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15 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.

15 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.

Related: Digital Transformation Statistics

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

8 Examples of Innovative Digital Transformation Case Studies (2024)

• January 19, 2022

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

30+ Digital Transformation Case Studies & Success Stories [2024]

We adhere to clear ethical standards and follow an objective methodology . The brands with links to their websites fund our research.

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.

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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Digital Transformation Examples: 3 Company Case Studies

Learn how three legendary companies—Walmart, Ford, and Anheuser-Busch InBev—improved customer experience by focusing digital transformation around data.

Digital transformation is a process by which a company invests in building out new digital products and services in the effort to rethink the business around digital. An effective digital transformation improves customer experience and enhances the way a company operates behind the scenes.

To digitally transform, your business needs to deploy new products and technologies. With these new products come new ways to connect with your customers and more data to inform roadmaps and strategies.

Once the investment in digital begins, your business can use new products and data to identify growth opportunities. The three case studies below—from Ford, Walmart, and Anheuser-Busch InBev—show how legendary companies went beyond simply creating an app and truly re-thought how digital efforts supported sustainable growth for the business.

• Digital transformation brings about new products and services that improve the customer experience.
• Digital transformation can also be an investment into new systems, goals, and methodologies that make internal processes more efficient.
• Digital transformation gives you more informative behavioral data and more touchpoints with the customer.
• You can leverage the new data gained from digital transformation efforts to further improve the customer experience and drive sustainable growth.
• AB InBev, Walmart, and Ford used investments in digital technology to accelerate internal processes and deploy new digital products that, consequently, provided valuable data on the customer experience and influenced future business investments.

3 examples of digital transformation through data

Here are three examples of legendary companies that embarked on digital transformation with a focus on data. These companies carefully considered how new technology could bring about data that both made internal processes more efficient and produced insights about how to grow customer value.

Brewing company AB InBev underwent a digital transformation by compiling their network of independent breweries into a unified powerhouse . One of their priorities was getting their data in the cloud, and by doing so, employees can now pull data that’s gathered globally and use it to make data-backed decisions.

For example, more accurate demand forecasting means AB InBev teams can match supply with demand—essential for such a large company with a complex supply chain. Access to data from all the breweries means they’re able to 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 their digital investments by launching an ecommerce marketplace called BEES for their 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 to send push notifications after 6:00 p.m., recommending relevant products, which led to increased sales and greater customer satisfaction. By the end of June 2021, BEES had gained over 1.8 million monthly active users and had captured more than $7.5B in Gross Merchandise Volume .

Jason Lambert, the 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 digital transformation when they opened 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—and 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 allow customers to purchase goods online. After analyzing customer behavioral information from their app, they added more services such as same-day pickup, mobile ordering, and “buy now, pay later.”

To be successful with digital transformation, Walmart prioritized data access for everyone on their teams. Breaking down internal silos allowed employees to take ownership; They acted fast and made concrete changes to improve the customer experience.

Walmart’s head of mobile marketing, Sherry Thomas-Zon, notes how critical data—and access to data—are to digital operations. “Our marketing and product teams are always looking at numbers,” Thomas-Zon said. “You can’t work quickly without a self-service data and analytics tool for marketing, especially in an organization as large as Walmart. 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 the manufacturing process at one of its biggest 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.

In 2016, Ford also introduced a digital product for their customers—the FordPass app . It allows Ford owners to remotely control their vehicles. For example, drivers can check their battery or fuel levels and lock or unlock their car from their phone.

To capitalize on these new digital touchpoints with the customer, Ford leveraged data to improve the experience of the FordPass app. First, the product team grouped customers based on the in-app behaviors they demonstrated. Then, based on each group’s activity, Ford personalized the app experience to provide more value. Jian Wei Hoh, head of business design at Ford, said, “ Designing around cohorts is a game-changer .”

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 their consumers interact with their products. Then, they made data-led decisions to provide more value to their customers.

Overcoming common digital transformation challenges

It’s not called a transformation for no reason. You’re changing the way your business operates, which is no easy feat. Here are the common challenges you’ll face and how to overcome them.

Teams undergoing a digital transformation have to:

• Unlearn habits
• Get used to new structures and ways of collaborating
• Deal with changing roles
• Develop new skills

All of this takes time and, as you integrate new systems with the old, there’s a risk that teams will get siloed and chaos will ensue.

A key way of overcoming these challenges is planning. Create a digital transformation strategy roadmap in advance. Outline your integration strategy and detail how this will affect each team. 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 allows 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—give 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.

More challenges arise if you believe there’s an end-state to digital transformation. New technology and new consumer behaviors are always emerging, which means digital transformation is an ongoing process. 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.

Tips for building a digital transformation strategy

A digital transformation won’t magically grant you more profit. 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 going about a digital transformation. Some companies prefer to implement an all-inclusive digital strategy, and they transform 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 consider your business processes. How could a digital transformation speed you up? Improve your operations? Allow more collaboration between teams? Asking these questions allows you to 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?

Allow everyone to access the data they need without input from anyone else. Help your employees improve their data literacy . Start by providing training so everyone can use the data tools and software in your organization—consider setting up a capability academy for data skills . To help everyone in your organization access and analyze data, adopt easy-to-use self-service tools. 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.
• Repeat. (Or, optimize .)

Always focus on your customers

Keep customer needs at the heart of what you do. Let them be your guiding light as you go through your 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. It’ll lead to more trust and loyalty and, ultimately, result in 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
• McKinsey & Company. Digital transformation: Raising supply-chain performance to new levels
• Harvard Business Review. Boost Your Team’s Data Literacy
• Datanami. From Big Beer to Big Data: Inside AB InBev’s Digital Transformation
• Predictable Profits. How Ford Embraced Digital Transformation
• APMG International. Heavyweight v Lightweight Management
• Whatfix. Upskilling Your Workforce in 2022

About the Author

More best practices.

A digital transformation is an overhauled, digital-first approach to how a business is run. The digital world is evolving quickly with new products and digital technologies that require vigorous digital transformation initiatives. The main goal of a digital transformation is to use new digital technologies throughout all aspects of a business and improve business processes. By using AI, automation, and hybrid cloud, among others, organizations can drive intelligent workflows, streamline supply chain management, and speed up decision-making.

Why digital transformation?

Unlike a typical business transformation, implementing digital transformation is not a one-time fix. Rather, it’s the start of a new foundation for a business that seeks to keep up with new technology and evolve with the ever-changing outside world.

In a moment’s notice, customer expectations and market conditions can change. Your business needs to be prepared to handle such an event. Staying up to date with the digital age is among the benefits of digital transformation. By updating a legacy system your business is embracing digital innovation and new business models.

Digital transformation can be a risky move, but if done well it can streamline your business onto a path for a better, smarter future. A recent analysis from the IBM Institute for Business Value asked company executives “[…] how they use data to create performance baselines and to understand how applying technologies—for example, cloud, AI, generative AI—might materially improve performance in the parts of the business that generate income.” What they found was that 9 out of 10 organizations interviewed “[…] do not have a way to represent how they deliver their most important products and services from end to end, nor do they have the performance data necessary to create a baseline to improve that performance. (They might do so if pushed, but they are not being asked to do it).”

An example of a company that underwent a major retail transformation is Amazon, which changed the way consumers shop for everyday items. There are several examples, or case studies, of successful digital transformation across a range of different industries. These real-world examples give a glimpse into the digital transformation process for both stakeholders and business leaders.

Digital transformation technologies

Before exploring digital transformation examples, it’s important to understand the diverse digital technologies available. Companies are becoming more reliant on data analytics and automation to enable profitability and customer satisfaction. There are many different digital technologies that might play a role in an organization’s digital transformation strategy, depending on the needs of the business. Specifically, there are a few digital tools that are continuing to evolve and show that they’ll be a fixture to digital transformation into the future.

Artificial intelligence – Artificial intelligence , or AI, is a digital technology that uses computers and machines to mimic the human mind’s capabilities. The AI learns from what it sees around it and when combined with automation can infuse intelligence and real-time decision-making into any workflow. The AI technology drives innovation to smart products and a more pointed focus on customer and user experience. An example is machine learning, which enables a computer or machine to mimic the human mind. Another is augmented reality technology that uses algorithms to mimic digital information and understand a physical environment.

Hybrid cloud – The hybrid cloud environment creates a single, optimal cloud for public cloud private cloud and on-premises infrastructure. It takes an organization’s on-premises data into a private cloud infrastructure and then connects it to a public cloud environment, hosted by a public cloud provider. Examples include AWS® , Google Cloud Services® ,  IBM Cloud® , and Microsoft Azure® .

The cloud computing infrastructure bridges a gap for cloud resources, making it easier and scalable for an organization to run every workload. This operating model increases operational efficiency and can better organize big data. An organization is not locked into a single platform with hybrid cloud, which sets up an organization for a successful digital transformation.

Blockchain – A blockchain is a digitally distributed, public ledger or record of electronic transaction. The main benefit of blockchain is total transaction transparency for those employees who require it and security from others who didn’t need access. This type of trust is an example of how blockchain can foster a stronger community, internal and externally.

Other technologies include:

• Internet of Things (IoT)
• Microservices
• Digitization

Examples of digital transformation  

Modernized tools example: frito-lay.

Snack food giant Frito-Lay decided to optimize its productivity across its systems and improve service to retailers with Salesforce. Frito-Lay’s digital transformation efforts enlisted the help of user-focused experts from  IBM® Consulting  and the IBM Salesforce practice . Together, they worked to expand the Frito-Lay e-commerce strategy and make a more streamlined workflow for frontline employees.

Through extensive user research done by IBM Garage™ and IBM iX® team of experts, the Frito-Lay and IBM team came to two solutions built on Salesforce platforms. These two solutions created modernized tools for both retailers and employees. ‘Snacks to You’ is an advanced e-commerce solution that helps small businesses simplify the ordering and delivery process. ‘Sales Hub’, powered by Salesforce Service Cloud, is the second solution the team came up with and works to simplify logistics on the back-end. These solutions focused on optimization for the users and required a rethinking of how processes were done in the past.

Transformed technology infrastructure example: Water Corporation

Water Corporation, a state-owned entity that is located in Western Australia, maintains pipelines that deliver water, wastewater, and drainage services to a region that spans roughly 2.6 million km. The organization relies on SAP architecture to run its critical resources and recognized its on-premises servers that were supporting the SAP infrastructure were out of date. Instead of purchasing more hardware, the organization shifted to a cloud-based strategy.

Water Corporation selected IBM Consulting to plan this extensive migration. They chose Amazon Web Services (AWS) to power its critical SAP systems and IBM watsonx™ Code Assistant technology to yield code recommendations for automation functions supporting the migration and upkeep of the SAP environment.

