments, they do so through formal channels, asking their manager to confer with his or her counterpart in, for example, accounting or marketing. A cross-functional team, by contrast, is loosely coupled in that it is composed of people from multiple functional areas, giving them the freedom to work across traditional organizational boundaries.
Digitally maturing companies embrace loosely coupled relationships, systems, and processes to support their digital innovation.
Digitally maturing companies embrace loosely coupled relationships, systems, and processes to support their digital innovation. They give greater autonomy to their cross-functional teams and individual units, which have the freedom to respond quickly to shifts in their market environment.
Their interactions with external partners are governed more by relationships than by detailed contracts. These stronger relationships enable the cross-pollination of skill sets and mindsets. This, in turn, allows novel solutions to arise more often and more quickly than in tightly controlled systems, which means the overall system is less vulnerable to the breakdown of any one part. Increased autonomy does require different forms of governance. It demands sturdy ethical guardrails to ensure that the autonomous units serve the company’s overall goals and protect its reputation.
Ethical Guardrails Enable Agility
“People think brakes are to make a car slow down when, in fact, the purpose of brakes is that they enable cars to go fast. The same is true with organizational ethics. If you have those in place, the organization can move faster, because you are confident in the mechanisms that will keep you from crashing if you run into something unexpected.” — Greg Baxter, chief digital officer, MetLife
With its biweekly open-house-style meetings attended by senior leadership, CarMax keeps close tabs on its cross-functional teams. That’s the sort of creative governance that digitally maturing companies often employ. Given their loosely coupled way of doing business, they can’t rely on command-and-control structures in which team members don’t act until they’ve received clearance from someone higher up. As Mohammad notes, increased autonomy means increased freedom to experiment and encourages an entrepreneurial culture.
Companies that encourage autonomy and experimentation are faced with a greater likelihood of making mistakes — and not just practical ones. Ethical errors can boil up, too. Ethical lapses can come in many different forms. For this reason, a strong culture of integrity is a critical companion for the cross-functional teams at CarMax. According to its website, the company’s purpose is to drive integrity by being honest and transparent in every interaction. Mohammad emphasizes that “integrity is core to everything at CarMax.” As you give teams more autonomy, it is imperative that they also understand the company’s values to guide that autonomy.
Respondents to our survey mention a number of social and ethical concerns brought about by digital innovation. When asked about their biggest concerns, apart from privacy, they most often cite cybersecurity or digital crime, job replacement, and the unethical use of data.
A commitment to greater flexibility, in the service of innovation, brings with it the need for sturdy ethical guardrails around increased employee autonomy. If the benefit of loose coupling is greater agility, its drawback is a loss of control. Executives and managers therefore must strive to foresee risks and equip employees so that they know how to respond — or at least know to slow down and seek help — when ethical questions arise, as they surely will.
That might explain why digitally maturing companies are more likely to have adopted policies to support their organizations’ ethical standards with regard to digital initiatives. This year’s survey found that 76% of them had such policies in place, compared with 62% of developing companies and 43% of early-stage ones. (See Figure 8.)
A common mistake managers make vis-à-vis digital ethics is assuming that their companies’ legacy policies are adequate. After all, nearly every company, once it has grown beyond the startup stage, has some sort of employee handbook that at least begins to spell out expectations regarding proper and improper employee behavior. More mature organizations might have even taken the time to compose an overarching values statement and craft ethics policies.
But the mere existence of guidelines doesn’t guarantee that those guidelines are up to the task of steering digital innovators through the ethical dilemmas they might face, says Michael Santoro, a management professor at Santa Clara University’s Leavey School of Business. Digital ethics is one of Santoro’s fields of expertise, and he’s often asked to consult with companies on their ethical standards.
He has found what he calls “a very serious, systemic hardware problem.” Often, a company’s code of conduct will have been “written 10, 15, or 20 years ago — even for tech companies — and hasn’t been revisited since.” At times, that code will be more remarkable for what’s missing than for what’s addressed. Santoro says he’ll often notice “a lack of a statement in the code of conduct about all of the business areas that a company is working in, a lack of board responsibility for any of the principles that the company has avowed to uphold, and a lack of channels to report up into the board.”
His advice for digital innovators thus begins with the suggestion that they consider their hardware needs from the beginning, instead of waiting until trouble arrives. Ethical considerations should be part of product design “so that you’re designing your product with a consciousness about the impact that it’s going to have on society,” he says.
The sort of approach Santoro recommends has been adopted by the identity verification and fraud protection company Socure as it has built out its product suite. Socure’s target market, financial services companies, have robust risk systems in place to identify biases in the way they offer their products to the public, says Johnny Ayers, the company’s cofounder and senior vice president. (Lending bias is closely regulated, specifically with Regulation B from the Equal Credit Opportunity Act from the Consumer Financial Protection Bureau. 10 ) They’re extraordinarily careful to ensure that their credit-reviewing and granting models don’t contain biases related to “age and gender and race and socioeconomic status,” Ayers says. As a result, Socure had to be equally mindful of these issues as it created its services, with each Socure team member being a consumer themselves. Ayers adds: “Even when we were only 10 people, we were building a lot of very specific controls into how we build and train models, knowing that, when you sit down with any number of the major credit issuers, their expectation is that you have stress-tested any of your models that you’re proposing to ensure that none of the aforementioned biases are implicit in your models.”
Santoro sees the potential for applying financial-industry thinking to other fields. When he’s called in to help a company solve a problem, he says, “what I’m usually doing is designing something that looks like Sarbanes-Oxley,” the 2002 law enacted in the wake of financial frauds that governs corporate record keeping and disclosure.
Making Ethics Fundamental
In March 2019, on the occasion of the World Wide Web’s 30th birthday, Sir Tim Berners-Lee, the inventor of the web, urged businesses to make ethical considerations fundamental to their product design. “Companies must do more to ensure their pursuit of short-term profit is not at the expense of human rights, democracy, scientific fact, or public safety,” he said. “Platforms and products must be designed with privacy, diversity, and security in mind.” 11
The mere existence of guidelines doesn’t guarantee that those guidelines are up to the task of steering digital innovators through the ethical dilemmas they might face.
Most businesses, even digitally maturing ones, are falling down in this regard — and by their own admission. Digital maturity aside, only 35% of all respondents to this year’s survey say that their organization’s leaders spend enough time thinking about and communicating the impact of their digital initiatives on society. Respondents from digitally maturing companies are the most likely to say their leaders are doing enough, but even then, the percentage barely breaks into a majority, at 57%. Only 16% of respondents from early-stage companies answer this question affirmatively.
Less than half (46%) of CEOs say their company is spending enough time on ethical matters — a notable figure, considering that they have the most control over their company’s agendas. For CIOs and chief digital officers, that number drops to nearly 40%, and for directors/board members, to about 32%.
Only 35% of respondents to this year’s survey say that their organization’s leaders spend enough time thinking about and communicating the impact of their digital initiatives on society.
Still, some digitally maturing companies have begun incorporating ethics into their operations and leadership structures. In 2016, for example, software company Salesforce created the position of chief equality officer, filled by Tony Prophet, to address the shortage of diversity in Silicon Valley. 12 Then, earlier this year, it added its first chief ethical and humane use officer, Paula Goldman, who, according to the company website, is charged with ensuring that Salesforce “drives positive social change and benefits humanity.” 13 One executive we spoke to commented on the importance of thinking about a company’s broader obligations and impact, noting discussion of topics such as equality, trust, and the ethical use of technology at the 2019 World Economic Forum Annual Meeting in Davos, Switzerland. 14 These issues are becoming particularly critical in today’s environment, as companies are increasingly being held accountable not only for their own actions and those of their employees but also for the actions of those with whom they do business.
It’s unlikely, however, that well-considered policies and high-profile posts are enough. If innovative teams have more autonomy and are expected to experiment, they’ll encounter situations where the guidelines don’t apply because the problem at hand hasn’t been envisioned. Who, for instance, could have imagined the ethical quandaries social media would present? Even dating sites and their algorithms can toss up unexpected moral dilemmas, such as how much, if any, A/B testing should be allowed with people’s profiles and date recommendations. It’s one thing to manipulate people’s choices of headphones, yet another to toy with their chances of finding love and happiness.
Berners-Lee’s stipulation for the Contract for the Web, a new effort among businesses, governments, and citizens to ensure that the web serves the public good, applies to any enterprise’s approach to thinking about ethics: “It must be clear enough to act as a guiding star for the way forward but flexible enough to adapt to the rapid pace of change in technology.” 15
When problems do arise, a company’s ethical muscles will be tested, and if they haven’t been exercised, they may fatigue too fast. “You can have the best ethical code of conduct in the world, and you can nail it to the wall as the employees walk in,” Santoro says. “But if you don’t have an ethical culture to support it, you’ve really got not very much.” Enron, after all, had a values statement. 16
Ethics often seem like the part that’s bolted on after the corporate engine has been built and tuned, like the speed limiters applied to some school buses and long-haul trucks. But, as MetLife’s Baxter notes, ethical norms and policies are not add-ons but an integral part of a digitally maturing company, akin to an automobile’s brakes.
How to Begin
Our fifth annual study of digital business reveals that a company’s approach to innovation has a decisive impact on its progress toward full digital transformation. Now more than ever, a company’s belief in the importance of innovation is not sufficient; taking concrete steps to drive innovation is what matters.
Our survey of more than 4,800 managers, executives, and analysts and our interviews with 14 executives and thought leaders establish that the most digitally mature enterprises have innovation efforts that reach both outside and inside their organizations. They encourage flexibility but develop ethical standards to guide them through the unanticipated dilemmas created by the loosening of hierarchical structures. To achieve digital maturity, consider the following:
Look beyond your organization to drive innovation.
Digitally maturing companies identify opportunities to foster and participate in innovative ecosystems, which are less formal and more flexible than traditional partnerships. Some of these ecosystems are platform- and product-driven, like Amazon, while others provide a way to tap into new innovations or market opportunities, like the MetLife-Techstars accelerator described in the introduction. Because ecosystems involve less control than traditional partnerships, managers must communicate clear objectives to employees and create governance practices to guide participation.
Reassess how your company cultivates and supports cross-functional teams.
Cross-functional teams are an integral part of the innovation efforts of digitally maturing organizations. They function best when managers pair team autonomy with clear team objectives that are understood both by the members and by the stakeholders working with them. Cross-functional teams ought to be evaluated against performance metrics at the team and individual levels. Of course, not all teams in an organization need to be cross-functional. Build up your use of cross-functional teams strategically in instances where increased innovation and agility can add significant value to the organization’s business model. See, for example, CarMax’s use of teams to drive new business opportunities.
Loosen formal hierarchies. Let teams explore and occasionally fail. Learn fast, and correct as you go.
