How do firms reorganize to implement digital transformation?

• DOI: http://doi.org/10.1002/jsc.2362
• Author: Radhakrishnan Balakrishnan,Satyasiba Das
• Published date: 01 September 2020
• Date: 01 September 2020

RESEARCH ARTICLE

How do firms reorganize to implement digital transformation?

Radhakrishnan Balakrishnan | Satyasiba Das

Department of Business Policy and Strategy,

Indian Institute of Management, Naya Raipur,

Chhattisgarh, India

Correspondence

Radhakrishnan Balakrishnan, Department of

Business Policy and Strategy, Indian Institute

of Management, Cheriya, Naya Raipur,

Chhattisgarh 493661, India.

Email: radhakrishnan.efpm2016@iimraipur.

ac.in

Abstract

The paper follows an explorative approach to digital transformation (DT), an organi-

zational transformation achieved through digital technologies such as mobile technol-

ogies, social media, cloud, internet-of-things, big data analytics, and artificial

intelligence. The study involving qualitative research on 14 technology-intensive

firms, attempts to understand structural changes and managerial actions associated

with DT. The study has found that medium and large-sized firms handle innovation

and operations separately wherein the small firms build innovation into operations by

embedding relevant skills in team members. The small firms focus on process innova-

tion whereas the other firms focus on both process optimization and new market

offerings. The study has new findings on DT managerial actions that include organi-

zation-centric activities linked to employee engagement, external stakeholder-centric

activities connected to partner engagement, and technology-centric activities related

to achieving economies of scale. This study provides a basis for both the academi-

cians and practitioners while embarking on DT.

KEYWORDS

digital activities, digital technologies, digital technologies and organizational transformation,

digital transformation, managerial digital activities, organizational design for digital innovation,

organizational design for digital transformation

1|INTRODUCTION

Rapid advancements in computing and communication technologies have

begun to have a far-reaching impact on businesses. Organizations that

use such technologies achieve digital transformation (DT), and the busi-

ness value of the enterprises starts multiplying upon the implementation

of digital technologies (Libert, Beck, & Wind, 2016). Digital technologies

generally refer to technologies such as mobile technologies, social media,

cloud technology, internet-of-things (IoT), big data analytics, and artificial

intelligence (AI), and have a significant impact on customers and organiza-

tions (Libert et al., 2016; Sánchez & Zuntini, 2018).

In this context, DT refers to the process of transforming the busi-

ness into digital business in which allied technologies transform all

business model components, including value proposition and value

delivery, in a meaningful and integrated manner (Cigaina &

Riss, 2016). During DT, digital technologies are used to radically

improve performance and reach of the enterprises (Westerman,

McAfee, & Bonnet, ). Through DT, firms target three critical areas of

improvements: customer experience, operational processes, and busi-

ness models. DT redefines customer experience through new value

propositions and new value delivery, enabling them through newer

value capture means (Westerman, McAfee, & Bonnet, 2014). The DT

referred to in this paper denotes radical changes in operations, value

creation, and newer products and service offerings based on digital

technologies. This approach is different from the incremental “digital

upgrades”employed by traditional organizations for improvising busi-

ness processes (Libert et al., 2016), and should not be confused with

the later.

Being a source of competitive advantage, DT has received the

recent attention of both academicians and practitioners alike

(Brynjolfsson & Mcafee, 2012). Table 1 presents a review of notable

contributions to the subject of DT. In many of these studies, “how do

organizations employ digital transformation”has been identified as a

less-explored topic and suggested it as a possiblefuture research topic.

JEL classification codes: M; M1-M10; M11; M12.

DOI: 10.1002/jsc.2362

Strategic Change. 2020;29:531–541. wileyonlinelibrary.com/journal/jsc © 2020 John Wiley & Sons Ltd 531