IBM Consulting and Water Corporation estimated the new automation strategy saves the business roughly 1,500 hours of manual labor that is associated with infrastructure support. It also cuts carbon emissions by roughly 150 metric tons per year. The shift to a new SAP environment was a digital transformation that required immense coordination between Water Corporation and its partners, but yielded a worthwhile result that will ultimately set them up for a successful digital future.

Re-imagined customer experience example: Camping World

The COVID-19 pandemic caused an unprecedented number of customers for Camping World , the leading retailer of recreational vehicles (RVs), revealing some issues with their existing infrastructure. The company, which relies on its contact centers and customer service, found holes in its agent management and response times as business grew.

Camping World sought out  IBM® Consulting  to address its concerns. The answer was a human-centered solution to allow its operation to scale. The retailer ended up settling on a cognitive AI tool that was developed by IBM to modernize Camping World call centers for a better customer journey from start to finish. The solution is powered by IBM watsonx™ Assistant and is integrated with a conversational cloud platform called LivePerson. By expanding the question and telephone capabilities Camping World is better suited to serve its customers, sending the simpler questions to the virtual agent, named Arvee rather than a live agent. Arvee frees up the live agents for more complex questions while still providing all customers with the answers that they need.

Intelligent, data integration platform example: State Bank of India

State Bank of India (SBI) saw its customer base grow their wealth and found they were looking for new opportunities. The SBI is the country’s largest public sector bank and the financial foundation of India. Therefore, it was important that the institution remains ahead of the curve and lean into the digital future.

To create a mobile financial marketplace, the bank used the IBM Garage Methodology. Bank representatives worked closely with IBM Garage designers, architects, and analysts to collaborate across all disciplines of the project and analyze metrics. The bank’s vision was a one-stop-shop that addressed all a customer’s needs in the form of a mobile app. They termed it ‘YONO,’ or ‘You Only Need One’. IBM worked with SBI to design workloads and build a security system that might support the solution and further enhance the customer experience.

Digital transformation and IBM

While digital transformations require investment and ultimately change how an organization conducts its business, there are many benefits if done correctly. Those organizations that succeed at digital transformations will stay ahead of the competition, drive better relationships with employees and customers and be better prepared for what may come.

Emerging technology and social forces are creating new customer experiences that result in changing expectations and demands and disrupt business models. IBM Consulting professional services for business help organizations navigate an increasingly dynamic, complex and competitive world. We help them align digital transformation with their business strategy to create competitive advantage and a clear focus on business impact.

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Digital transformation at GE: Shifting minds for agility

The case explores the journey taken by GE, at the instigation of Jeff Immelt in 2008, towards transforming itself from a global industrial giant to becoming an Industry 4.0 leader, by harnessing the nascent promise of the Industrial Internet of Things. The case illustrates the different initiatives launched including: 1. Fastworks – lean methodology including design thinking and agile-lite approach to creating new products. 2. Business analytics and sensors for products. 3. Creation of GE Digital in San Ramon, combining analytics with a platform – Predix – and working under full agile methodology. 4. 2015 – introduction of Chief Digital Officers in each industrial vertical reporting to Bill Ruh at GE Digital. 5. Digital Foundries – to help GE customers with their digital transformations. Immelt had invested more than $4 billion into GE’s digital transformation. The case uses examples to illustrate the transformation and the challenges GE faced. Challenges included: the initial decision to create a separate division rather than embedding digital into the verticals upfront, culture change, different skill sets and time horizons, different recruitment and remuneration practices, and communication strategies. During the transformation, Immelt retired early due to falling stock value and what the market judged as previous bad decisions. He was replaced by John Flannery, a GE veteran, charged with overhauling GE by focusing on financials and spinning off parts of GE. Flannery announced he was supportive of GE Digital and the changes, but it was clear that the focus was on the industrial verticals. The markets were unhappy with the speed of progress under Flannery and a year later, he was also replaced. This time by Larry Culp, a GE-outsider. The case ends in 2019 with Culp’s announcement that GE Digital, the digital ‘home’ of GE was to become a separate enterprise, although wholly-owned by GE.

• The audience will learn how a large industrial MNC tried to transform itself into a digital technology leader but the challenges it faced doing that and the result.

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Mastering Digital Transformation: A Case Study (Part 1)

• Unlearning what we have learned so far and fundamentally changing our daily ways of working required a considerable amount of courage from everyone involved. 
• Start small . We started with small steps and then scaled up quickly. 
• Don’t play it, mean it! And be it! For the digital transformation, the focus is on applying the agile principles instead of stubbornly following a specific method.
• Using commodity infrastructures makes us faster.
• Focus on self-organizing, cross-functional product teams.
• We achieve greater effectiveness by treating offshore teams as equals.

Paradigm Shift

• From waterfall methodology to agile software development
• From project to product 
• From development and operations to DevOps
• From requirements analysis to design thinking
• From IT service management to a focus on business value 

“One Touch Retail”

Changes from the status quo, revolution at mercedes-benz.

The four catalysts of the Mercedes-Benz ITS strategy

• A radical process simplification reduces the complexity and duplication of tasks, which allows greater automation of simpler processes.
• A shift of focus away from the project and towards the product itself. The goal is to use data to reduce costs, increase revenue, and develop your intellectual property and user base.
• Using speed as a strategic advantage, e.g. to implement customer requirements promptly in your products through continuous delivery.
• The willingness to fearlessly question existing rules and processes and to learn from mistakes and feedback.
• Use of free and open-source software
• Cloud-based operation that enables DevOps
• Implementation of microservices that can be reached via APIs
• Working in dynamic swarms
• Use of Mercedes-Benz standard security providers

We consistently implement the Mercedes-Benz IT strategy in the OTR project. 

Ways of working.

• The automobile industry is currently undergoing a fundamental transformation  (refer to [13], for example). The societal, technical, and economic upheavals behind this are now so prevalent in public discourse that the need for action is clear. While the transformation represents a challenge or even a threat on the one hand, on the other it also enables change projects of this kind.
• At the start of the OTR project, we were met with great openness regarding agile methods and the aforementioned paradigm shifts. Even during the initial two-week inception phase we repeatedly heard the motto “trust the process.” This demonstrates the pledge of confidence that the project employees at Mercedes-Benz – who had previously only rarely come into contact with agile methods – made to us. 

Retrospective

Team setup and abilities.

• If teams are to work autonomously, the necessary abilities, and therefore individuals, must be available in the team. This inevitably leads to cross-functional teams. 
• The scaling up of agile product teams necessitates a reduction of dependencies between teams. Microservices can help strengthen this autonomy. 
• The introduction and operation of a microservice infrastructure requires capabilities such as the use of automated deployment pipelines (CI/CD), infrastructure automation, monitoring, etc. (see M. Fowler [16]). 
• Hypothesis-driven development is based on the possibility of making mistakes. A safe work environment is necessary for this. 
• Design thinking requires creativity, which in turn benefits from diversity.
• Implementing agile principles requires test automation because frequent deployments are impossible with manual tests. This is achieved by implementing a test pyramid  (for details on this, see Hermann Vocke [17]). 

Overview of mutually supportive abilities

Living out agility, summary and outlook.

Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.

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Partner center.

How Netflix Moved Operations to the Cloud and Saw Revenue Boom: A Digital Transformation Case Study

Remember the time you had to request mail-order DVDs to catch the latest flicks while munching popcorn on your couch?

Me neither.

It’s strange to think that about a decade ago, streaming giant Netflix had a business model built around direct mail.

Request a movie, put a few in your queue for next time, and let the anticipation build as you wait for your first DVD to arrive on your doorstep.

Now, our instant gratification bells ring daily as we pour through episode after episode of new material. And, we can barely remember the (dark) time where we waited days for entertainment instead of having it literally at our fingertips.

The shift from mail-in orders to a cloud streaming service improved customer satisfaction and made Netflix billions.

The company’s move to the cloud came with a hike in customer loyalty and a brand that competitors still fight tooth and nail to beat in the market.

Netflix serves as the ultimate digital transformation case study.

They transformed their entire business model and charted unprecedented waters. Here’s how to use their model as inspiration for your contact center’s digital transformation.

How to move your operations to the cloud, Netflix style: A digital transformation case study.

21 years after they started renting DVDs, Netflix now sits at a valuation of almost $145 Billion .

They came to market as a disruptor of traditional video stores like Blockbuster and Family Video.

Netflix founders Reed Hastings and Marc Randolph wanted to bring customer-centricity to the video rental market. At the time, renting videos was inconvenient and costly, with customers often plagued by expensive late fees.

They created an entirely new way to watch movies and consume content. And as time went on and subscribers grew, they continued to shift to keep pace with new consumer demands.

In 2007 , they took their first step into the world of streaming video. They offered customers a streaming subscription in addition to the more traditional DVD rental service, giving customers the option to chart their own path.

Since then, they’ve seen exponential growth in subscribers and revenue. Let’s take a look at their trends over time. We’ll skip over the first few years of the company’s infancy and jump to the year the company went public.

Here’s how Netflix has grown since 2002.

That incredible growth trajectory, and willingness to change, made Netflix stock skyrocket by 6,230% in a 10-year period.

And, they did it all without crazy price hikes, keeping customers top-of-mind.

While Netflix has adjusted prices over the years, they strike a balance by adding more value and services for the dollar. In 2019 , the Basic plan increased by $1 a month (adding up to $12 annually). While the Standard and Premier plans rose by $2 per month, (adding up to $24 annually, for each plan).

Meanwhile, the company is putting some $15 billion towards creating new content binge-watchers will love.

After this price change, Netflix saw a slight blip in subscriber growth, with growth in Q2 coming in low. But, analysts don’t think for a second it’s the beginning of a downward trend. In fact, a similar event happened back in 2010 when Netflix moved to a pricing model that broke out streaming and video rentals. And they clearly rebounded.

When you put the numbers into perspective, you see this is the first dip in subscriber growth in nearly a decade. That’s pretty remarkable. And, revenue still increased for the quarter. It’s clear the value of the digital innovator’s services still outweighs the cost for most.

Plus, if you can post positive revenue numbers for over a decade and become a multi-billion-dollar company in about 20 years, you’re doing alright.

Here’s what Netflix did to reach these lofty heights. And, how you study the same tactics to lead your contact center through a successful digital transformation.

Stay true to your vision.

Netflix started out with the idea to make it easier and less expensive for people to watch movies.

But they didn’t want to stay in the DVD game forever. They had the foresight to predict that consumer behaviors would continue to shift. And, they wanted to stay ahead of the competition.

Only, they didn’t sacrifice their vision when it came time for company-wide changes. Instead, they realigned their business strategies to fit their vision, even as consumers and trends shifted.