The biweekly cross-functional team meetings at CarMax exemplify how a company can foster an innovation mindset centered around products rather than projects. The involvement of top executives across departments has helped leaders cultivate a supportive environment. A similar move is underway at another software-as-a-service company we spoke with. The company has been shifting from project-aligned to product-aligned funding. Traditionally, project-aligned funding necessitated budgeting for a specific project at the outset, which limited the scope of the outcome to what was paid for at the start. By contrast, product-aligned funding encourages innovation and exploration, with funds received as agreed-upon milestones, including return on investment, are achieved.
This can be a substantial change. Give yourself time to achieve it. A marathon, after all, is just a collection of footsteps.
Establish ethical guardrails as you drive innovation in your company. Make sure your company’s values keep pace with its innovations and are attuned to all the markets you operate in.
Start talking about the importance of ethics as an enabler of growth rather than as a constraint. Incorporating ethical considerations into product design can enable an organization to get ahead of potential problems before they materialize. If it’s too late for that, consider establishing ethics policies now, if none exist. These policies can be reassessed and updated as technologies and markets evolve. Finally, employee enthusiasm for ethical and social issues can be leveraged to build a culture of trust and civic engagement. The creation of such a culture will not only benefit your brand but also attract new talent and new external partners who want to work with you.
As we complete our fifth year studying the impact that digital technologies have on organizations, we find that the goalpost of digital maturity keeps moving. Because internal collaborations and ecosystems enable companies to be not only more innovative but more agile as well, businesses will most likely continue to expand their participation in these arrangements. But where does this all lead? News headlines tell us that ethical challenges are a risk as organizations innovate and transform at an accelerating pace. Companies that take the time to understand this risk and prepare for it by establishing ethical guardrails to support their path forward are in a better position to reach their digital goalpost faster and safer.
About the Research
To understand the challenges and opportunities associated with the use of digital business, MIT Sloan Management Review , in collaboration with Deloitte, conducted its eighth annual survey of more than 4,800 business executives, managers, and analysts from organizations around the world.
The survey, conducted in the fall of 2018, captured insights from individuals in 125 countries and 28 industries, from organizations of various sizes. More than two-thirds of the respondents were from outside of the U.S. The sample was drawn from a number of sources, including MIT Sloan Management Review readers, Deloitte Dbriefs webcast subscribers, and other interested parties. In addition to our survey results, we interviewed business executives from a number of industries and academia to understand the practical issues facing organizations today. Their insights contributed to a richer understanding of the data. Digital maturity was measured in this year’s study similar to how it was measured in prior years.
We asked respondents to “imagine an ideal organization transformed by digital technologies and capabilities that improve processes, engage talent across the organization, and drive new value-generating business models.” We then asked respondents to rate their company against that ideal on a scale of 1 to 10. Three maturity groups were observed: early (1-3), developing (4-6), and maturing (7-10).
The Survey: Questions and Responses
Results from the 2018 digital business global executive survey.
Demographics 1
Demographics 2
Demographics 3
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Some charts do not total 100% due to rounding.
About the Authors
Gerald C. Kane is the MIT Sloan Management Review guest editor for the Digital Business Initiative and a professor of information systems at the Carroll School of Management at Boston College.
Doug Palmer is a principal in the Digital Business and Strategy practice of Deloitte Digital.
Anh Nguyen Phillips is a senior manager within Deloitte Services LP, where she leads research on digital transformation and other strategic initiatives.
David Kiron is the executive editor of MIT Sloan Management Review , which brings ideas from the world of thinkers to the executives and managers who use them.
Natasha Buckley is a senior manager within Deloitte Services LP, where she researches emerging topics in the business technology market.
Contributors
Desiree Barry, Mark Cotteleer, Deb Gallagher, Swati Garg, Carolyn Ann Geason, Nidal Haddad, Daniel Han, Saurabh Rijhwani, Negina Rood, Lauren Rosano, Allison Ryder, and Karina van Berkum.
Acknowledgments
Michael Arena, former chief talent officer, General Motors
Johnny Ayers, cofounder and senior vice president, Socure
Greg Baxter, chief digital officer, MetLife
John Bungert, assistant vice president, innovation, MetLife
Tony Colon, former senior vice president, success cloud product management and innovation, Salesforce
Max Kelly, senior vice president, strategy, Techstars
Mark Lee, cofounder and CEO, Enroll Hero
Shamim Mohammad, chief information and technology officer and senior vice president, CarMax
Dave Otten, CEO and founder, JW Player
Geoffrey Parker, professor, Dartmouth College; visiting scholar, MIT Sloan School of Management; research fellow, MIT Initiative on the Digital Economy
Michael Santoro, professor, Santa Clara University
Matt Schuyler, chief human resources officer, Hilton
Amy Smith, senior vice president, product, Techstars
Youngjin Yoo, Elizabeth M. and William C. Treuhaft Professor of Entrepreneurship, professor of information systems, Case Western Reserve University
MIT Sloan Management Review
MIT Sloan Management Review leads the discourse among academic researchers, business executives, and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological, and societal change.
This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a U.K. private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the U.S. member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States, and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.
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1. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a U.K. private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the U.S. member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States, and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.
2. “About Us,” Enroll Hero, accessed May 10, 2019, http://blog.enrollhero.com .
3. Bethlehem, once one of the U.S.’s biggest steelmakers and shipbuilders, went bankrupt and ceased operations in the early 2000s.
4. N. Furr and A. Shipilov, “Building the Right Ecosystem for Innovation,” MIT Sloan Management Review 59, no. 4 (summer 2018): 59-64.
5. G.G. Parker, M.W. Van Alstyne, and S.P. Choudary, Platform Revolution: How Networked Platforms Are Transforming the Economy — and How to Make Them Work for You (New York: W.W. Norton, 2016).
6. M.J. Arena, Adaptive Space: How GM and Other Companies Are Positively Disrupting Themselves and Transforming Into Agile Organizations (New York: McGraw-Hill, 2018).
7. M. Heller, “Why CarMax’s ‘Shock the System’ Digital Strategy Is Working,” April 26, 2017, www.cio.com .
8. “CarMax Brings the Future of Car Buying to Atlanta,” CarMax, Dec. 4, 2018, http://investors.carmax.com .
9. K.E. Weick, “Educational Organizations as Loosely Coupled Systems,” Administrative Science Quarterly 21, no. 1 (March 1976): 1-19.
10. “12 CFR Part 1002: Equal Credit Opportunity Act (Regulation B),” Consumer Financial Protection Bureau, Jan. 1, 2018, www.consumerfinance.gov .
11. T. Berners-Lee, “30 Years On, What’s Next #ForTheWeb?” Web Foundation, March 12, 2019, https://webfoundation.org .
12. J. Guynn, “Meet Tony Prophet, Salesforce’s Chief Equality Officer,” USA Today, Sept. 15, 2016.
13. “Paula Goldman Joins Salesforce as Chief Ethical and Humane Use Officer,” Salesforce, Dec. 10, 2018, www.salesforce.com .
14. “Today at Davos With Salesforce: Thursday, Jan. 24,” Salesforce, Jan. 24, 2019, www.salesforce.com and P. Renjen, “The 4 Types of Leader Who Will Thrive in the Fourth Industrial Revolution,” World Economic Forum, Jan. 23, 2019, www.weforum.org .
15. Berners-Lee, “Thirty Years On.”
16. S.R. Nilsen, “The Enron Code of Ethics Handbook From July 2000 Is a Fascinating Read,” CFA Institute, Oct. 14, 2013, https://blogs.cfainstitute.org .
i. J. Pfeffer, “The Knowing-Doing Gap,” Insights by Stanford Business, Nov. 1, 1999, www.gsb.stanford.edu .
ii. “Farmers Reap Benefits of Automated Tractor Tech,” July 1, 2015, www.cbsnews.com .
iii. C.S. Dweck, Mindset: The New Psychology of Success, updated ed. (New York: Random House, 2016).
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The Value of Digital Transformation
- Eric Lamarre,
- Shital Chheda,
- Marti Riba,
- Vincent Genest,
- Ahmed Nizam
A team at McKinsey tracked the performance of 80 banks over four years to identify exactly how their transformation efforts paid off — and how others can follow suit.
While 89% of large companies globally have a digital and AI transformation underway, they have only captured 31% of the expected revenue lift and 25% of expected cost savings from the effort. Until business leaders are convinced of the value and confident in how to get it, they are unlikely to do the difficult, hands-in-the-dirt changes needed to improve their success rate. To see where digital transformation creates value, the authors used McKinsey’s Finalta benchmark, which tracked the performance of 80 global banks every year from 2018 to 2022 against a set of 50 normalized metrics, such as digital/mobile adoption, digital sales by banking product, number of people in contact centers, and number of branches. They found that digital leaders are creating much more shareholder value than laggards, often by creating value that’s hard to copy.
“Show me the money!” Cuba Gooding Jr., playing Rod Tidwell, made those words a cultural touchstone in the movie Jerry McGuire . He was not just voicing his concerns about committing to a sports agent, played by Tom Cruise in this case; he was also questioning Cruise’s commitment.
- EL Eric Lamarre is a senior partner in McKinsey’s Boston office, leader of the Digital Practice in North America, and coauthor of REWIRED .
- SC Shital Chheda is a partner in McKinsey’s Chicago office, and co-leads the Digital Retail Banking practice and leads the Client Experience in Banking practice in North America.
- MR Marti Riba is a Partner in McKinsey’s Boston office, and co-leads the Digital Retail Banking practice in North America.
- VG Vincent Genest is an Associate Partner in McKinsey’s Boston office, and co-leads the Digital Retail Banking practice in North America.
- AN Ahmed Nizam is a senior insights manager in McKinsey’s Chicago office, and leads Finalta’s Impact partnership practice.
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Digital transformation: a review, synthesis and opportunities for future research
- Open access
- Published: 18 April 2020
- Volume 71 , pages 233–341, ( 2021 )
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- Swen Nadkarni 1 &
- Reinhard Prügl 1
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In the last years, scholarly attention was on a steady rise leading to a significant increase in the number of papers addressing different technological and organizational aspects of digital transformation. In this paper, we consolidate existing findings which mainly stem from the literature of information systems, map the territory by sharing important macro- and micro-level observations, and propose future research opportunities for this pervasive field. The paper systematically reviews 58 peer-reviewed studies published between 2001 and 2019, dealing with different aspects of digital transformation. Emerging from our review, we develop inductive thematic maps which identify technology and actor as the two aggregate dimensions of digital transformation. For each dimension, we derive further units of analysis (nine core themes in total) which help to disentangle the particularities of digital transformation processes and thereby emphasize the most influential and unique antecedents and consequences. In a second step, in order to assist in breaking down disciplinary silos and strengthen the management perspective, we supplement the resulting state-of-the-art of digital transformation by integrating cross-disciplinary contributions from reviewing 28 papers on technological disruption and 32 papers on corporate entrepreneurship. The review reveals that certain aspects, such as the pace of transformation, the culture and work environment, or the middle management perspective are significantly underdeveloped.
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1 Introduction
Digital transformation, defined as transformation ‘concerned with the changes digital technologies can bring about in a company’s business model, … products or organizational structures’ (Hess et al. 2016 , p. 124), is perhaps the most pervasive managerial challenge for incumbent firms of the last and coming decades. However, digital possibilities need to come together with skilled employees and executives in order to reveal its transformative power. Thus, digital transformation needs both technology and people. In the last years, scholarly attention, particularly in the information systems (IS) literature, was on a steady rise leading to a significant increase in the number of papers addressing different technological and organizational aspects of digital transformation. In the light of this development, we are convinced it is the right time to map the territory and reflect on the current state of knowledge. Therefore, in this paper we aim at providing a descriptive, thematic analysis of the field by critically assessing where, how and by whom research on digital transformation is conducted. Based on this analysis, we identify future research opportunities.
We approach this objective in two steps. First, we adopt an inductive approach and conduct a systematic literature review (following Tranfield et al. 2003 ; Webster and Watson 2002 ) of 58 peer-reviewed papers dealing with digital transformation. By applying elements of grounded theory and content analysis (Corley and Gioia 2004 ; Gioia et al. 1994 ) we identify important core themes in the literature that are particularly pronounced and/or unique in transformations enabled by digital technologies. In a second step, in order to assist in breaking down disciplinary silos (Jones and Gatrell 2014 ) and avoiding the building of an ivory tower (Bartunek et al. 2006 ; Fuetsch and Suess-Reyes 2017 ), we supplement the pre-dominantly IS-based digital transformation literature with a broader management perspective. Accordingly, we integrate cross-disciplinary contributions from reviewing 28 papers on technological disruption and 32 papers on corporate entrepreneurship.
We find these research fields particularly suitable for informing digital transformation research for two reasons. First, by reviewing the literature on technological disruption we hope to derive implications regarding technology adoption and integration. Burdened with the legacy of old technology, bureaucratic structures and core rigidities (Leonard-Barton 1992 ), incumbents may face major challenges in this respect during their digital transformation journey. Second, we expect corporate entrepreneurship to add a more holistic perspective on firm-internal aspects during the process of transformation, such as management influence or the impact of knowledge and organizational learning.
Our findings and related contributions are threefold: First, based on a systematic and structured analysis we develop digital transformation maps which inductively categorize and describe the existing body of research. These thematic maps identify technology and actor as the two aggregate dimensions of digital transformation. Within these dimensions, we reveal nine core themes which help to disentangle the particularities of digital transformation processes and thereby emphasize the most influential and unique antecedents and consequences of this specific type of transformation. Thus, it becomes possible to identify the predominant contextual factors for which research would create the strongest leverage for a better understanding of the challenges inherent in digital transformation. Second, we contribute to the advancement of this field by elaborating opportunities for future research on digital transformation which integrate the three perspectives mentioned above. In particular, informed by corporate entrepreneurship, we find that the important middle management perspective on digital transformation has thus far been largely neglected by researchers. Also, emerging from our review we call for more studies on the various options for integrating digital transformation within organizational architectures and existing processes. Third, in reviewing the adjacent literature on technological disruption and corporate entrepreneurship, we strengthen the valuable management perspective within the primarily IS-based discussion on digital transformation. This way we avoid the reinvention of the wheel while at the same time enable the identification of cross-disciplinary research opportunities. We hope to stimulate discussion between these different but strongly related disciplines and enable mutual learning and a fruitful exchange of ideas.
2 Conceptual foundations
Technology as a major determinant of organizational form and structure has been well acknowledged by academics for a long time (Thompson and Bates 1957 ; Woodward 1965 ; Scott 1992 ). Following a significant decline of interest in this relationship until the mid-1990s (Zammuto et al. 2007 ), innovations in information technologies (IT) and the rise of pre-internet technologies have revitalized its relevance in the context of organizational transformation. Thus, the literature on IT-enabled organizational transformation, a concept which originates from the field of information systems (IS) that has caught considerable academic attention starting back in the early 1990s (Ranganathan et al. 2004 ; Besson and Rowe 2012 ), may be seen as one of the scholarly roots of digital transformation research. In his seminal book, Morton ( 1991 ) argued that companies must experience fundamental transformations for effective IT implementation. In the course of the years a shift of attention occurred from technological to managerial and organizational issues (Markus and Benjamin 1997 ; Doherty and King 2005 ). Non-technological aspects such as leadership, culture, and employee training were found to be equally important for successful IT-enabled transformation (Markus 2004 ). This is supported by Orlikowski ( 1996 ) who found empirical evidence from a 2-year case study that organizational transformation was in fact enabled by technology, but not caused by it.
Today, information technologies have become ‘one of the threads from which the fabric of organization is now woven’ (Zammuto et al. 2007 , p. 750). Digital technologies are considered a major asset for leveraging organizational transformation, given their disruptive nature and cross-organizational and systemic effects (Besson and Rowe 2012 ). In order to achieve successful digital transformation, changes must occur at various levels within the organization, including an adaptation of the core business (Karimi and Walter 2015 ), the exchange of resources and capabilities (Cha et al. 2015 ; Yeow et al. 2018 ), the reconfiguration of processes and structures (Resca et al. 2013 ), adjustments in leadership (Hansen and Sia 2015 ; Singh and Hess 2017 ), and the implementation of a vivid digital culture (Llopis et al. 2004 ). Therefore, the scope of our review revolves around digital transformation at the organizational level only (in contrast to implications at the individual level).
In this study, we conceptualize digital transformation at the intercept of the adoption of disruptive digital technologies on the one side and actor-guided organizational transformation of capabilities, structures, processes and business model components on the other side. In other words, and in line with Hess et al. ( 2016 ), we define digital transformation as organizational change triggered by digital technologies. Hence, we argue that two perspectives of digital transformation within organizations must be captured: a technology-centric and an actor-centric perspective. To exploit the technology-centric perspective we include the literature on technological disruption (e.g. Tushman and Anderson 1986 ; Anderson and Tushman 1990 ) and merge it with research on digital transformation. For the actor-centric perspective, we derive essential implications from the field of corporate entrepreneurship (Guth and Ginsberg 1990 ), which we believe may add valuable insights regarding actor-driven innovation and renewal processes within firms. In the following, we offer a brief introduction to both concepts and their relationship with digital transformation.
Rice et al. ( 1998 ) define disruptive innovations as ‘game changers’ which have the potential ‘(1) for a 5–10 times improvement in performance compared to existing products; (2) to create the basis for a 30–50% reduction in costs; or (3) to have new-to-the world performance features’ (p. 52). Similarly, Utterback ( 1994 ) emphasizes this disruptiveness at the firm and industry level and provides a similar ‘game changer’ definition in terms of ‘change that sweeps away much of a firm’s existing investment in technical skills and knowledge, designs, production technique, plant and equipment’ (p. 200). Tushman and Anderson ( 1986 ) distinguish between product and process disruptiveness. Product disruptiveness encompasses new product classes, product substitutions, or fundamental product improvements. Process disruptiveness may take the form of process substitutions or process innovations which radically improve industry-specific dimensions of merit. Christensen and Raynor ( 2003 ) introduce a further form of disruptive innovations, namely disruptive business model innovations, which represent the implementation of fundamentally different business models in an existing business.
We argue that digital technologies may reflect in all of these definitions of disruptive innovation. They may represent new-to-the-world product innovations, dislocate existing processes, and open up entirely new business models. As resumed in a recent study by Li et al. ( 2017 ), e-commerce for instance is defined as a disruptive technology (Johnson 2010 ) which involves significant changes to an organization’s culture, business processes, capabilities, and markets (Zeng et al. 2008 ; Cui and Pan 2015 ).
Corporate entrepreneurship (CE) on the other side is a multi-dimensional concept at the intersection of entrepreneurship and strategic management in existing organizations (Zahra 1996 ; Hitt et al. 2001 ; Dess et al. 2003 ). We adopt the conceptualization proposed by Guth and Ginsberg ( 1990 , p. 5), who argue that corporate entrepreneurship deals with two phenomena ‘(1) the birth of new businesses within existing organizations, i.e. internal innovation or venturing, and (2) the transformation of organizations through renewal of the key ideas on which they are built, i.e. strategic renewal.’ Particularly the aspect of strategic renewal in corporate entrepreneurship, also labelled as strategic change, revival, transformation (Schendel 1990 ), reorganization, redefinition (Zahra 1993 ), or organizational renewal (Stopford and Baden-Fuller 1994 ), provides a promising interface to digital transformation. As stated by Covin and Miles ( 1999 , p. 50), corporate entrepreneurship ‘revitalizes, reinvigorates and reinvents’—processes also required for digital transformation. Various authors have stated that corporate entrepreneurship is a vehicle to improve competitive positioning and transform corporations (Schollhammer 1982 ; Miller 1983 ; Khandwalla 1987 ; Guth and Ginsberg 1990 ; Naman and Slevin 1993 ; Lumpkin and Dess 1996 ). Considering the disruptive nature of many current digital technologies, we believe that organizations need to fundamentally renew and redefine the key ideas of their business in order to fully exploit the potential of digitization and eventually achieve successful transformation. The literature places particular attention on the role of middle managers as the locus of corporate entrepreneurship (Burgelman 1983 , Floyd and Wooldridge 1999 ). Concluding, we will review the research on corporate entrepreneurship and identify those contributions which we believe may offer valuable knowledge regarding actor-driven internal renewal and change processes in the light of digital transformation.
Our review of the literature on digital transformation, technological disruption and corporate entrepreneurship is conducted in a two-step approach. First, we review, analyze and synthesize existing articles on digital transformation. Then, in a second step we supplement these findings be simultaneously reviewing the literature stream on technological disruption and corporate entrepreneurship. We believe a separate analysis and contrasting of the research streams is appropriate for two reasons: first, it provides the reader with more clarity on the status quo of digital transformation knowledge and prevents the confusion of concepts emerging from different literature fields. Second, white spots and opportunities for future research regarding digital transformation become much more visible in such a structured approach.
3 Research methodology
A systematic review is a type of literature review that applies an explicit algorithm and a multi-stage review strategy in order to collect and critically appraise a body of research studies (Mulrow 1994 ; Pittaway et al. 2004 ; Crossan and Apaydin 2010 ). This transparent and reproducible process is ideally suited for analyzing and structuring the vast and heterogeneous literature on digital transformation. In conducting our review, we followed the guidelines of Tranfield et al. ( 2003 ) and the recommendations of Denyer and Neely ( 2004 , p. 133) Footnote 1 as well as Fisch and Block ( 2018 ) in order to ensure a high quality of the review.