What you can do:

As you make digital shifts in your contact center and your company, keep your vision constant. While tons of other factors may orbit around you, your vision keeps you grounded.

Use your company vision to guide your decision-making. And, use data and trends to predict how your customer behavior will shift.

As you shift to keep pace with your customers’ needs, align your operations to your customer behaviors to realize your vision.

Reinvent the wheel if the old one doesn’t solve customer problems.

Netflix soared from seed idea to a $145-billion-dollar valuation in only 21 years. (Wow, they did that in less time than it took big tech vendors to break CSAT scores.)

And they didn’t get there by spinning up a new-and-improved version of Blockbuster.

Ted Sarandos, Head of Content at Netflix said when he came on board at the early stages of the company founder Reed Hastings used his vision to scale and innovate at Netflix.

“We never spent one minute trying to save the DVD business,” said Sarandos .

The company leaders didn’t stick to traditional best practices because they no longer worked for modern customers.

Instead of piggybacking off what other companies did, Netflix solved problems differently. And, they solved them better. The proof is in a bankrupt Blockbuster and dwindling Family Video stores.

Want to know what you’re missing when you only look at digital transformation best practices? Pop over to our article on the topic.

Tailor your path and contact center strategies to your specific business needs. Focus on listening and understanding your customers, with the help of better data and customer surveys .

Find out what’s causing your customers’ pain. See what common questions your customers have. Work with your sales team to find out why customers are fleeing competitors. Discover why they choose your products and services in the first place. Then, work with your contact center and company leaders to develop the methods to solve these pains.

Don’t get caught up in what your competition is doing. What they’re doing might work, but your actionable data and customer information can guide you to a way that works better.

If you’re going to be consumed by one thought, let it be this one: how might we better serve our customers?

Don’t force your customers down a single path.

In the early phases of Netflix, internet speeds weren’t built for streaming movies. People who tried to download and view movies online were only frustrated by the lengthy, often interrupted experience of watching a film online.

Netflix didn’t want to enter the streaming market until the right infrastructure was available to support a platform with high-quality and high-speed content. They didn’t want to taint their brand from day one, linking the Netflix name to all the baggage that came with poor streaming experiences.

At the same time, they were watching postage prices. The price of postage kept rising, and internet speeds were on the ups. By watching how the market and internet infrastructure changed, they identified the right moment to launch their first streaming service.

They tested their streaming service with lower-quality video, first. They wanted to gauge interest and customer experience without canceling their bread-and-butter DVD service.

Those who wanted access to the crisp DVD picture could still order movies to their doorstep. Others who wanted instant access could forgo the high-quality picture for convenience, instead.

Your contact center and customer experience will change. It has to. But as you make changes and shift your operations to the digital era, keep options open for your customers.

Just because chat and email are on the rise as popular customer service channels doesn’t mean every customer wants to use them. Use past data and communication history to learn more about your customers. Then, coach your agents to handle each interaction based on the customer’s preferences.

Bringing changes to your contact center has the potential to transform your customer experience for the better. But, without careful intention, it can also cause friction. Introduce changes to your customers slowly, and make sure your agents are always there to offer extra help through the process.

Use data and trends to personalize your customer experiences.

This one’s huge. It’s how Netflix keeps customers engaged with their platform, and how they coined the term binge-watching

As Netflix made changes in their operations, they watched their data like a hawk. They looked for trends on how people watched content, what kept them watching, and how personalization fueled content absorption. Then, they used an algorithm to serve up content tailored to their customers’ specific interests.

“Like a helpful video-store clerk, it recommended titles viewers might like based on others they’d seen.” – Twenty Years Ago, Netflix.com Launched. The Movie Business Has Never Been the Same , by Ashley Rodriguez for Quartz .

And, as their new cloud-based business let them scale globally, their data points multiplied.

Previously, Netflix could only mail DVDs to U.S. customers. Shipping DVDs overseas wouldn’t have been financially sustainable while keeping prices fair for all customers. Moving to an online business model allowed Netflix to target and reach new audiences without taking on the costs of shipping globally.

Doing this not only scaled their business, but it diversified their data and made their algorithm smarter. Enter, extreme personalization and binge-watching fever on a global scale.

Track and analyze data from your customer interactions. Create custom reports and dashboards to distill important findings from your data. Then, use the trends and patterns you find to personalize your customer service experiences.

From the way you send customer surveys to the tone your agents use, your interactions tell you what your customers want. Lean into your analytics for valuable insight into how to help your customers.

And, use the data to transform your contact center too. Customer data is a powerful tool to drive business change. If your metrics show customers aren’t happy, your company leaders want to know about it. And, they’ll want to fix it. There’s no better case for company transformation.

Netflix took risks to transform their business. But, there’s no bigger risk than stagnation. Staying the same doesn’t help you reach your contact center goals. Innovating and trying out your big ideas is what separates the leaders from the laggards.

Can your tech vendor survive in your digital transformation?

Learn how to choose vendors who make your transformation strategy possible.

Digital Transformation at Walmart: A case study.

Walmart (NYSE: WMT), the largest physical retailer based in the United States, has achieved enormous growth over the years through its EDLP pricing strategy and a customer-friendly brand image. In recent years, the company has focused on digitalization to grow sales and improve customer service. Its e-commerce sales have continued to strengthen worldwide.

Physical retailers in the US are turning to digitalization to serve their customers better, whose lifestyles are now heavily influenced by digital technology. Walmart acquired the Indian online retail brand Flipkart in 2018. Since then, it has also made a significant investment in its US e-commerce infrastructure.

While investing in technology is essential for retailers to serve their customers more efficiently, Amazon’s growing influence in the retail industry has also proved to be a key driver of digitalization across the US-based retail brands. The need to focus on digital technology was never more highlighted than during the pandemic. Customer behavior changed profoundly with the spread of the Covid-19 pandemic . Customers mostly switched to online shopping during lockdowns. These changes will last longer since the impact on people’s lifestyle has been profound. 

Walmart has been investing in e-commerce over the past several years and is reaping its benefits now. However, Walmart’s focus is not just on e-commerce but on a complete digital transformation that drives superior associate performance while driving higher customer satisfaction also apart from stronger financial returns. Cloud technology is driving similar transformations across other retailers too. Walmart is leveraging cloud technology to strengthen its competitive position and accelerate its growth momentum.

Back in 2018, Walmart partnered with Microsoft to accelerate its cloud journey and more expeditiously deliver on changing customer expectations. Walmart’s digital transformation has also come in the face of growing competitive pressure from the e-commerce giant Amazon. From its online store to supply chain and logistics, digital technology, AI, IoT, and Machine Learning are driving rapid changes. Walmart’s continuous growth in the future depends on its ability to leverage technology to swiftly respond to the changing market scenario and customers’ purchasing habits.

Table of Contents

Factors that drove rapid digitalization at Walmart.

Walmart is the largest physical retailer in the United States. The company has been enjoying enormous growth over the last several years. However, the retail landscape in the United States is changing swiftly.  Five main factors drove digitalization at Walmart: 

• Demographic changes in the US population.
• Changing consumer habits and expectations.
• Rise of mobile computing.
• Need for more speed and efficiency.
• Growing challenge from Amazon

Demographic changes and other changes like the rise of e-commerce has also changed how people shopped. Since the retail landscape is changing, Walmart’s traditional operating model was insufficient to serve the customers’ evolving needs in the US. Millennials are now the largest segment of the US adult population (Pew Research, 2020). 

They are also the most important customer segment for retail brands like Walmart. The expectations of the millennial generation are very different from the  Baby Boomers. The millennials are tech savvier and live highly digital lives. They like to shop online for a large range of products and services. Apart from their general needs, these people also depend on online channels for their daily entertainment and various other needs like music and fashion.

The rise of social media and the millennials’ consumption habits all required the businesses that wanted to serve them to adopt a better model driven by technology. Walmart’s competitive moat lay in its pricing strategy mainly apart from the large array of products it sells. However, these things are no longer sufficient to cater to the millennial generation’s expectations fully. Walmart needed to transition to a better model that could handle things with higher speed and efficiency.

 Both these things are important for maximizing customer satisfaction in an era driven by computers, the internet, data and analytics. The dependence of retail brands on technology was also destined to grow because of the growing use of mobile computing. The need for higher mobility also drove higher investment into technology. Digital technology has altered the buying habits of the customers, who like to compare prices on their smartphones before they go for the final purchase.

Lower prices attract the millennials but there are more factors they consider before making a purchase. Customer convenience matters more than ever to win in a highly competitive retail landscape. It affects demand and sales. However, to grow the level of customer convenience requires a focus on digital technology which saves time and also helps reduce costs.

Another important factor that drove Walmart towards rapid digitalization was the rise of the e-commerce giant Amazon. Prior to that, Walmart was the undisputed leader in the US retail sector. Amazon is right next to Walmart on the Fortune 500 list, where the physical retail giant has managed to remain at the top for several years. In 2020, Walmart is on the top of the list for the eighth time (Fortune, 2020).

In terms of e-commerce sales in the US, Walmart is just next to Amazon (despite the substantial gap). There is still a substantial difference in the market shares of the two in the e-commerce industry but Walmart is trying to strengthen its position through continuous investment in digital technology. Amazon poses a major challenge before the other  US-based retailers whose continuous growth now depends on how well they can serve their tech-savvy consumers.

The drive towards a highly digital future has accelerated with the pandemic. People’s buying habits are being reshaped, and consumers will likely depend more on online shopping in the future. Walmart needed to take Amazon’s challenge since, over time, Walmart’s influence could substantially reduce due to the growth in Amazon’s, which is aggressively demanding lower prices from its sellers using its clout in e-commerce. Leveraging its existing competitive strengths for superior results was only possible if Walmart invested in digitalization.

Supply chain digitalization at Walmart

Walmart has focused on higher digitalization in nearly all areas of its business system. From the supply chain to sales, customer service, marketing, and store operations, the company has steadily been investing in digitalization to grow its operational efficiency and cost-efficiency. Walmart’s supply chain digitalization was an important pillar of its omnichannel strategy.

Digitalizing the supply chain was the first important step towards making its omnichannel strategy a success. To really gain from its investment in technology and digitalization, Walmart first needed to leverage the strength of its supply chain. A highly optimized supply chain is a critical source of competitive advantage for the retail brand. It has helped Walmart maintain consistently lower prices and could be further optimized using digital tools to gain higher cost-efficiency and derive better employee performance. 

Moreover, the traditional supply chain management model was insufficient to serve the evolving needs of US customers. Digitalizing the supply chain has enabled the retail giant to pursue its omnichannel strategy with a higher success rate. Walmart is leveraging digital technology to share information across the supply chain, and for tracking and managing inventory across its stores and warehouses in the United States.