The nature of our review is both scoping and descriptive (Rowe 2014 ; Paré et al. 2015 ) as we aim to provide an initial indication of the potential size and nature of the available literature as well as to summarize and map existing findings from digital transformation research. By developing opportunities for future research, our review further contributes to the advancement of this field and stimulates theory development.
For the purpose of data collection, we exclusively limit our focus on peer-reviewed academic journals as recommended by McWilliams et al. ( 2005 ). Thus, we opted to exclude work in progress, conference papers, dissertations, or books. First, based on discussion among the authors and the reading of a few highly-cited papers, we designed our search criteria using combinations of keywords containing ‘ digital* AND transform*’ , ‘ digital* AND disrupt*’ , ‘ digitalization’ , and ‘ digitization ’. Then, we manually searched each issue of each volume of the leading journals in the management Footnote 2 and IS field (AIS Basket of eight). Footnote 3 In addition, we run our search query against five different electronic databases: Business Source Premier (EBSCO) , Scopus , Science Direct , Social Sciences Citation Index (SSCI) , and Google Scholar . We used all years available and only included articles referring to business, management, or economics in order to exclude irrelevant publications. We abstained from including digital innovation in our search (the only exception in our sample is a recent literature review by Kohli and Melville ( 2019 ), in order to capture consolidated insights). Although we realize that it is a hot topic in IS research at the moment (e.g. Fichman et al. 2014 ; Nambisan et al. 2017 ; Yoo et al. 2010 , 2012 ), we aim to concentrate our focus on papers dealing with digital transformation on a broader level (firm and industry), rather than with transitions within innovation management.
Our first search query was conducted mid 2017 and yielded an initial sample of 1722 publications. This very large sample was mainly due to the broad ambiguity of the terms ‘digital’ and ‘disrupt’. Given these broad search parameters, we anticipated that only a small fraction of this very large sample would prove to be of substantive relevance to us. To select these relevant articles for our final sample, we performed a predefined and structured multi-step selection process (similar to the approach of Siebels and Knyphausen-Aufseß 2012 ; Vom Brocke et al. 2015 ) and defined specific criteria for inclusion (Templier and Paré 2015 ). The filters during our selection process included (1) scanning the titles, (2) reading abstracts, (3) removing duplicates, (4) full reading and in-depth analysis of the remaining papers, and finally (5) cross-referencing and backward searching by looking through the bibliographies of the most important articles to find additional relevant work. The initial pool was split in half between two panelists who separately performed the scanning of titles, analysis of abstracts and removal of duplicates. After these early steps, the sample could be narrowed down to 155 articles. As we arrived at step 4 “full reading and in-depth analysis of the remaining papers”, both panelists read and independently classified each of the remaining 155 studies. During this process, papers qualified for the final sample if they satisfied three requirements: (1) articles were required to have their primary focus and contribution within digital transformation research or digitally-induced organizational transformation (e.g. a vast number of papers inadequately captured the topic of digital transformation as they primarily focused on business model innovation), (2) articles needed to be based on a sound theoretical foundation and therefore not primarily practitioner oriented (such as articles that offer popular recommendations to business leaders on how to survive digital transformation), (3) papers that were not addressing digital transformation at an organizational level (e.g. the rise of home-based online businesses by entrepreneurs) were dismissed. Whenever disagreements emerged regarding the inclusion or classification of an article, we engaged in discussion and tried to resolve the issue together to make our selection rules more reliable. We updated the review in the autumn of 2018 for any articles that had appeared between then. Following this approach, 58 studies passed all five selection steps and were included in our final sample.
Within this sample, conceptual articles (27) and case studies (20) are dominant. Roughly 60% of the articles stem from the IS literature, while 40% cover a broader management perspective of digital transformation. While the reviewed papers span a time frame from 2001 to 2018, approximately eighty-percent of articles were published within the past 5 years, indicating the relative novelty of digital transformation as a research discipline. The distribution of our sample according to journals is provided in Table 4 of “ Appendix ”.
Upon the recommendation of Webster and Watson ( 2002 ), our categorization and analysis of the literature was concept-centric. First, to facilitate analysis and build a basis for our initial coding, each selected paper was reviewed to determine the following database information.
(1) Article title, (2) outlet, (3) research methodology, (4) sample, (5) region, and (6) key findings (see full database in Table 5 of “ Appendix ”). Next, we started coding our sample, adopting elements of the approach introduced by Corley and Gioia ( 2004 ). We began by identifying initial concepts in the data and grouping them into provisional categories and first order concepts (open coding). Then, we engaged in axial coding (Locke 2001 ) and searched for relationships and common patterns between and among these provisional categories, which allowed us to assemble them into second order themes. Finally, we assigned these second order themes to aggregate dimensions, representing the highest level of abstraction in our coding. In sum, reviewing and analyzing the extant literature, 194 coded insights were generated within the field of digital transformation: 61 first order concepts, nine second order themes, and two aggregate dimensions. The nine second order themes represent core themes across the papers, which finally constitute two aggregate dimensions: technology and actor. In conclusion, we define digital transformation as actor-driven organizational transformation triggered by the adoption of technology-driven digital disruptions. The result of the coding process is a high-level inductive map of the core themes in digital transformation research (Fig. 1 ).
Digital transformation high-level thematic map emerging from the analysis of the literature
The reviewed studies from our sample provide a rich body of knowledge regarding the specific contextual factors of digital transformation. This may be beneficial to both researchers and practitioners enabling a more comprehensive understanding of the peculiarities of digital transformation (in comparison to previous technology-driven transformations).
4.1 Macro-level findings
On a macro level, the central observation emerging from our review is that both technology- and actor-centric aspects take center stage within this debate. This is also reflected in various definitions of digital transformation provided in the sample. For example, Lanzolla and Anderson ( 2008 ) represent the technology-centric side and emphasize the diffusion of digital technologies as an enabler for transformation. Such digital technologies may include big data, mobile, cloud computing or search-based applications (White 2012 ). Similarly, Hess et al. ( 2016 ) note that digital transformation is ‘concerned with the changes digital technologies can bring about in a company’s business model, which result in changed products or organizational structures or in the automation of processes’ (p. 124). However, Hess et al. ( 2016 ) also highlight the role of actors (e.g. managers) in promoting transformation processes, while facing the challenge of simultaneously balancing the exploration and exploitation of resources. Leaders must have trust in the value and benefits of new IT technologies and support their implementation (Chatterjee et al. 2002 ).
In total, we find an almost even distribution of papers studying the two dimensions of technology and actor: 33% are technology-centric, 34% are actor-centric, and 33% of papers cover both technology and actor. However, within these two dimensions we observe a rather uneven distribution of articles by second order themes. On the technology-centric side, we find that understanding the implications of digital technologies on the consumer interface and market environment are highly active research streams. In comparison, understanding the pace of change in times of digital transformation and its direct impact on incumbents is so far comparably understudied. On the actor-centric side, our review reveals a very dominant focus on leadership and capabilities in a digital context, while in contrast company culture and work environment thus far received less recognition. We also find that the status-quo of digital transformation literature is rather diverse, in a sense that papers discuss topics across various categories of our thematic map and are therefore not restricted nor focused to a specific unit of analysis. The vast majority of articles is related to adjacent topics of digital transformation underpinning its nature as a diverse and broad field of research while again indicating its emerging nature.
In addition, we observe some degree of diversity in the theoretical foundations drawn upon. Different theories are applied by several authors to capture the context of digital transformation, e.g. alignment view, configuration theory, resource-based view, dynamic capabilities, organizational learning theory, network view or business process reengineering. It would be interesting to use other theoretical angles, for example from the literature on corporate entrepreneurship and technological disruption, in order to increase theoretical diversity. Such an exchange with different fields of research would broaden the scope of the field and help bridging an ivory divide . Finally, from a methodological perspective, we observe that actor-centric papers primarily use case studies while technology-centric studies at this point are pre-eminently conceptual. In general, the literature is scarce regarding quantitative empirical evidence. We see this as a strong indicator for the early stage of digital transformation research.
4.2 Micro-level findings: the technology-centric side of the equation
In the following, we present and discuss the most important findings of the second order themes within the technology-centric dimension. In Fig. 2 we provide a thematic map for this dimension and in Table 1 a brief summary including illustrative quotes.
Thematic map for technology-driven themes in digital transformation literature
4.2.1 Pace of change and time to market
In times of digital transformation, the speed of technological change is disproportionally accelerating with new digital capabilities being rolled out every year. The technological capability of applications such as the Internet of Things (IoT), big data, cloud computing, and mobile technologies significantly increases the overall pace of change. For example, entire industries, like the newspaper business, have been transformed and digitized within a very short period of time (Karimi and Walter 2015 ). Further, the cloud and online platforms have revolutionized the process and pace of turning an innovative idea into a business (Vey et al. 2017 ). Today, innovative ideas can be realized within days and companies set-up literally ‘overnight’. In this sense, in the digital world striving for a ‘first-mover advantage’ due to a ‘winner takes it all’ environment has become more important for incumbent firms (Grover and Kohli 2013 ) as they have much less time to respond to such threats and should not give away first-mover advantages too easily.
Moreover, pure digital companies like Facebook, Google or Amazon have substantially raised the overall time to market and speed of product launches (Bharadwaj et al. 2013 ). With continuous improvements in hardware, software and connectivity, these companies set the pace for a tightly timed series of product launches. Thus, firms in the hybrid world (digital and physical) are being put under enormous pressure to also accelerate their product introductions. In a digitally transformed market, the control of speed of product development and launches is increasingly transferred to an ‘ecosystem of innovation’ in the sense of a network of actors with complementary products and services (Bharadwaj et al. 2013 ).
4.2.2 Technology capability and integration
The technological capability and power of digital transformation applications, such as for example the Internet of Things (IoT), big data, cloud computing, and mobile technologies, is in terms of computing power, data storage and information distribution in many cases significantly higher than in previous technology-driven transformations. Earlier business transformations were mostly concerned about introducing internal management information systems such as enterprise resource planning (ERP) or customer relationship management (CRM). These transformations were usually limited to improvements to business processes within firm boundaries (see Ash and Burn 2003 ; Kauffman and Walden 2001 in: Li et al. 2017 ). But today, cross-boundary digital technologies such as IoT devices (Ng and Wakenshaw 2017 ), 3D printing (Rayna and Striukova 2016 ), and big data analytics (Dremel et al. 2017 ), drive transformations that go far beyond internal process optimizations as they potentially induce drastic changes to business models (Rayna and Striukova 2016 ), organizational strategy (Bharadwaj et al. 2013 ), corporate culture (El Sawy et al. 2016 ; Dremel et al. 2017 ; Sia et al. 2016 ), and entire industry structures (Kohli and Johnson 2011 ).
Further, the review confirms that the role and significance of data itself is changing profoundly and that personal data has become one of the most powerful assets in the digital era (Ng and Wakenshaw 2017 ). In fact, we believe the impact of the massive increase in quantity and quality of data generated every day (Bharadwaj et al. 2013 ) and the game changing power of big data analytics (Günther et al. 2017 ) are yet to be fully experienced and understood by society, economy and academics.
With regards to the process of dematerialization of tangible products and objects (e.g. CDs, books, machinery etc.), triggered by the transformative capabilities of digital technologies, the most notable insight is that intriguingly, in many cases the digital substitutes, for example e-books, offer superior performance and higher customer benefits than their physical counterparts (Loebbecke and Picot 2015 ). This, for example, is in contrast to the assumptions provided by Christensen ( 1997 ) more than 20 years ago, arguing that new disruptive technologies usually provide different values from mainstream technologies and are often initially inferior to mainstream technologies, therefore only serving niche markets in the beginning.
Finally, regarding technology integration, the current state of research emphasizes the importance of flexible IT (Cha et al. 2015 ), new enterprise platforms (El Sawy et al. 2016 ), and a strong and scalable operational backbone (Sebastian et al. 2017 ) as part of an agile digital infrastructure. The old paradigms of technology integration are not effective any more. However, in a second step we need to reach a more comprehensive understanding of ‘how’ and ‘where’ the integration of technology and transformation activities should be embedded within the organizational architectures of incumbent firms.
4.2.3 Consumer and other stakeholder interface
With regards to the customer interface, which is currently receiving the highest levels of attention by scholars, we conclude that there is some solid research particularly on changes in consumer behavior (Berman 2012 ; El Sawy et al. 2016 ; Ives et al. 2016 ; Lanzolla and Anderson 2008 ), consumer preferences (Vey et al. 2017 ) and consumer knowledge (Berman 2012 ; Granados and Gupta 2013 ). Firstly, our review confirms that in the new digital marketplace, consumers behave differently than before, and traditional marketing techniques may not apply anymore. Today there are myriad choices to easily gather information about products and services far before the actual purchase. For instance, customer buying decisions are increasingly influenced by online customer-to-customer interaction via platforms and social media, where users share products feedbacks, upload home video clips, or publish blog entries (Berman 2012 ). In this sense, digital technologies are also transforming firms’ customer-side operations (Setia et al. 2013 ) and customer engagement strategies (Sebastian et al. 2017 ). For example, reaching out to customers in a digital environment requires digital omnichannel marketing, including e.g. social media, mobile apps, and augmented reality (El Sawy et al. 2016 ). Secondly, we may note that digital technologies increasingly reduce the information asymmetries between sellers and buyers (Granados and Gupta 2013 ). In this sense, information ubiquity (Vey et al. 2017 ) and instant access to data via mobile technologies (Berman 2012 ) profoundly change the long-established seller–customer relationship. And thirdly, the current literature raises awareness for the emergence of multi-sided business models. While in the ‘old’ world, intermediaries were matching sellers and buyers, in the digital market place, intermediation increasingly takes place through the establishment of multi-sided digital platforms and networks (Bharadwaj et al. 2013 ; Evens 2010 ; Pagani 2013 ).
4.2.4 Distributed value creation and value capture
The review of the literature reveals that the value chain has become far more distributed in times of digital transformation—particularly value creation and value capture. Two major changes can be observed here: (1) digital technologies offer opportunities to customers to co-create products with the manufacturer, e.g. via digital platforms (El Sawy et al. 2016 ; Ng and Wakenshaw 2017 ), and (2) on an inter-firm level value is increasingly co-created and captured in a series of partnerships in a value network (Evens 2010 ). As Bharadwaj et al. ( 2013 ) argue, network effects are the key differentiator and driver of value creation and capture in a digital world. The focus of value creation is therefore shifting from value chain to value networks. For this purpose, companies like Google are experimenting with multi-sided business models. In such a multilayered business model, a company gives away certain products or services in one layer to capture value at a different layer (Bharadwaj et al. 2013 ). Google is giving away its Android operating system for free and captures value via the ability to control advertising on every phone that uses Android.
In more general terms, we may conclude that control of value in the digital world is less and less determined by R&D capabilities, competitors, or industry boundaries. Instead the buyer, not the seller, determines the dimensions of value that matter (Keen and Williams 2013 ). Therefore, businesses need to engage with their customers at every point in the process of value creation (Berman 2012 ). Also, the strong impact of digital technologies on incumbent’s value chains imply some degree of deviation from the classical and often analog core business. For example, new product-related competencies, platform capabilities or value architectures will be required. And, incumbents must prepare for new forms of monetization in the digitized marketplace.
4.2.5 Market environment and rules of competition
This is a rather broad and diverse categorization in our review, as it comprises technology-driven changes in the market environment. After consumer-centric aspects this research stream received the most attention by scholars in the review (on the technology-centric side). In sum, the current state of literature recognizes three major developments. First, digital transformation redefines, blurs and even dissolves existing industry boundaries which may lead to cross-industry competition (Sia et al. 2016 ; Weill and Woerner 2015 ). Dominant industry logics (Sabatier et al. 2012 ) apparently do not work anymore in times of digital transformation. The ‘new kid on the block can come out of the blue’ (Vey et al. 2017 , p. 23) and even individuals can become competitors as 3D Printing is expected to lead to a sharp increase in competition from SMEs and individual entrepreneurs (Rayna and Striukova 2016 ). And with the emergence of multi-sided business models also incumbents are starting to disrupt new markets (Weill and Woerner 2015 ). For instance, Google is disrupting the mobility sector with its self-driving car subsidiary Waymo, while Amazon has introduced AmazonFresh as a grocery delivery service which is seen as a potentially tough competitor to supermarkets. Second, with the emergence of digital platforms, networks, and ecosystems the market infrastructure becomes increasingly interconnected (Grover and Kohli 2013 ; Majchrzak et al. 2016 ; Markus and Loebbecke 2013 ). In a broader sense, we see a shift from controlling or participating in a linear value chain to operating in an ecosystem or network (Weill and Woerner 2015 ). As different types of innovation networks with different cognitive and social translations regarding knowledge emerge, novel properties of digital infrastructure in support of each network are required. Digital technologies therefore increase innovation network knowledge heterogeneity (Lyytinen et al. 2016 ). Third, the free flow of digital goods precipitates an erosion of property rights and higher risks of imitation (Loebbecke and Picot 2015 ).
4.3 Micro-level findings: the actor-centric side of the equation
In the following, we present and discuss the most important findings of the second order themes within the actor-centric dimension. In Fig. 3 we provide a thematic map for this dimension and in Table 2 a brief summary including illustrative quotes.
Thematic map for actor-driven themes in digital transformation literature
4.3.1 Transformative leadership
Understanding the impact of digital transformation on leadership and management behavior is a very active and prioritized research focus. In total, 23 papers in our review explore this aspect. First and foremost, research calls for a shift in the traditional view of IT strategy as being subordinate to business strategy (El Sawy et al. 2016 ). In the course of the past two decades information technologies have surpassed their subordinate role as administrative ‘back office’ assets and evolved into an essential element of corporate strategy building. Thus, incumbents should align IT and business strategies on equal terms and fuse them into ‘digital business strategy’ (Bharadwaj et al. 2013 ).
Also, emphasis is placed on the changing nature of leadership itself, caused by digital transformation. Such changes may include rapid optimization of top management decision-making processes enabled by instant access to information and expansive data sets (Mazzei and Noble 2017 ), new communication principles (Bennis 2013 ; Granados and Gupta 2013 ), or changes in leadership education (Sia et al. 2016 ). Further, there is consensus that senior management requires a new digital mindset in order to captain their company’s digital transformation journey. Therefore, incumbents should also rethink their leadership education practices. In the past, leadership programs have been primarily about leadership and communication skills. But in times of digital transformation, executives must become ‘tech visionaries’ and develop their transformative powers. For example, Sia et al. ( 2016 ) have conducted a case study on an Asian bank that uses hackathons to educate their senior managers. Media transparency and exposure are further key challenges of digitization where top managers may require some additional education. Given the ubiquity of information and the speed of online data dissemination (via mobile phones, viral effects of social media etc.), leaders today are significantly more exposed publicly than their analog predecessors. Therefore, according to Bennis ( 2013 ) leadership in the digital era needs to be learned through embracing transparency and adaptive capacity (specifically resilience as the ability to rebound from problems and crisis).
Finally, the vast extent and complexity of digital transformation leads to the emergence of an additional position at the top management level—the Chief Digital Officer (Dremel et al. 2017 ; Tumbas et al. 2017 ). Given the immense challenges of digital transformation and the claim for a new mindset and different skills, CEOs or even CIOs are conceivably not the best match (Singh and Hess 2017 ). Particularly not if they are expected to drive digital transformation in addition to their original tasks.
4.3.2 Managerial and organizational capabilities
Our analysis suggests that in order to effectively drive digital transformation additional and refined capabilities are required—both managerial and organizational (Li et al. 2017 )—in comparison to the analogue world.
At the managerial level, for one thing, a much faster strategy and implementation cycle is needed to cope with the pace of digital transformation (Daniel and Wilson 2003 ). The turbulent and ever-changing digital environment is forcing managers to make decisions and implement strategies significantly faster than they had been previously required to. In order to study managerial capabilities in the context of digital transformation, some studies have adopted the theory of dynamic capabilities (Daniel and Wilson 2003 ; Li et al. 2017 ; Yeow et al. 2018 ) as introduced by Teece et al. ( 1997 ), Teece ( 2007 , 2014 ). In particular, results indicate that dynamic capabilities may support the refinement of digital strategy and are therefore not separate from alignment, but on the contrary have the potential to enact and guide the process of aligning.
At the organizational level, one of the most intriguing challenges for incumbents will be to manage the ambidexterity of capabilities in terms of analog and digital capabilities. Firms need to incorporate ‘old’ and ‘new’ capabilities into their organizational structure in a complementary and not impeding way. In addition, capabilities in two further areas are of particular importance to many firms. First, capabilities to implement and operate in networks (Bharadwaj et al. 2013 ), platforms (Li et al. 2017 ; Sebastian et al. 2017 ), and ecosystems (El Sawy et al. 2016 ; Weill and Woerner 2015 ). Depending on contextual factors like for example their industry or business model, companies must learn to take advantage of network effects in terms of complementary capabilities while also learn how to become more of an ecosystem rather than continue managing value chains. Second, in the digital era it is essential to develop sensing capabilities, such as entrepreneurial alertness and environmental scanning (Kohli and Melville 2019 ), in order to identify new ideas and critically evaluate, design, modify and eventually deliver new business models (Berman 2012 ; Daniel and Wilson 2003 ).