An efficient and modernized supply chain has played a critical role in helping the company gain higher cost-efficiency. Walmart’s competitive position as the leading physical retailer in the US has strengthened with growing digitalization across its supply chain, which also helped it access a large pool of data. It gains valuable insights from the data to understand consumer behavior. Walmart’s large supply chain produces tons of data daily used to make important inventory management decisions. It also helped the company grow its supply chain resilience to serve customer needs better during a crisis like a hurricane or in the event of a pandemic like Coronavirus.

Walmart also secured its supply chain against fast-changing market conditions by leveraging data and analytics. In 2017, it invested in Data Cafe, one of the largest private clouds in the world to grow its data and analytics capabilities and process more than 40 Petabytes of data being generated from internal and external sources daily (Marr, 2017). Walmart’s data cafe is its analytics hub located at its headquarters in Bentonville, Arkansas. Data Cafe allows Walmart to model, manipulate, and visualize recent transactional data, it collects from more than 200 internal and external streams.

It enabled faster decision making at Walmart and provided solutions to several critical supply chain management related problems that could otherwise take a lot longer to answer. Walmart made Data Cafe available to its suppliers so they could gain free insights into customer demand and manage their supply and inventory better. 

In 2018, Walmart introduced its Connected Content Provider Program, whose main focus was to help suppliers scale content to Walmart’s catalog and other retailers (Ogura, 2018). The program aimed to bring harmony between retailers, suppliers, and content. With its syndication partners like Salsify, the company aimed to help its suppliers deliver content with higher speed and agility. Suppose a customer comes to Walmart looking for a particular product that is not available at the time. Walmart looks up its syndication providers like ‘Salsify’ to find which supplier has the product and then arranges for home delivery. 

Walmart is also using other latest technologies like AI and Blockchain to track inventory down its supply chain (Aitken, 2017). The retail brand partnered with IBM to leverage blockchain technology and leverage and track food products’ movement across its supply chain to ensure their quality and authenticity. The use of IBM blockchain allowed Walmart to track the movement of goods in its supply chain faster. Something that could take days or weeks to trace using the traditional tracking methods was now possible in seconds. Blockchain -based decentralized ledgers have simplified the process of tracking goods in Walmart’s supply chain.

Digital Transformation through Cloud Technology

Cloud technology is also driving rapid transformation across the retail landscape. Retailers turn to cloud technologies to grow their efficiency and transform a large pool of data they generate daily into actionable insights. 

In 2018, when Walmart was already using a large set of Microsoft services for critical workloads, the company announced a strategic five-year partnership with the cloud leader to make its digital transformation possible. This partnership with Microsoft allowed Walmart to leverage machine learning, artificial intelligence, and data platform solutions for a wide range of external customer-facing services and internal business applications (Walmart, 2018).

Walmart aimed to transform digitally, bring innovations that saved its customers time and money, and change how work was carried out inside the organization for increased productivity. To achieve its target, the company selected a full range of Microsoft cloud solutions that included Microsoft Azure and Microsoft 365. The main advantages of using cloud technology for Walmart were going to be as follows:

• Leverage the capacity of Microsoft’s enormous compute capacity.
• Ability to manage workloads seamlessly in an elastic environment.
• Bring innovations faster through the new toolsets
• Drive costs lower through a cloud native environment.

From reducing energy consumption in the Walmart stores to managing logistics, the company uses cloud technology to make its work processes more efficient and save time and money. The company uses machine learning to route thousands of trucks in its supply chain. Apart from that, Walmart gained access to various tools that allow its associates to improve their productivity and collaborate on projects. Tools like Microsoft workplace analytics, Microsoft Stream, and Microsoft One Drive allow associates to collaborate, save time, and work better.

Walmart owned Jet.com also uses cloud technologies heavily to serve customers efficiently. It has built an innovative eCommerce engine on the Azure cloud platform in less than 12 months. The Jet.com platform is composed of open-source software, Visual F#, and Azure Platform as a service (PaaS) like Azure Cosmos DB. The next-generation architecture of Jet.com is built for speed. It uses Panther, Azure’s next-generation inventory processing system to make its service faster, smarter, and more efficient. 

“Within just a few weeks, a prototype based on Service Fabric proved that Panther could support the massive scale and the functionality Jet needed plus high availability and blazing fast performance across multiple regions. But what really made Panther possible was adding Azure Cosmos DB for the event store. Coupling an event-sourcing pattern with a microservices-based architecture gave them the flexibility they needed to keep improving Jet.com and delight their customers.” (Microsoft, 2020)

Sources Used:

Pew Research. (2020, April 28). Millennials overtake Baby Boomers as America’s largest generation . PewResearch. Retrieved 2020, from https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

Fortune. (2020). Fortune 500 . Fortune. Retrieved 2020, from https://fortune.com/fortune500/2020/search/

Marr, B. (2017). Really Big Data At Walmart: Real-Time Insights From Their 40+ Petabyte Data Cloud . Forbes. Retrieved 2020, from https://www.forbes.com/sites/bernardmarr/2017/01/23/really-big-data-at-walmart-real-time-insights-from-their-40-petabyte-data-cloud/?sh=1c6727f26c10

Ogura, F. (2018, September). Introducing the Connected Content Partner Program . LinkedIn. Retrieved 2020, from https://www.linkedin.com/pulse/introducing-connected-content-partner-program-frank-ogura/

Salsify. (2018). Salsify Selected By Walmart To Join Its Connected Content Partner Program . Salsify. Retrieved 2020, from

Aitken, R. (2017). IBM Forges Blockchain Collaboration With Nestlé & Walmart In Global Food Safety . Forbes. Retrieved 2020, from https://www.forbes.com/sites/rogeraitken/2017/08/22/ibm-forges-blockchain-collaboration-with-nestle-walmart-for-global-food-safety/?sh=66710fac3d36

Microsoft. (2020, June). Jet.com powers innovative e-commerce engine on Azure in less than 12 months . Microsoft Azure. Retrieved 2020, from https://customers.microsoft.com/en-in/story/822088-jet-com-powers-innovative-e-commerce-engine-on-azure-in-less-than-12-months

Walmart. (2018, July). Walmart establishes strategic partnership with Microsoft to further accelerate digital innovation in retail . Walmart Newsroom. Retrieved 2020, from https://corporate.walmart.com/newsroom/2018/07/17/walmart-establishes-strategic-partnership-with-microsoft-to-further-accelerate-digital-innovation-in-retail

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Navigating Disruption: 4 Case Studies in Digital Transformation Strategy

Let’s cut through the marketing speak.

Overuse has obscured the meaning of terms like “disruption” and “digital transformation,” making it hard to clarify the threat that disruption actually poses, and identify the strategies of companies that make through to the other side and thrive in the new reality.

Even if the terminology feels abstract, the effects are real. We’re talking about the life and death of companies and industries. 

The ‘automation first’ era is upon us, and, as in the mainframe, personal computer, and mobile technology eras that preceded automation first, businesses that can’t adapt will lag behind.

Businesses and employees are already using software robots to increase efficiency, generate greater returns, and free employees from tedious tasks. It’s easy to envision a time in the future when every human will have a software robot of their own at their disposal—a robot for every person . 

Companies that are thriving in this automation first era have developed digital transformation strategies that prioritize a change in mindset. That shift means, first and foremost, that if something can be automated, it should be automated.

The best way to develop a digital transformation strategy is to learn by example. In this article, I’ll go over four companies that succeeded or failed against the threat of disruption. None of them failed to see the future, but only some managed to successfully adapt to it.

1. Blockbuster: How a retail juggernaut fell behind its customers

We often talk about companies that failed to navigate disruption in terms of vision. In many classic cases of disruption, however, companies had plenty of time to recognize the threat they faced; they just failed to act.

Blockbuster is infamous for its failure to transform. The story, as it tends to be told, focuses on former Blockbuster CEO John Antioco turning down Reed Hastings’s offer to acquire a fledgling Netflix in 2000. 

Netflix eventually became the giant we know today, Antioco was relieved as CEO, and Blockbuster went bankrupt.

The lessons aren’t in Antioco’s mistake but in the decisions that followed it.

Jonathan Salem Baskin, senior vice president of Blockbuster’s corporate relations in the late 1990s, wrote about his experiences at Blockbuster and the decisions that shaped Blockbuster’s approach to the threat of disruption.

A video-rental business might seem quaint now, but, at the time, the business model was highly profitable. Movie studios priced VCR tapes at nearly $100, pushing them outside the price range that an average consumer could afford. Seeing the opportunity, rental stores purchased the tapes and rented them cheaply.

Everyone won—especially the rental stores. Once a store rented a tape enough times to clear the initial investment, every subsequent rental was pure profit.

This model only needed to rely on effective logistics. Acquiring more stores gave Blockbuster more supply and more data to fuel selections. Its success shaped an understanding of their customer that disruption eventually unraveled.

As the internet-era emerged, Blockbuster’s grip on movie rentals faced a major challenge from a new internet-first company – Netflix. Customers began signing up to choose movies online, and receive them in the mail. Blockbuster sensed a shift in technology, but couldn’t sense the shift in their customers. Instead, they added candy and toys to their stores, upping profit margins with impulse buys while waiting for the environment that sustained their business model to recover.

Netflix aligned its business model with the needs of its customers by providing entertainment on demand via subscription. Blockbuster’s business model was instead tied to late fees, introducing friction when a customer wanted to rent.

When Blockbuster was the only option, customers endured the friction. When Netflix entered the market, that disruption became unbearable.

Instead of addressing its core problems, Blockbuster distracted itself  by playing catch-up and taking big, poorly planned risks.

Blockbuster signed an exclusive deal with Enron Broadband Services to provide video-on-demand in 2000 but had to tear up the contract after nine months due to Enron’s scandals.

Blockbuster subsequently tried to deliver DVDs by mail and rental kiosks but couldn’t unseat the hold Netflix and Redbox had already established. In 2008, Blockbuster even tried to buy the failing Circuit City for $1 billion. Circuit City went bankrupt later that year.

Even when Blockbuster directly addressed Netflix’s disruptive service, Blockbuster’s assumptions about its customers proved to be an Achille's heel . Blockbuster on Demand had newer content than Netflix, but they charged consumers on a title-by-title basis—as much as $3.99 per title. Blockbuster couldn’t figure out how to provide a frictionless experience.

The company filed for bankruptcy in 2010.

Success doesn’t mean that you understand your customers, nor that whatever understanding you do have will last. Customers came to Blockbuster not out of brand loyalty or a desire to experience its stores but as a way to get entertainment.

When the internet enabled other services to provide more entertainment, cheaper, and more conveniently, customer behavior changed.