4.3.3 Company culture
Digital transformation is not exclusively a technology-driven challenge but requires deep cultural change. Everyone within the organization must be prepared with an adaptive skill set and digital know-how. Two major insights can be identified within the existing literature. First, digital transformation demands a data-sharing and data-driven corporate culture (Dremel et al. 2017 ). Data as such must be recognized much more as a valuable resource and an enabler to become a digital enterprise. This will require higher operational transparency in daily-business and work-routines and a data-sharing mindset among employees. In this sense, incumbents need to develop their informatic culture to an informational culture (Llopis et al. 2004 ). In comparison to an informatic culture, an informational culture values IT as a core element of strategic and tactical decisions and clearly understands the financial and transformative potential of digital technologies. Second, digital transformation may trigger cultural conflict between younger and comparably inexperienced digital employees and older but more experienced pre-digitization employees (Kohli and Johnson 2011 ). Management is well advised to prevent that two different cultures arise within the same organization—a group of employees who understand digital technologies and those who have a long-standing track record in the traditional business but are technologically lagging behind. Facilitating a learning friendly culture (Kohli and Melville 2019 ) and publicly affirming support and trust by the executive level may effectively mitigate such a potential cultural divide.
4.3.4 Work environment
Our review reveals that digital transformation is changing the daily work environment in incumbent firms in terms of work structures (Hansen and Sia 2015 ; Loebbecke and Picot 2015 ), job roles, and workplace requirements (White 2012 ). For example, digital interconnectivity enables the emergence of flexible and networked cross-location teams across the entire geographical company map. In this context, traditional hierarchical work structures dissolve and new opportunities emerge beyond company boundaries, such as the integration of external freelancers (Loebbecke and Picot 2015 ). Also, the implementation of a digital workplace becomes inevitable. Particularly for ‘born digital’ younger employees a digitally well-equipped workplace may represent a major criterion for their choice of employer (El Sawy et al. 2016 ). According to White ( 2012 ), a digital workplace must be adaptive, compliant, imaginative, predictive, and location-independent.
However, the most notable insight in this perspective is that—in addition to a potential cultural divide—digitization may effectively lead to a growing skills gap between pre-digitization workers and recently hired digitally savvy employees (Kohli and Johnson 2011 ). In fact, while digital technologies significantly help to optimize and accelerate many work processes and thereby increase productivity, incumbents must be aware that many employees might not keep pace with this digital high-speed train and feel left behind. It is unclear how such a tradeoff is considered and how firms could handle related conflicts.
5 Avoiding an ivory tower: drawing on existing knowledge from adjacent research fields
We assume that pre-existing knowledge on corporate transformation processes in general is partly already available and may provide implications for digital transformation. Therefore, at this point in our review, we aim to stimulate a theoretical discussion by identifying potential white spots abstracted from adjacent research fields. For this purpose, we additionally reviewed 28 studies from the literature on technological disruption (to gain technology-centric input) and 32 papers from corporate entrepreneurship (to expand the actor-centric view). By this, we supplement the pre-dominantly IS-based digital transformation literature with a broader management perspective. First, by reviewing the literature on disruptive innovations we hope to derive implications regarding technology adoption and integration. Burdened with the legacy of old technology, bureaucratic structures and core rigidities (Leonard-Barton 1992 ), incumbents may face major challenges in this respect during their digital transformation journey. Second, we expect corporate entrepreneurship to add a more holistic perspective on firm-internal aspects during the process of transformation, such as management contribution or the impact of knowledge and learning.
We rigorously conducted the same review and analysis process as for our digital transformation sample. A database and concept matrix (Webster and Watson 2002 ) for the sample on technological disruption and corporate entrepreneurship are provided in Tables 6 and 7 of “ Appendix ”. The data structures, which summarize the second order themes for both the actor-centric and technology-centric dimension of these additional research fields are illustrated in Figs. 5 and 6 of “ Appendix ”. Within the main body of this article, we only draw attention toward three key implications (Fig. 4 ). In the following, we provide a brief synthesis of these implications and their grounding in the respective literature. In a second step, we transfer and apply these implications to the context of digital transformation and integrate them into an agenda for future research opportunities.
Expanding the digital transformation high-level thematic map with insights from technological disruption and corporate entrepreneurship
5.1 Insights from technological disruption
Existing knowledge from the adoption of disruptive technologies suggests that in order to successfully integrate, commercialize or develop disruptive technologies incumbents need to create organizations that are independent from but interconnected in one way or another with the mainstream business (Bower and Christensen 1995 ). The reasons for this are manifold. For example, managers are encouraged to protect disruptive technologies from the processes and incentives that are targeted to serve established customers. Rather, disruptive innovations should be placed in separate new organizations that work with future customers for this technology (Bower and Christensen 1995 ; Gans 2016 ). Further, separation potentially helps to unravel the discord between viewing disruptive innovations as a threat or an opportunity. Exempted from obligations to a parent company, separate ventures are more likely to perceive a novel technology as an opportunity (Gilbert and Bower 2002 ). And lastly, a freestanding business also enables local adaptation and increased sensitivity to changes in the environment (Hill and Rothaermel 2003 ).
5.2 Insights from corporate entrepreneurship
Our review of the corporate entrepreneurship literature identifies two major implications that have not been (adequately) considered in digital transformation research yet.
First, the literature indicates that middle management plays a crucial role in redefining a firm’s strategic context and by this driving organizational transformation. A middle management perspective has thus far been completely neglected in digital transformation research. We see this as a major gap, since the middle layers of management are ‘where the action is’ (Floyd and Wooldridge 1999 , p. 124). Top management should control the level and the rate of change and ensure that entrepreneurial activities correspond to their strategic vision (Burgelman 1983 ), but middle managers at the implementation level are the driving force and key determinant behind organizational transformation. However, on the downside, middle managers may also represent a major barrier to organizational change (Thornberry 2001 ). Typically, managers have the task to minimize risks, make sure everything is compliant to the rules and perform their functional roles. Thus, middle managers usually have the most to lose from radical changes and are therefore often the least likely to be entrepreneurial or to support transformations (Thornberry 2001 ). In order to solve middle and operational manager’s risk-awareness and unleash their entrepreneurial spirit, research suggests encouraging autonomous behavior (Shimizu 2012 ). In sum, reviewing the literature on corporate entrepreneurship raises our awareness for the impact of hierarchy and management levels on organizational transformation (Hornsby et al. 2009 ).
Second, a closer cooperation and regular exchange between incumbents and start-ups in order to accelerate entrepreneurial transformation is proposed (Engel 2011 ; Kohler 2016 ). Incumbents should recognize start-up companies as a source of external innovation and develop suitable models for collaboration (e.g. corporate accelerators). In particular, incumbents are advised to implement three common best practices from successful start-ups in order to facilitate transformation: (1) working in small omni-functional teams, (2) goal-driven rapid development instead of bureaucratic processes, and (3) field-level exploration of market potential instead of complex and tedious quantitative models (Engel 2011 ). In addition, corporate entrepreneurship underlines the importance of organizational learning as a vehicle to drive and shape cultural transformation (Dess et al. 2003 ; Floyd and Wooldridge 1999 ; Zahra 2015 ). We come to understand that learning, and in fact also knowledge management, are intimately tied to the concept of organizational transformation. A culture of learning and knowledge drives experimentation, encourages the development of an adaptive skill set, reshapes competitive positioning, and opens the minds of employees to new realities (Zahra et al. 1999 ).
6 Opportunities for future research
Based on the cross-disciplinary perspectives from reviewing the literature on digital transformation, technological disruption and corporate entrepreneurship, we propose opportunities for future research on digital transformation. Using our thematic map as a lens to view future research opportunities, we focus on the two dimensions of technology and actor. For the technology-centric dimension we expand on the structural and operational integration of digital technologies and organizational transformation initiatives as well as gaining a deeper understanding of the pace of technological transformation. For the actor-centric dimension we address three topics: we start at the leadership level by emphasizing the relevance of middle management in digital transformation, after that we refer to the potential skills gap and threat of an employee divide in incumbent organizations induced by digital technologies, and finally we move beyond organizational boundaries to turn toward the potential benefits and drawbacks of cooperating with start-ups and pure digital companies to boost transformation. For each area, we propose a set of research questions. Altogether, the agenda is organized around five guiding topics (Table 3 ).
6.1 Integration of digital transformation within organizational structures and activities in incumbent firms
Our review of the literature on digital transformation reveals a knowledge gap regarding this topic. However, we do gain some interesting cross-disciplinary insights from technological disruption at this point. In fact, as already discussed, studies on technological disruption indicate that in order to successfully integrate, commercialize or develop disruptive technologies incumbents need to create organizations that are completely independent from but interconnected in one way or another with the mainstream business (Bower and Christensen 1995 ; Gans 2016 ; Gilbert and Bower 2002 ; Hill and Rothaermel 2003 ).
Thus, the question arises as to how incumbents should incorporate their digital transformation activities. Several options and interesting questions arise in this matter that future research may investigate on:
Which forms of organizational architecture are most suitable for digital transformation? Seamless integration of digital technologies requires building an agile and scalable digital infrastructure that enables continuous scalability of new initiatives (Sia et al. 2016 ). For example, Resca et al. ( 2013 ) suggest a platform-based organization. In addition, digital transformation demands a new kind of enterprise platform integration (El Sawy et al. 2016 ). Given the high intensity of interactive digital connectivity between the outside and inside of a company, traditional enterprise platforms (like ERP) and the ‘old’ supply chain management integration paradigm are in many cases not the most suitable solution anymore. Therefore, flexible IT is a key transformation resource in the digital world (Cha et al. 2015 ). Pursuing an open innovation approach might be another alternative for incumbents.
When and why is it an advantage/disadvantage to start digital transformation in a new organization which is completely independent from traditional business, as suggested by technological disruption research? Under what circumstances and why do spill - over - effects to the parent organization happen/not happen? ? For example, Ravensburger AG , a German toy and jigsaw puzzle company, founded Ravensburger Digital GmbH as a subsidiary in 2009. The purpose of the subsidiary was to become the firm’s digital competence center. In 2017, the digital subsidiary was reincorporated in the parent organization as a digital unit with the goal to apply their digital knowledge to transform the traditional business segments. We call for more qualitative case study research devoted to this question to develop our understanding in this topic.
How, when, and why do incumbents benefit from adopting a ‘let a hundred flowers bloom’ philosophy versus taking a ‘launch, learn, pivot’ approach? In the first scenario, a company would start its digital initiatives across all divisions simultaneously and locally to encourage broad experimentation. Such an approach was adopted by AmerisourceBergen Corp. , an American drug wholesale company. The company is convinced that digital transformation is a matter of culture that needs to be established across the entire organization. For this purpose, it implemented agile project teams throughout the entire enterprise, of which each focused on different aspects. On the downside, companies following such a broad approach may risk losing focus and at some point, the various initiatives may start competing against each other. Hence, we believe it is crucial to have a big picture in mind and accordingly allocate resources and attention very thoughtfully. Alternatively, incumbents may start with a pilot transformation project in a smaller market or subsidiary. Arguably, a major advantage is the opportunity to assure that customers are happy with the transformation results and everything is working out well before starting the large roll out in other markets. And it provides incumbents time to fine-tune their initiatives. For example, American medical company Alcon premiered their initial transformation efforts in Brazil before ramping up their rollout in 27 further countries.