By not understanding the problem that their solution temporarily solved, Blockbuster was unable to adapt to an internet-first company when it needed to.

2. Microsoft: Creating new values for renewed success

Disruption is more a pattern than an event. When one company takes the place of another, it’s likely only a matter of time before another company arrives to unsettle the industry again. If you’re not humble about your success, your victory will set up your eventual loss.

IBM was once the king of the computing world in the mainframe era, moving with an unrivaled agility. But in 1980, IBM realized the potential of the fledgling personal computer industry and rushed to catch up by inking a deal with a small, unknown company: Microsoft.

IBM paid Microsoft for the right to use their operating system (OS) but—crucially—allowed Microsoft to keep licensing that OS to other companies. By focusing on personal computers, IBM missed a more important shift.

The point of leverage in the computing industry was moving from hardware manufacturing to the operating systems that linked software and hardware. Microsoft was ready to enter the door IBM had opened.

Over the following decades, Microsoft built its dominance on Windows. They understood that the graphical user interface (GUI) was the key to broad PC adoption, and partnered with manufacturers to place their software on most of the PCs that shipped.

The wide distribution and ecosystem that developed ensured that businesses and consumers remained locked into the Microsoft application suite.

This strategy built a massively successful company, one that completely transformed the computer and software industries.

As we saw with Blockbuster, however, no degree of prior success will guarantee your survival once technological and consumer trends start moving in different directions.

Ben Thompson, a technology writer, argues that three trends eroded the foundation Microsoft relied on:

The rise of the Internet, web applications, and software as a service (SaaS) reduced application lock-in, enabling people to reach outside the Microsoft ecosystem.

PC hardware and design reached a level of quality that was high enough to lengthen the upgrade cycle, reducing the number of new purchases.

Smartphones captured consumer needs that the PC couldn’t.

Despite these trends pointing away from Windows and OS centricity, former CEO Steve Ballmer publicly recommitted to a Windows-first philosophy in 2013 , stating, “By deploying our smart-cloud assets across a range of devices, [Microsoft] can make Windows devices once again the devices to own.”

So far, this appears to be a classic example of the disruption pattern about to repeat. A company rises to glory, refuses to face new trends, and eventually collapses.

In early 2014, however, Ballmer was replaced by Satya Nadella, who steered Microsoft away from the edge it was likely heading toward.

When Nadella took over as CEO, Microsoft’s stock closed at $36.35; by late 2018, it was trading above $113 per share. This dramatic course correction carries lessons for any company planning a digital transformation strategy.

When Nadella came in, he changed the entire culture. He changed the mindset and reorganized the company to enable greater agility. To sanctify Microsoft’s new future, Nadella made Microsoft Office available on the iPad—something the old guard would never have agreed to. He understood the PC era was over and something new had emerged.

Nadella had a vision and a future-oriented digital transformation strategy that previous leaders lacked. Nadella pivoted from “Windows-first” to “Windows-and.”

Compare Ballmer’s message emphasizing Windows with Nadella’s first strategy memo only months after taking over:

“At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

By shifting from the assumption that Windows had to be the sun around which all computing experiences orbited, Microsoft was able to better identify, track, and serve evolving customer needs. With productivity as their new mission, they were free to pursue different goals and strategies to fulfill that mission.

As alluded to before, this renewed strategy has led Microsoft to more partnerships. A company previously focused on establishing and then defending closed ecosystems has now formed substantial relationships with would-be competitors, including Dropbox, Red Hat, and Amazon—including an appearance from Nadella at a Salesforce conference .

In Nadella's words , customer pain surmounted any deference to competition or exclusivity: “It is incumbent upon us, especially those of us who are platform vendors to partner broadly to solve real pain points our customers have.”

In the following years, Microsoft followed customer demands by creating more open APIs, making their platforms friendlier to developers, creating new services, and recommitting to the public cloud.

Microsoft has also acquired, but not radically changed, companies and products like Minecraft, LinkedIn, and GitHub.

Microsoft supported this business-model shift with a culture shift from destructive, internal competition to an empowering growth mindset that embraced learning from risks.

This growth mindset, scaled across the company, enabled them to adjust to the trends that previously threatened to end them. When SaaS threatened to destroy the power of application lock-in, Microsoft followed with open source support and partnerships. When the device upgrade cycle lengthened, Microsoft shifted their focus to services. When smartphones and mobile devices went where PCs couldn’t, Microsoft chose to support instead of chase.

Microsoft’s digital transformation strategy was one of humility—recognizing that success doesn’t always come from dominance.

Instead, Microsoft pursued customer need first and foremost and found a place for itself supporting customers at various points in their lives, from the office to the home and from devices outside Microsoft to services within.

3. Nokia: How a former innovator trapped itself in its own success

Nokia had a lot of success. Innovation and adaptability were never foreign ideas.

Even companies that have built their profits on innovation will face disruption if they’re not willing to refresh their approach.

Nokia started as a paper mill in the late 1800s, eventually merging several jointly owned businesses to form the Nokia Corporation in 1967. Nokia laid out its future in the late 1970s and early 1980s when it launched the first international cellular system . Nokia released some of the first mobile phones, though their cumbersome, heavy weight made mobility a little dubious.

By the late 1990s, Nokia was the world’s top cell phone provider.

Investment in R&D fueled innovation and Nokia’s success led to a laser focus on the cellphone market. They were even the first to develop a touch screen, internet-enabled phone. Where could it go wrong?

Nokia’s failure was written by its success.

Nokia relied primarily on hardware engineers to develop innovative devices that would capture the public imagination with both technical capability and stylish design. By 2007, Nokia dominated; it hoarded over half of all the profits in the mobile-phone industry.

Predicting its failure would have been a bold claim, and people hailed its market power.

That dominance, however, wasn’t due to smartphones, so the rise of this new technology appeared to be a risk rather than an opportunity. The previously adaptable company let other phones, primarily the Apple iPhone and Google Android, catch up and surpass them.

Wedded to its previous path to success, Nokia believed their hardware design would keep users loyal as Nokia found its way in the, by then, rapidly growing smartphone market. Instead, users fled Nokia to phones with better software, seeking improved user experiences.

Prior success doesn’t predict future success.

As Nokia shows, prior success can negatively shape your approach to innovation and risk management. Nokia overestimated the risk of shifting to smartphones but underestimated the risk of disruption.

The very approach that made Nokia dominant also cleared the way for defeat. Without the willingness to depart from success, even the biggest companies will eventually fall.

4. Unilever: How a giant rebuilt itself for speed

Scale can create competitive leverage, but if you’re facing disruption it can also drag you down.

Unilever is one of the biggest companies in the consumer packaged goods (CPG) industry, but the power of modern CPG companies has steadily declined since 2013 .

Unilever started selling margarine and soap in the early 1900s. Over the following decades, they scaled to selling a multitude of products made from oils and fats. The company also acquired companies like Lipton, Ben & Jerry’s, and Dollar Shave Club.

After 2010, Unilever started pulling away from its declining food business and moved toward health and beauty.

This shift kept the company going, but its scale meant agility would be a challenge.

Traditionally, enterprises buy customer data from market-research firms, but Unilever chose to build its own database. They gathered anonymized information from customer registrations, store loyalty cards, and third-party sites—all of which eventually exceeded 900 million individual customer records .

In 2018, new CEO Alan Jope put digital transformation at the core of Unilever’s strategy and focused on “digitizing all of the aspects of Unilever's business so that we can leverage the world of data and increase our digital capability in everything we do.”

Unilever had found a point of leverage.

With a massive amount of data backing their digital-transformation and product-development strategies, Unilever has been able to spend less and sell more.

When they were selling Baby Dove in India, for example, their data enabled targeted advertisements that cost one-fifth the normal price for the same brand-awareness impact. Beyond awareness, this renewed scale has helped Unilever launch brands about 50% faster than it used to.

We used to think in years, quarters, months. As soon as you start digitizing your company, you start thinking in quarters, months, and weeks. Peter Ter Kulve , Chief Digital Officer, Unilever

Unilever matches the scale of its data with the scale of small, nimble teams . “Digital hubs” around the world gather analysts together to study consumer traits, segment the traits into hundreds of categories, and build content to serve them. These teams are made even more agile with the support of an extensive artificial intelligence (AI) system that can help predict upcoming trends.

Disruption can destroy companies and industries because it enables new structures that can outcompete yours, whether that be new ways of connecting to customers, new business models, or new ways to design products.

Unilever is a model example because they have embraced the danger and reorganized its company to face the threat.

When Unilever realized that many of the processes in its service lines, including supply-chain management and master data management, were slowing it down, it looked to transform those processes with Robotic Process Automation (RPA).

Adaptability isn’t a static goal. Unilever’s focus on efficiency has involved transformation in product development and process automation. New technologies will continually call on businesses to find different ways to improve agility.

Disruption won’t end; neither should your willingness to rebuild.

Lessons from the history of digital transformation

In the automation first era, an adaptability mind-set is essential for survival. Disruption doesn’t necessarily mean your core product has lost its value. It means the relationships between you and your customers are shifting, and the infrastructure necessary to build and maintain those relationships is also changing.

The companies that have so far survived disruption were willing to invest in digital transformation and change the mindset of the company. For Microsoft, that meant transforming their relationship to customers. For Unilever, that meant transforming their approach to scale.

Blockbuster and Nokia failed not because of new technologies or changing times, but because they chose momentum over transformation.

Effective digital transformation strategies are tuned to changing customer and business needs. In the automation first era, you’ll be able to fulfill potential that has, thus far, remained untapped.

How many problems could you solve if software robots freed your employees from repetitive labor?

How many more customers could you help if each employee had a robot at their disposal?

What could you do with the scalable power of robots on your side?

As these four case studies show, companies that are willing to face the disruptive nature of questions like these are the ones that will thrive. The automation first era is here, and now is your chance to transform.

Chief Marketing Officer (CMO) , Ada

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A digitization project redefines processes for a big-box retailer

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A digital transformation, including<br>culture change and collaborative<br>automation builds

Alteryx<br>ProEdge

Creating a digital team behind the scenes

A big-box retail chain with thousands of locations throughout North America has been working on a sweeping digital transformation. For the company, it's been a multiyear effort to create a seamless digital customer experience. A top objective has been to empower the finance and accounting controllership team with automation and analytics tools and techniques, enabling them to move away from legacy, manual processes toward efficiency and a competitive edge. The goal: a digital overhaul focused on individual team members that allows them to design and access their own real-time, automated views of critical information so they’re able to play a more strategic role.

Prior to the retailer’s current digital transformation efforts, leaders had worked to transform enterprise applications, but the upgrades were not reaching every corner of the business to fully meet the needs of the high-growth company. They started over on a project-by-project basis, modernizing each area as they progressed.