6.2 Pace of digital transformation
The rapid pace of technological change is perhaps the most defining characteristic of digital transformation in distinction to previous IT-enabled transformations. Yet, as this topic is only addressed by four papers in our sample it is still to be studied in more depth. For example, there is consensus among the studies that the pace of change has accelerated significantly, however the parameters that define the pace of change remain yet to be defined. Further, we are informed that some industries like the newspaper business have been digitally transformed within a very short period of time (Karimi and Walter 2015 ), while other branches are still under transformation or are yet to be converted. We posit two exemplary research questions regarding the pace of digital transformation:
What are the parameters that define the pace of change? Our review reveals that the speed of product launches (Bharadwaj et al. 2013 ) and the time it takes to turn an idea into a business (Vey et al. 2017 ) are two potential indicators, but we certainly need to obtain a more comprehensive conceptualization at this point.
Why do industries adopt to digital transformation at a different speed? For example, consider front-runner industries like the media or publishing versus late-comers such as oil and gas. In this specific case, the easiness to dematerialize and digitize the product portfolio is certainly a main reason. However, other industries are less obvious, and we would like to invite future research to investigate upon these conditions. What are the parameters that define whether an industry is more or less transformative?
6.3 The role of middle management in digital transformation
We have learned from our review of the corporate entrepreneurship literature that middle managers are the locus of organizational transformation in incumbent firms (Floyd and Wooldridge 1999 ; Hornsby et al. 2002 , 2009 ; Shimizu 2012 ). While top management controls the level and rate of change, middle managers are in charge of execution (Burgelman 1983 ). Hence, one may conclude that middle managers are the kingpin of digital transformation. Yet, there is not a single paper in our sample that covers a middle management perspective in digital transformation. We believe that this subject has been highly neglected in research to this point and deserves far more attention in future. Several topics are particularly interesting:
How and why is digital transformation affecting the role, tasks and identity of middle managers? How and why do middle managers react to these changes? Based on our review, we expect a deep change in the nature of middle management’s role and influence in a ‘digitally transformed’ company ranging from administration to leadership aspects. Middle managers require a new attitude as they move from directing and controlling stable processes and people at the middle of hierarchy to managing resources and connecting people in the middle of networks. In addition, middle managers in the digital era must step up to their role of supporting, enabling, and coaching people to use the available digital tools. They are expected to facilitate the organization.
What kind of new responsibilities and functions in middle management hierarchy are required to accelerate digital transformation? The odds are that change fatigue might grow on employees and digital transformation may start faltering. For this purpose, horizontal functions such as business-process management layers or central administration platforms may be implemented (McKinsey & Company 2017 ). They could be shared across multiple initiatives within the organization and help to accelerate transformation.
Which mindset and digital literacy do middle managers need to be the driving force behind digital transformation? How, when, and why are middle managers motivated/not motivated to drive transformation? Research on corporate entrepreneurship emphasizes that middle managers are often the least likely to support change as they are inherently risk-averse, hardly entrepreneurial and very attached to their functional routines (Thornberry 2001 ). In addition, middle managers may easily get stressed about their ‘sandwich’ position in-between senior management and the operational level. So how can we expect middle managers to be the speedboat of digital transformation? Also, incumbents need to carefully evaluate the existing digital skills and literacy of their middle managers. How comfortable do they feel with digital tools, social media, the cloud and similar trends? They may not fulfill their coaching and leadership role if they heavily struggle with technology in the first place.
How and why is digital transformation affecting the interface of the top management team (TMT) and middle managers? The relationship between the TMT and middle managers is a very special and important relationship which significantly affects both strategy formulation and the quality of implementation. Middle managers are the organizational ‘linking pins’ between top and operational level and thus heavily rely on a good exchange with their superiors. To what extent and in which ways does digital transformation affect this special leader–follower relationship? How are digital technologies changing the speed and quality of information exchange? What is the impact on the inter-personal level?
What is the impact of digital transformation on the overall importance of the middle management layer? Since the 1950s, research indicates the decline of middle managers in terms of both numbers and influence (Dopson and Stewart 1993 ; Leavitt and Whisler 1958 ; Pinsonneault and Kraemer 1997 ). The shift in emphasis from planning and controlling to speed and flexibility is severely affecting the assumedly ‘slow’ middle. Are middle managers afraid that digital technologies will replace most of their traditional tasks and functions, e.g. communicating and monitoring strategy? Will digitalization naturally empower lower level operational managers at the bottom and consequently eliminate the middle layer?
6.4 A growing skills gap and threat of an employee divide
Given the complexity and explosive pace of digital technologies, there is a threat of a growing skills gap between pre-digitization workers and recently hired digitally savvy employees (Kohli and Johnsons 2011 ). A couple of topics are particularly interesting for future research:
How, when and why are incumbents able/unable to mitigate a growing skills gap and employee divide in the face of digital transformation? Given the increased complexity of digital technologies, traditional IT trainings may not be effective anymore. In a similar vein, how could different levels of knowledge and experience residing within different employees be integrated in the context of digital transformation? Future research might examine the mechanisms required for facilitating or hindering such an integration.
How and when are incumbents able/unable to incorporate ‘old’ and ‘new’ capabilities within their organization? On the one hand firms need to develop new capabilities to continuously transform their business, while on the other hand they must leverage their existing knowledge and skills in order to maintain their existing operations. Thus, for the time of transformation incumbents need to develop multiple, often inconsistent competencies simultaneously. In this context, how do firms ensure not to lose focus while mastering the challenge of ambidexterity in times of digital transformation?
Who in the company is managing the development and transformation of skills (e.g. HR, senior leadership, IT division, functional teams, employees etc .), and how and why does that impact outcomes of digital transformation ? This question is not addressed by current research at all. However, according to a survey (Capgemini Consulting 2013) this lack of alignment with digital strategy is rather worrisome. Responsibilities for skills transformation and development in times of digitization need to be clearly defined and allocated. Empirical academic research in this direction might be helpful to understand the status-quo in incumbent firms regarding this issue.
6.5 Cooperation with startups and pure tech companies to accelerate digital transformation
Corporate entrepreneurship proposes a closer cooperation and regular exchange between incumbents and start-ups in order to accelerate entrepreneurial transformation (Engel 2011 ; Kohler 2016 ). In fact, start-ups are often perceived as the forerunners of digital transformation. They are praised for faster innovation capabilities, higher levels of agility, a culture of risk-taking, and supremely digitized processes and workflows. In contrast, incumbents have more experience, access to capital, established brand trust and a huge customer base. Hence, a cooperation between start-ups and incumbents may be beneficial for both parties. In addition, non-tech incumbents may also consider cooperating with pure digital players which are beyond their start-up phase but are important knowledge carriers in digital matters. Two topics are particularly interesting:
Assuming that successful start - ups have a good digital culture — what are the constituent pillars of such a digital culture? And how could incumbents incorporate these “best practices” and “lessons learned”?
What are the benefits of employee exchange programs with technology companies or start - ups to scale - up digital skills? For example, in early 2008 consumer goods giant Procter and Gamble and Google have been swapping two dozen employees in an effort to foster creativity, exchange thoughts on online advertisement and strengthen their mutual relationship. This program worked very well for both sides.
7 Limitations and conclusion
Our review is not without limitations. First, the specific objectives and nature of our filtering process applied during the review naturally come with a certain selection bias. For example, data collection, analysis and interpretation remain influenced by the subjective assessments of the researchers. Also, despite being the common rule within systematic literature reviews, searching exclusively in peer-reviewed academic journals might have omitted some relevant research contained in books or dissertations. However, by means of a rigorous and transparent search process, an as complete as possible review sample was collected and analyzed subsequently. Second, using a high-level thematic map for such a complex multi-dimensional phenomenon like digital transformation highlights particular connections while it potentially fails to capture others. Specifically, critics may point to the lack of analytical depth within each second order theme. However, we believe that within the limited scope of a review our broad thematic description nevertheless adds value to the advancement of this field and should rather be seen as a holistic starting point for future research to dive deeper into the characteristics of sub-themes of digital transformation. Finally, we are aware that our focus on the organizational level of digital transformation within the private sector does not fully capture the implications of digital transformation for our society, as it also occurs at various other levels, such as the individual level or public sector. As such, future researchers may apply alternative approaches to review and synthesize the existing literature on digital transformation. For example, in contrast to our inductive method to code and analyze our sample, it may also be interesting to apply a more deductive and pre-structured method, in particular when focusing on a deeper understanding of the sub-themes emerging from our analysis. Accordingly, future research could benefit from adopting a phenomenon-based research strategy as proposed by von Krogh et al. ( 2012 ).
Concluding, our paper contributes to the extant discussion by consolidating, mapping and analyze the existing research on digital transformation, sharing important macro- and microlevel observations in the literature and proposing corresponding future research directions. Emerging from our review of 58 studies, we develop a thematic map which identifies technology and actor as the two aggregate dimensions of digital transformation and that elaborates on the predominant contextual concepts (second order themes) within these dimensions. From a macrolevel perspective, we observe that the status-quo of digital transformation literature is rather diverse, in a sense that papers discuss topics across various clusters and concepts. Further, we find some degree of diversity in the theoretical foundations drawn upon as well as confirm that the existing literature in general is scarce regarding quantitative empirical evidence. Another important contribution of our paper is bringing different lenses together by integrating knowledge from related disciplinary areas outside IS management, such as technological disruption and corporate entrepreneurship. With our review, we hope to provide a comprehensive and solid foundation for the on-going discussions on digital transformation and to stimulate future research on this exciting topic.
The development of clear and precise aims and objectives; pre-planned methods; a comprehensive search of all potentially relevant articles; the use of explicit, reproducible criteria in the selection of articles; an appraisal of the quality of the research and the strength of the findings; a synthesis of individual studies using an explicit analytic framework; and a balanced, impartial and comprehensible presentation of the results.
The search included Academy of Management Journal , Administrative Science Quarterly , Entrepreneurship Theory and Practice , Journal of Management Studies , Strategic Management Journal .
The search included European Journal of Information Systems , Information Systems Journal , Information Systems Research , Journal of the Association for Information Systems , Journal of Information Technology , Journal of Management Information Systems , Journal of Strategic Information Systems , MIS Quarterly , MISQ Executive .