The controllership was the next big opportunity. Management historically relied on time-intensive, manual spreadsheets but was aware of the opportunities automation techniques could provide.

The dream outcome: each associate on the controllership team would be empowered to independently imagine and execute new ways to get efficient with data—a concept PwC calls “citizen-led automation.”

Modernizing internally with automation

The retailer launched a pilot to build 20 automation workflows for the financial controllership team. For inspiration and training, PwC applied its BXT way of working, combining business strategy (B), experience design (X) and immersive technology (T), and 175 controllership staff members attended PwC-led courses for hands-on experience.

Eliminating manual tasks to create a more tech-enabled future

The company needed proof that citizen-led automation would work—and fast. Leaders were eager to reduce the time teams spent on manual tasks so they could contribute to the company’s future in new ways. A sprint included exploring potential methodologies and possibilities, which created the energy and engagement necessary to move quickly from planning to action. Functional leaders identified their most painful manual processes and then mapped workflows, creating the basis for successful rebuilds. PwC helped perfect what was needed to manage everything from lease accounting to ERP daily payment reconciliations. The teams created momentum. In just six weeks, they built automations for 20 processes. Robust testing and refinement led to wide adoption of the new workflows.

Simplified processes lead to new possibilities

The retailer’s controllership team huddled with PwC to design and test new processes, deep-think solutions and compare notes.

Employees began to understand how new workflows could simplify their jobs and were active in refining the workflows to create a better digital experience and improve efficiency.

PwC-led programs armed the controllership with new skills and opened their minds to new possibilities. Employee morale, engagement and productivity grew, and teams were thrilled to present their workflows and celebrate their successes and contributions.

Employees jumped at the opportunity to use Innovation hub, a PwC product which serves as an ideation platform teams can use to log and track ideas while providing analytics to the finance team. In just three weeks, employees logged over 250 digitization ideas.

Citizen-led automation: Intuitive software for the controllership and tax teams

The retailer leveraged the know-how and assets offered up by PwC’s technology automation delivery team to ramp up its tech transformation.

The effort focused on gaining experience and delivering results, leveraging Alteryx, a platform that allows end-users to automate data intensive work, obtaining automated insights and analytics for faster business outcomes, supporting the business case for modern methods.

Alteryx was complemented by ProEdge—a PwC product that enables digital upskilling efforts across organizations—to give employees opportunities to learn how to build their own automations.

The company also became an early adopter of PwC’s self-service marketplace of curated digital assets, including pre-built automations for its controllership and tax teams. This has helped the company with its digital transformation and inventory.

Setting the stage for a new digitization mindset

In a matter of weeks, the retailer was able to introduce capabilities that could remove thousands of hours of manual processes per year. Additionally, the company enabled faster decision-making with more robust and current data. More importantly, it set the precedent for the controllership team to begin a full “citizen automation” mindset shift.

As an example, reconciliations of payments in the core ERP platform were done daily in a manual, spreadsheet-managed process. Leveraging Alteryx and the cloud data platform, this process was automated from taking approximately 1,000 hours on an annual basis to minutes via the Alteryx automation.

In a short trial of only six weeks, the company moved from planning to action, increasing employee productivity and morale for 100% of use cases identified by process champions. The team extended its efforts through an additional phase of work to achieve the following results in a matter of months:

hours saved annually—with over $8 million projected cost savings over three years

use cases were automated, shifting the focus of the finance team from data prep to analytics review; 250 more use cases identified for automation

of automations enable leaders to make faster decisions

“The big-box retailer’s digital transformation inspired citizen-led automation within their financial controllership team. This new way of working empowers associates to reimagine how they work, which results in faster decisions, complementing the enterprise-led IT initiatives already in process.”

 Andy Ruggles Partner, PwC

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Digital Twins Drive Efficiency for Fresenius Medical Care

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Fresenius Medical Care provides solutions for people living with chronic kidney disease and related conditions. Providing services through a network of almost 4,000 outpatient dialysis centers, the company primarily treats end-stage renal disease, which requires patients to undergo dialysis three times per week for the rest of their lives.

Fresenius Medical Care has a deeply integrated value chain for the design and manufacturing of different devices and disposables, and recently expanded its product portfolio with extracorporeal blood treatment for heart and lung therapies.

Working to improve the quality of life of every patient, every day, Fresenius Medical Care is transforming healthcare through research, innovation and compassion.

To continue its innovation, Fresenius Medical Care needed to move away from its paper-based systems, processes, methods and tools. Digital transformation would allow the healthcare company to develop global products, drive efficiency and speed time to market in product development, manufacturing and product management, along the complete product lifecycle.

Drive Efficiency, Speed Time to Market

Fresenius Medical Care has been growing successfully, but cumbersome, paper-based regional processes, methods and tools in product development did not match on a global scale.

The situation hindered global collaboration between product teams, created unnecessary inefficiencies, and slowed development cycles and speed to market – especially in context of developing complex, next-therapy systems.

Fresenius Medical Care realized that streamlining and digitalization of processes were key steps to allow design anywhere, build anywhere and ship anywhere.

Fresenius Medical Care worked with Rockwell Automation to create a global digital transformational program to realize digital twins of its products to drive efficiency in global product development and regulatory compliance. The Global Product Lifecycle Management (PLM) is a strategic program for managing all product and process data with streamlined capabilities based on a globally accessible and integrated eco-system.

The overall business goals of the project included:

• Speed time to market in product development, manufacturing and product management
• Increase global collaboration and efficiency, especially among product teams
• Improve product quality
• Lower administrative efforts
• Prepare for and enable the Industrial Internet of Things (IIoT)

Global PLM drives for a single source of truth for managing product data digitally, enabling research and development (R&D), manufacturing and quality to become truly global, collaborative organizations and move into state-of-the-art, digital-driven product development and manufacturing as the basis for future products.

Justifying Investment

Fresenius Medical Care identified tangible examples and pain points that clearly highlighted the potential benefits of this initiative to the board of directors and executives.

Above pure financial justification, they placed initiatives as strategic programs targeting overall efficiency increases and improved time to market.

Since program work began in 2017, Fresenius Medical Care has defined a variety of streamlined and globally harmonized engineering and manufacturing capabilities and had numerous rollouts that started gaining value from better collaboration, digital processes and less administrative efforts.

As a result of the PLM project, Rockwell Automation has helped Fresenius Medical Care move from paper-based systems to systems that capture and drive analytics on product data, including tracking adoption of capabilities and operational improvements – for example, change management lead time or deliverable lead time.

Going forward, Fresenius Medical Care will add advanced analytics and leverage machine learning and automation to improve R&D and manufacturing operations from insights.

Global Topic Owners and Expert Groups

The program’s timeline was created as a multi-year business transformation consisting of four phases, slicing the transformation into digestible pieces of work that can be implemented step by step to progressively deliver value. For example, systems engineering allows early-stage simulations and verification of development results.

With Rockwell Automation, the Fresenius Medical Care team created global topic owners (GTO) and expert to drive definition of new capabilities and confirm proximity to users and customer centricity.

Since 2017, the project team has reached out to over 300 people from different product teams across sites and functions to secure input about business needs, priorities, pain points and additional use cases.

The project team established a complete end-to-end operating model, including teams to address technical solutions, the cloud, cybersecurity, training and global support. Experts were embedded within the operative product teams to quickly drive adoption and transformation and create a feedback loop.

“We developed several measures to acquire and sustain the right expertise needed,” said Oliver Paul, senior director, Therapy System Lifecycle Management. “We have engaged external partners who brought the business and technical expertise and experience as well as additional capacity and people power needed for this endeavor. As we hire employees, we bring in more people with experience and a digital way of thinking and working to keep the expertise gained, and educate and train colleagues to sustain PLM/digital twin as a business concept at Fresenius Medical Care.”

According to Larry Dube, Vice President of PLM Strategy, GTOs and expert communities are a key pillar to drive adoption within the organization.

“For every rollout we look for deployment leads who are part of the operative product team,” Dube said. “By selecting a few early adopters and demonstrating success through measurable business value, other product teams and organizations now seek us out to deploy the capabilities.”

Improved Global Digital Collaboration

The work outlined in the project is supported by a communication series for different levels and target groups, including a sounding board to update leaders about milestones, achievements, next steps and success stories.

At the beginning of the program in 2017, the team connected the rollout of the first capability with one of the most important and largest product development teams.

“We successfully rolled out the capability to this team to demonstrate better global digital collaboration, digital approval process and management of all product deliverables in a much leaner way than before,” said Paul. “Getting this done with the most complex product team gave our organization and our implementation team confidence that we are on the right track.”

Working with digital processes and data has enabled more fact-based decisions and transparency for global product teams. In addition, teams have learned what it means to manage product data in a digital way and to follow new best practices – for example, atomizing information as digital objects, representing the described digital twin of products, instead of managing large sheets of documents.

Published December 19, 2021

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Combining digital and legacy technologies: firm digital transformation strategies—evidence from Chinese manufacturing companies

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• Hongfang Cui 1  

Humanities and Social Sciences Communications volume  11 , Article number:  1021 ( 2024 ) Cite this article

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The digital transformation of firms is a pervasive trend within the digital-based economy. Despite its inevitability, there is a continuing debate regarding the most effective methods for implementing such transformations. This study delineates four digital technology strategies—searching, enhancing, grafting, and integrating—within the theoretical framework that digital technology can strengthen an enterprise’s existing legacy technology. Using fuzzy qualitative comparative analysis, this study examines 76 Chinese high-tech manufacturing companies to uncover the configuration effects of technology distance, the type of technical search, and leadership perceptions on the adoption of these strategies. The empirical results reveal that the searching strategy is commonly employed in scenarios involving general technology, search breadth, and the perceived usefulness of the technology. The enhancing strategy is typically adopted when companies engage in extensive searches and perceive digital technology as easy to use. Moreover, the grafting strategy has emerged as the natural choice when there is a deep search for specific technologies coupled with a recognition of their usefulness. The integrating strategy becomes prominent when a company identifies a specific technology through both search breadth and search depth, acknowledging its usefulness and ease of use simultaneously. These findings offer valuable insights for managers aiming to select an effective digital technology strategy to facilitate successful transformation.

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Introduction.

The rapid digitization accelerated by the COVID-19 pandemic highlights the urgent need for effective digital transformation strategies (Rangaswamy et al., 2022 ). Digital transformation represents a pervasive trend across all sectors (Saarikko et al., 2020 ), driving fundamental economic and technological shifts at both the organizational and industry levels (Besson and Rowe, 2012 ). When successfully implemented, it enables firms to achieve heightened adaptability (Nambisan et al., 2019 ), exceptional financial returns (Loonam et al., 2018 ), and sustainable growth (Hess et al., 2016 ). Despite its critical importance—underscored by a survey from SAP ( 2017 ) revealing that while 84% of global companies consider digital transformation crucial for survival within the next 5 years, only 3% have realized comprehensive transformation—many firms struggle with effective implementation. This gap often stems from a lack of understanding among practitioners about how to navigate and lead successful digital transformation initiatives.

Extensive research has explored various facets of digital transformation in firms, including its antecedents (Liu et al., 2011 ; Porter and Heppelmann, 2015 ), processes (Loebbecke and Picot, 2015 ; Lanzolla et al., 2020 , 2021 ), and outcomes (Broekhuizen et al., 2021 ; Hanelt et al., 2021 ). Despite the breadth of this research, the findings often remain contradictory, and significant gaps persist regarding how digital technologies influence existing technologies within firms.

To address this research gap, we propose that a firm’s digital technology strategy is pivotal in shaping its digital transformation. We define this strategy as the deliberate application of digital technology to strengthen legacy technology. Companies typically leverage digital technology to swiftly address challenges within the digital landscape (Henfridsson and Bygstad, 2013 ; Pagani and Pardo, 2017 ). For instance, Brynjolfsson and McAfee ( 2014 ) explored how digital technology can be integrated with existing business models to create new value. Schwartz et al. ( 2017 ) emphasized how digital technology can help businesses better understand and serve their customers to better adapt to the customer-centric strategy of the enterprise. Westerman et al. ( 2014 ) discussed how digital leaders in businesses can incorporate technology into business transformation, emphasizing the importance of integrating existing technologies with new technologies to achieve transformation. On the other hand, the vast majority of company revenues in most industries still come from traditional products and services (Øiestad and Bugge, 2014 ; Sebastian et al., 2017 ). Huang and Handfield ( 2015 ) analysed the impact of enterprise resource planning (ERP) systems on the maturity of supply chain management through big data analysis, illustrating how digital technology can be integrated with existing processes to increase corporate operational efficiency. Davenport ( 2018 ) discussed how artificial intelligence (AI) can be integrated with existing business processes to increase efficiency and foster innovation. We argue that the sustainability of a firm’s digital transformation largely depends on the extent of integration between digital technology and the firm’s existing technologies.

We delineate four digital technology strategies, each shaped by the impact of digital technology on a firm’s legacy technology: searching, enhancing, grafting, and integrating. The search strategy seeks digital technologies with functionalities similar to the firm’s existing legacy technology. The enhancing strategy employs digital technology to strengthen a firm’s legacy technology. The grafting strategy directly connects digital and legacy technologies to broaden the functionalities of existing systems. Finally, the integrating strategy strives to create new technological solutions by merging digital technology with the firm’s existing legacy technology.

In this article, we identify three critical factors that influence the selection of digital technology strategies during a firm’s digital transformation: technology distance, technical search type, and leadership perception. Some studies have argued that the differences between digital and existing technologies significantly affect a firm’s technology adoption decisions (Forman and Zeebroeck, 2018 ). Other studies have emphasized the importance of technical search in shaping digital transformation strategies (Corradini and Propris, 2017 ; Lanzolla et al., 2021 ). The process of integrating existing technology with new scenarios, thereby fostering innovative combinations, is driven predominantly by individuals or groups (Singh and Hess, 2017 ), making leadership perception a pivotal factor in the adoption of digital technology strategies.

In the empirical section of this study, we examine the adoption of digital technology strategies by 76 Chinese high-tech manufacturing enterprises undergoing digital transformation. We conducted interviews with local executives to gather insights into their application of digital technology, the development of legacy technology, technical search processes, and leadership perceptions. Through systematic coding of the interview data, we identified key variables: technology distance, technical search type, and leadership perception. We subsequently applied the fuzzy set qualitative comparative analysis (fsQCA) method to analyse these variables, illustrating our results with excerpts from the interviews.

This study makes three main theoretical contributions. First, we propose that a firm’s competitive advantage in its digital transformation arises from the combination of digital technology with legacy technology. Thus, understanding how to effectively strengthen a firm’s legacy technology with appropriate digital technology is of paramount importance. Second, we develop a new typology of digital technology strategies based on four approaches: searching, enhancing, grafting, and integrating. Unlike previous studies that have focused predominantly on the outcomes of digital technology adoption (Broekhuizen et al., 2021 ; Hanelt et al., 2021 ), our research emphasizes the process of adapting digital technology, thereby broadening the understanding of digital technology adoption in the digital transformation of firms. Third, we provide a detailed analysis of the configuration effects of technology distance, the type of technical search, and leadership perceptions on the selection of digital technology strategies during digital transformation. Our findings contribute to the literature on digital innovation management by highlighting the practical utility of digital technology for high-tech manufacturing firms undergoing digital transformation.

The rest of this paper is organized as follows. In the section “Theoretical development and hypotheses”, we develop four digital technology strategies and establish hypotheses in relation to the influence of three configurations. Section “Data and methods” explains the process and methods of data collection. In the section “Results”, we present the results, followed by robustness checks in the section “Robustness checks”. Finally, the section “Discussion and conclusions” summarizes and discusses future research directions.

Theoretical development and hypotheses

Digital technology and the digital transformation of firms.

Digital technology transforms firms’ capabilities, products, services, and key interrelationships within extended business networks (Bharadwaj et al., 2013 ). Some scholars view digital technology as a crucial resource that accelerates digital transformation processes (Kallinikos et al., 2013 ; Nambisan, 2017 ). From this perspective, the impact of digital technology on a firm’s core business during digital transformation has garnered significant attention (Hess et al., 2016 ; Aversa et al., 2020 ).

Digital technology (DT) has been widely adopted by firms to improve their innovation performance (Cheng et al., 2023 ). The characteristics of digital technology drive firms to develop suitable digital technology strategies for their digital transformation. On the one hand, the distribution, accessibility, and transfer ability of digital technology significantly lower the threshold for its implementation across various industries (Kallinikos et al., 2013 ; Yoo et al., 2010 ; Nambisan, 2013 ). Consequently, digital technology can easily be used in diverse activities related to technology development. On the other hand, the editability, openness, and generative nature of digital technology enable it to produce different outcomes in various organizational contexts (Nambisan et al., 2019 ; Wareham et al., 2014 ).

The nature of strategy is evolving with advances in digital technology (Volberda et al., 2021 ). Firms face increasing pressure to adopt heterogeneous digital technologies to renew and transform their business models (Baden-Fuller and Haefliger, 2013 ; Calvin et al., 2019 ). A significant volume of research highlights the various roles that digital technology plays in advancing firms’ innovative processes (Frank et al., 2019 ). In many firms, there is often a misalignment between digital technology and existing technologies (Wimelius et al., 2020 ). Piecemeal strategies may be ineffective; instead, firms need to fundamentally reconsider how they create and capture value (Priem et al., 2018 ). The simple use of digital technology is likely to reduce a firm’s competitive advantage in the digital era (Chen and Wu, 2020 ; He et al., 2020 ). The ability to leverage digital technology efficiently to develop existing technology is a crucial source of competitive advantage (Hossain et al., 2022 ; Lee et al., 2021 ). Hence, adopting an appropriate digital technology strategy that facilitates cooperation between digital and traditional technologies is key to the successful transformation of enterprises.

We propose that these characteristics of digital technology generate complex effects on legacy technology in the context of a firm’s digital transformation. The generative nature, accessibility, and transferability of digital technology improve its potential for combination with a firm’s existing technologies (Majchrzak and Markus, 2012 ; Forman and Zeebroeck, 2018 ). Simultaneously, other characteristics of digital technology, such as its universality and affordance, are easily imitable (Yoo et al., 2010 ; Nambisan, 2017 ), which can lead to a loss of competitive advantage (Tilson et al., 2010 ). Therefore, we believe that firms should seek digital technologies that are suitable for maintaining and strengthening their competitiveness.

Firm digital technology strategies

How digital technologies sustain and change the foundations of organizational learning, absorptive capacity, combination capabilities, and dynamic capabilities remains underexplored (Appio et al., 2017 ). Digitalization has already been shown to have a profound effect on the search for and recombination of knowledge (Austin et al., 2012 ; Thomke, 2020 ). However, prior research has not fully investigated the boundary conditions under which digitalization might enable different types of knowledge search and integration. Some scholars believe that digitalization can reinforce or overturn existing knowledge structures, substitute or complement existing competencies, and increase or decrease cognitive and emotional “costs” (Lanzolla et al., 2021 ). Knowledge recombination might spur various outcomes, including knowledge searching, integration, grafting, or enhancing.

The digital technology strategy aims to provide insights into how an organization-wide digital technology strategy might be adopted (Hess et al., 2016 ; Matt et al., 2015 ) to meet the challenges of managing the growing landscape of digital initiatives (Henfridsson and Bygstad, 2013 ). In a firm’s digital transformation, legacy technology is subject to reshaping through the use of digital technology (Agarwal et al., 2010 ; Iansiti and Lakhani, 2014 ). We argue that a firm’s competitive advantage stems from its legacy technology because it is difficult to imitate (Greco et al., 2013 ). Hence, we define digital technology strategy as the use of digital technology to strengthen a firm’s legacy technology during digital transformation. We classify digital technology strategies into four types: searching, enhancing, grafting, and integrating. Figure 1 provides a typology of these four digital technology strategies in a firm’s digital transformation.

The “legacy technology” encompasses both old and new technologies. Vertically represents the strengthening and changing effects of digital technology.

The search strategy involves finding new technology with functions similar to those of the firm’s legacy technology through digital technology. Some studies have shown that digital technology can drive enterprises to seek a deeper and broader range of new technologies (Lopez-Vega et al., 2016 ; Piezunka and Dahlander, 2015 ). For example, self-organizing digital applications initiated by individuals at lower levels of an enterprise can push the firm to adopt a searching strategy for digital transformation.

In some technology companies, employees interested in data analysis spontaneously organize teams to mine and analyse internal company data using various data analysis tools and techniques. These self-organized digital applications can provide critical business insights and decision support, thereby facilitating more effective digital transformation.

The enhancing strategy involves extending the functions of a firm’s legacy technology through digital technology. In this context, digital technology accelerates the development of the firm’s existing technology, thereby improving the competitiveness of legacy technology in the technical market.

Employees in many firms use their interests and skills to spontaneously organize learning groups during their spare time. These groups leverage online learning platforms or communities to collaboratively learn specific technologies or fields of knowledge. By sharing resources, discussing problems, and learning from each other, they continually enhance their professional skills. This collaborative learning is then applied to practical work, creating greater value for the company and facilitating the adoption of digital technology measures.