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Data structure for the technology-centric dimension of technological disruption
Data structure for the technology-centric dimension of corporate entrepreneurship
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Nadkarni, S., Prügl, R. Digital transformation: a review, synthesis and opportunities for future research. Manag Rev Q 71 , 233–341 (2021). https://doi.org/10.1007/s11301-020-00185-7
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In the SISCODE project we strive to learn more about co-creation and it’s potential to be a leading maxim for policy and in RRI. In doing so, case studies with a strong emphasis on co-creation, design, policy and/or RRI are collected for analysis. These case studies have the opportunity to be included in the final selection of cases that will serve as leading examples of co-creation labs in Europe.
Previously, a joint Lego workshop was conducted during OLLD18 in the framework of iSCAPE and SISCODE projects to learn more about co-creation across Living Labs (see the debrief here ). Now, a set of main principles of co-creation have been set for the selection of the case studies. Does your lab follow the “main principles of co-creation” as set by the SISCODE project?
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Disruption or adaptation: Three questions for the right digitalization strategy
by University of Hamburg
Does every company need to focus on disruption with its digital strategy or should it wait for disruptions from others before reacting and adapting its processes? A new study by Jan Recker, Murat Tarakci and Fabian J. Sting uses simulations to investigate under which conditions which digital strategy pays off the most. The paper is published in the journal MIS Quarterly .
Executives who develop digital strategies face a fundamental dilemma: Should they try to fundamentally disrupt markets through digital technologies in order to build new markets, like Netflix did? Or should they adapt and digitally improve their company's existing value chain , like Vorwerk did? This decision has significant consequences for the market results of companies, which is why many managers find it difficult to choose the right approach.
For their study, the authors identified key decision parameters by analyzing the strategies of well-known companies and simulated the consequences of several thousand combinations of these parameters. This enabled them to identify the key questions that are decisive for making the right choice.
"Our findings show that there are three important key questions that managers should answer in order to choose the right digital strategy for their company," explains Recker, Professor for Information Systems and Digital Innovation at the University of Hamburg.
"What are our short and long-term performance targets–in absolute terms, but also in relation to our competitors? What digital strategies are our competitors pursuing? How open is our market to digital disruptions and is there the right infrastructure or rather strong regulations?" The sum of the answers then points to the right strategy–or even a hybrid of both strategies.
"Many naturally think that a disruptive strategy is the best choice," says Recker. Netflix illustrates how a company can be successful with this approach: By redefining customer expectations and changing products and supply chains, the movie provider was able to switch its business model from DVD delivery to streaming. However, cases such as Peloton or Uber show that disruptive strategies can also be associated with high risk and initial losses. Companies should therefore examine their corporate goals and market structure.
Companies such as the Australian retailer Woolworths, for example, are successful with a purely adaptive digital strategy. "While the company uses digital technologies to optimize its logistics and improve the shopping experience, it retained its traditional brick-and-mortar business," says Recker.
"Ultimately, the choice between disruptive, adaptive or a combination of both strategies should be made after weighing up the key questions we have identified." A deep understanding of one's own goals and the competitive landscape is essential.
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The Role of Digital Mobile Money in Catalyzing Financial Inclusion: The Case of Cameroon, South Sudan, and Zambia
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In Zambia, Cameroon, and South Sudan, digital financial inclusion has been recognized as a crucial tool to bridge the financial gap in underserved regions. Each country faces unique challenges and opportunities in its journey toward financial inclusion, particularly in leveraging mobile wallets to improve access to financial services.
- Zambia demonstrates significant progress, with mobile money adoption contributing to a 69.4% financial inclusion rate, driven by widespread mobile phone penetration and robust infrastructure in urban areas.
- Cameroon is witnessing rapid adoption of mobile wallets, particularly in urban areas like Douala and Yaoundé. However, rural regions face limitations in infrastructure and digital literacy, with gender disparities prominent in mobile wallet use.
- South Sudan is at the early stages of mobile money adoption, with mobile money usage hindered by infrastructural deficits, especially in rural areas. Adoption remains low but has shown signs of growth through humanitarian efforts and new service providers like m-Gurush.
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Here are the 8 inspiring digital transformation case studies to consider when undertaking transformation projects in 2024: 1. Amazon extended the B2C model to embrace B2B transactions with a vision to improve the customer experience. Overview of the digital transformation initiative. Amazon Business is an example of how a consumer giant ...
Related: Digital Transformation in Aviation Case Studies . Conclusion. The stories of these 15 companies culminate in a powerful testament to the transformative impact of digital technology. Each case study highlights the pivotal role of innovation in securing market leadership and underscores the broader implications for industries at large.
Three years ago, IKEA Retail (Ingka Group) hired Barbara Martin Coppola — a veteran of Google, Samsung, and Texas Instruments — to guide the company through a digital transformation and help ...
Digital Case Studies. See how we're partnering with clients to rewire their organizations to outcompete with technology. Get in touch. Keeping companies safer by matching them with the right cybersecurity providers. ... An AI power play: Fueling the next wave of innovation in the energy sector. May 12, 2022 -
A former developer and journalist, Mallory's written work and coding projects have been published by TIME, Chicago Tribune, and The Texas Tribune. She graduated from Northwestern University. Explore digital transformation case studies through the lens of three successful brands—Walmart, Ford, and Anheuser-Busch InBev.
30+ Digital Transformation Case Studies & Success Stories. Digital transformation has been on the executive agenda for the past decade and ~ 90% of companies have already initiated their first digital strategy. However, given the increasing pace of technological innovation, there are numerous areas to focus on.
Daniel Schallmo is Full Professor and Director of the Institute for Entrepreneurship at Neu-Ulm University of Applied Sciences in Germany. In the context of digitization, his work and research focuses on business model innovation, entrepreneurship, measuring digital maturity, developing digital strategies, the digital transformation of business models, and implementing digital initiatives.
Partnering with McKinsey, DBS transformed its data-driven operating model, aiming to leverage data for innovative outcomes and widespread AI adoption. With McKinsey AI experts' support, they established a program that reduced end-to-end AI deployment time from 18 months to less than 5 months. The goal is to reduce that even more, to just a few ...
Working Paper: Case Study. Digital Innovation at Toyota Motor North America: Revamping the Role of IT. This case study reviews how Toyota's IT unit established credibility for its efforts and fostered enthusiasm for digital innovation in the company. No. 403Published: Oct 6, 2015Topic: Innovation and Strategy.
Case Study: Technology Modernization, Digital Transformation Readiness and IT Cost Savings. Author: Guy Pearce, CGEIT, CDPSE, and Richard Fullerton, AWS CSA, ITIL, MCAAA, VCP-DCV. Date Published: 27 August 2021. Related: COBIT. "Digital Distinction" is a major trend for growing, medium-sized organizations, with growth requiring a well ...
Digitally maturing companies are more successful at driving innovation than their less mature counterparts. (See Figure 2.) Eighty-one percent of respondents from maturing companies cite innovation as a strength of the organization, compared with 36% from developing outfits and only 10% from early-stage companies.
Organizational transformation Digital Article. Andrew White. Adam Canwell. Michael Smets. Lessons on navigating turning points from surveys of 846 senior leaders and 840 employees involved in ...
Digital Innovation and Business Transformation in Practice. ... "The book is a useful and comprehensive summary of several real-life case studies for organizations and researchers. It is a valuable resource in the form of empirical evidence." (Bálint Molnár, Computing Reviews, July, 2018)
Summary. While 89% of large companies globally have a digital and AI transformation underway, they have only captured 31% of the expected revenue lift and 25% of expected cost savings from the ...
Digital innovation affect companies as a whole . The ability to innovate is, e.g., influenced by organizational structures and working methods . Digital innovation also requires new skills in the company, such as continuous learning and new ways of how employees think and act [7, 8]. It is therefore important to develop a culture for digital ...
The reality is that digitalisation cuts across the entire innovation value chain. Consequently, many aspects of digital innovation affect the theory and practice of innovation more generally. One aspect of digital innovation that lets us better study and understand general innovation processes is the speed with which it unfolds.
This case chronicled the digital transformation of DBS Bank in seeking regional growth amidst a new digital era in the Asian banking industry. Led by its CEO, DBS invested heavily in technology and undertook radical changes to 'rewire' the entire enterprise for digital innovation. Key thrusts of its digital transformation strategy involved the revamp of its Technology and Operations ...
The findings of this study revealed that the matters which were discussed as drivers for the digital innovation were also highlighted as challenges for diffusion. The digital innovation was motivated by the need for: (1) Centralized technology management to integrate the diverse market sectors of the firm.
The study attempts to answer the research question of how SMEs achieve agility to respond to DDI. Drawing on a case study of an innovative SME, our study develops a framework on agility based on the processes of mitigating organizational rigidity, developing innovative capabilities, and balancing the tension of organizational ambidexterity.
1.1 Growing Pains of Disruptive Innovation. Innovation has always been a key component for the growth and development of any company, organization, or industry. Innovation is what drives performance and growth, it is central to the success of any business and it must be an integral part of a business strategy.
We abstained from including digital innovation in our search (the only exception in our sample is a recent literature review by Kohli and Melville , in ... Zeng Q, Zhang S (2016) The role of institutional entrepreneurship in building digital ecosystem: a case study of Red Collar Group (RCG). Int J Inf Manag 36(3):496-499. Google Scholar
No. 2: Bringing ideas to value. Innovation happens when ideas create value. An innovation lab is the ideal place to explore and establish how the organization will accomplish this. In addition to taking ownership of idea generation, the lab is responsible for overseeing successful implementation. This can be done by measuring the outcomes of ...
Some studies have focused on the impact of financial technology (fintech) on reducing air pollution and natural resource management. For instance, fintech reduces pollution by promoting green innovation and digital finance [25]. Fintech promotes natural resource management in Belt and Road economies [26].
These case studies have the opportunity to be included in the final selection of cases that will serve as leading examples of co-creation labs in Europe. Previously, a joint Lego workshop was conducted during OLLD18 in the framework of iSCAPE and SISCODE projects to learn more about co-creation across Living Labs (see the debrief here ).
Strategic innovation in supply chain management is crucial to secure a competitive advantage. Today's supply chain leaders must embrace curiosity and intentionality in steering their organizations toward efficient, transformative digital solutions. The Supply Chain Management: AI, Sustainability, and Resilience Strategies Program equips you to effectively integrate new technologies into your ...
A new study by Jan Recker, Murat Tarakci and Fabian J. Sting uses simulations to investigate under which conditions which digital strategy pays off the most. The paper is published in the journal ...
In Zambia, Cameroon, and South Sudan, digital financial inclusion has been recognized as a crucial tool to bridge the financial gap in underserved regions. Each country faces unique challenges and opportunities in its journey toward financial inclusion, particularly in leveraging mobile wallets to improve access to financial services.