The grafting strategy involves creating a simple and direct connection between digital technology and a firm’s traditional technology. This approach develops and/or adds new functions to legacy technology through digital technology. Nag et al. ( 2007 ) argued that the grafting strategy is more likely to occur when new technology is integrated into collective practice but does not substantially alter how employees use legacy technology to perform their existing tasks.

Integrating

The integrating strategy involves fusing digital technology with legacy technology to create a new, combined technology. In this case, digital technology partially subverts a firm’s legacy technology, ultimately complementing the existing core technology. With this strategy, digital and legacy technologies work together to strengthen the firm’s competitiveness (Almirall and Casadesus-Masanell, 2010 ). Table 1 provides the concepts of the four digital technology strategies.

Configurative contexts for digital technology strategies

The digital transformation of a firm is a complex process involving strategic technology decisions (Tortorella and Fettermann, 2018 ), and it is influenced by various contingency factors. Forman and Zeebroeck ( 2018 ) noted that a strategy that combines a firm’s existing capabilities with digital technology is affected by the distance between the two types of technologies. Other studies have argued that the type of technical search plays a crucial role in a firm’s digital transformation (Corradini and Propris, 2017 ; Lanzolla et al., 2021 ). Additionally, some research has suggested that leaders’ perceptions of digital technology are significant contingency factors in choosing digital technology strategies (Singh and Hess, 2017 ; Lanzolla et al., 2020 ). Therefore, we use all three factors—distance, search type, and leadership perceptions—to explore the choice of digital technology strategy in firms’ digital transformation.

Technology distance

Lanzolla et al. ( 2021 ) claimed that digital technology can help firms rebuild competitive advantage by strengthening their legacy technologies. However, digital technology often differs from a firm’s legacy technology, and there are varying degrees of distance between the two (Zhu et al., 2021 ). Therefore, we believe that technology distance is a crucial factor in deciding which digital technology strategy to adopt in a firm’s digital transformation.

In the technical context, it is essential to consider the effects of technological distance (Bar and Leiponen, 2012 ). For example, technological distance encourages firms to form alliances (Gilsing et al., 2008 ) and improve cooperation (Bar and Leiponen, 2012 ). Digital technologies are categorized as general or specific on the basis of their characteristics (Henfridsson and Bygstad, 2013 ; Banalieva and Dhanaraj, 2019 ). General digital technology has advantages such as replicability, accessibility, transferability, and traceability; however, these features also increase the risk of imitation by other firms (Yoo et al., 2010 ). In contrast, specific digital technology is complex, and its unique functions are reflected only in a firm’s business operations (Ciarli et al., 2021 ), for example, the reshuffling function of digital technology in a firm’s product manufacturing (Lyytinen et al., 2016 ). Hence, specific digital technology is unique to an enterprise’s digital transformation and difficult to imitate. Therefore, we argue that when the distance between digital technology and legacy technology is great, searching and enhancing strategies are appropriate choices for a firm in its digital transformation. Hence, we propose the following hypothesis:

Hypothesis 1a. When digital technology is common, a firm undergoing digital transformation will adopt searching and enhancing strategies.

In contrast, when the distance between digital and legacy technologies is small, their functions will be similar. In such cases, digital technology as a specific technology can easily be connected to or integrated with a firm’s legacy technology, and it may be considered complementary to that legacy technology. Hence, we propose the following hypothesis:

Hypothesis 1b. When digital technology is specific, a firm undergoing digital transformation will adopt the grafting and integrating strategies.

Technical search type

Firms attempt to solve problems in ambiguous and uncertain environments (cf. Huber, 1991 ), often by engaging in organizational learning through search processes. Organizations may undertake various searches to develop new innovations (Von Hippel and Tyre, 1995 ), create new manufacturing methods (Jaikumar and Bohn, 1992 ), and conceive improved organizational designs (Bruderer and Singh, 1996 ). Therefore, firms acquire knowledge through search activities (Lanzolla et al., 2021 ).

Firms can gain knowledge through either deep or broad searches. In other words, firms address problems with their preexisting knowledge bases or knowledge closely related to them (Helfat, 1994 ; Martin and Mitchell, 1998 ; Stuart and Podolny, 1996 ). Conversely, new knowledge can also come from a firm’s external environment, often referred to as distant search or broad search (Afuah and Tucci, 2012 ; Chesbrough, 2003 ; Fleming and Sorenson, 2004 ; Gruber et al., 2012 ; Laursen, 2012 ; Rosenkopf and Nerkar, 2001 ). These two search types are called search depth and search breadth, which are also configured antecedents discussed in this article.

A central aspect of technological innovation for firms involves searching for new external knowledge (Li et al., 2014 ). In the context of digital transformation, firms can use a technical search strategy to find suitable digital technologies to promote their legacy technologies. Terjesen and Patel ( 2017 ) proposed two types of technical search strategies: search breadth and search depth. Some scholars believe that search breadth represents how broadly a firm explores various sources of external technologies in different areas, whereas search depth denotes how intensively and repeatedly a firm exploits a small number of external technological sources (Chiang and Hung, 2010 ). Search breadth involves the identification of new technologies outside the organization’s existing range (Teodoridis et al., 2019 ); when a firm seeks new technology beyond its legacy technology, it conducts a breadth search. Search depth aims to address problems with preexisting technology by finding technology closely related to it (Terjesen and Patel, 2017 ); when a firm seeks technology similar to its legacy technology, it conducts a depth search.

Specifically, in the search breadth strategy, a firm looks for technology beyond its core technology to compensate for any deficiencies in its legacy technology in coping with digital-based challenges. Consequently, the firm will tend to adopt searching and enhancing strategies in its digital transformation. Hence, we propose the following hypothesis:

Hypothesis 2a. When a firm conducts a breadth search for technology, it will adopt the searching and enhancing strategies in its digital transformation.

In contrast, when search depth is dominant in a firm’s digital transformation, it is likely to seek technologies that are closely related to its existing technologies. In such cases, the depth of the technical search can help the firm effectively combine digital technology with its legacy technology. Accordingly, we hypothesize that in the application of a search depth strategy, enterprises will adopt the grafting and integrating strategies.

Hypothesis 2b. When a firm conducts an depth search for technology, it will adopt the grafting and integrating strategies in its digital transformation.

Leadership perceptions

Notably, most firms have a person dedicated to managing change (Popkova et al., 2022 ). The influence of leader perceptions on a firm’s digital transformation has been examined in recent studies (Singh and Hess, 2017 ). Top managers play a largely integrative role in firms’ exploratory efforts (Heavey and Simsek, 2017 ). Leaders are the executors of a firm’s digital technology strategy, and their perceptions of digital technology significantly influence the adoption of that strategy. We categorize leader perceptions into two types: perceived usefulness and perceived ease of use.

Perceived usefulness involves a leader’s beliefs about the impact of technology on work performance (Rezvani et al., 2017 ), specifically the degree to which a person believes that using a particular technology will improve job performance (Venkatesh, 2000 ). Perceived ease of use refers to the extent to which a person believes that using such technology will require minimal effort (Venkatesh and Davis, 2000 ). Even if leaders perceive a given technology as useful, they may simultaneously find it too difficult to use. In such cases, the performance benefits of using the technology are outweighed by the effort needed. Thus, in addition to perceived usefulness, usage is influenced by perceived ease of use.

Perceived usefulness is related to the performance increase resulting from the use of technology by an individual (Amoako-Gyampah, 2007 ). When digital technology is difficult to apply but has a significant positive effect on legacy technology, leaders will make cautious decisions. Laudien and Daxböck ( 2016 ) reported that managers tend to rely on prior experience, favouring strategic choices with which they are familiar. Nevertheless, leaders may use digital technology to strengthen a firm’s legacy technology or to seek a new legacy technology to replace the existing one. In other words, they are inclined to adopt the searching and enhancing strategies. Therefore, we propose the following hypothesis:

Hypothesis 3a. When a leader’s perception of usefulness dominates, the firm will adopt searching and enhancing strategies in its digital transformation.

Managers form perception-based judgements by cognitively comparing what technology is capable of doing with what they need to accomplish. When leaders believe that digital technology is easy to use and can play a specific role in promoting a firm’s legacy technology, they will integrate digital and legacy technologies as much as possible to improve the company’s competitiveness. Hence, we propose the following hypothesis:

Hypothesis 3b. When a leader’s perceived ease of use dominates, the firm will adopt the grafting and integrating strategies in its digital transformation.

Table 2 provides configurations of technology distance, technical search type, and leadership perception for the four digital technology strategies.

Data and methods

Understanding how small and medium-sized enterprises (SMEs) adopt technology in a rapidly changing business environment is crucial for promoting their development (Vu and Nguyen, 2021 ). This study uses a multicase qualitative research method, focusing on Chinese high-tech manufacturing companies for three main reasons. First, from a global industrial development perspective, the digital transformation of manufacturing companies is a central theme of Industry 4.0. Major industrialized countries emphasize the digital transformation of manufacturing firms (Yu et al., 2021 ). Second, in the Chinese government’s Made in China 2025 initiative, high-tech manufacturing companies are considered pillar industries essential for the country’s development, and their digital transformation is linked to the high-quality development of the economy. Third, at the micro level, high-tech manufacturing enterprises typically possess cutting-edge technology that leads to industry development trends, making the demand for digital transformation urgent. Additionally, these firms face high investment costs related to their advanced technologies, leading them to be particularly cautious about digital transformation.

Choosing “high-tech enterprises” as the focus of research is beneficial because such firms have significant advantages in innovation capability, market competitiveness, and future development potential. High-tech enterprises are more sensitive to market changes and consumer demand, allowing them to respond quickly to market shifts and maintain competitiveness. Their products and services often have greater growth potential, especially in rapidly developing technological fields such as artificial intelligence, big data, and cloud computing.

Understanding and applying digital technologies while considering the relationship between “digital technology” and “traditional technology” in high-tech companies is crucial. Digital technology can be combined with traditional technology to create new products and services, improving efficiency and the user experience. High-tech firms must also consider how to integrate digital technology with traditional technology to achieve sustainable development.

Studying this relationship in high-tech firms is more pertinent than in nonhigh-tech companies because nonhigh-tech firms may have a lower dependence on technology, or the pace of change in their business models and technology applications may be slower. High-tech enterprises must ensure that technological development aligns with existing business processes and market demands while also fostering opportunities for innovation and competitiveness.

Our sample consists of high-tech manufacturing companies identified by the Ministry of Industry and Information Technology of the Chinese government from 2015–2016. Footnote 1 The starting point of 2015 was chosen because the Made in China 2025 initiative was launched that year. We screened the sample in two steps. First, we selected small and medium-sized high-tech manufacturing companies (i.e., those with fewer than 1000 employees) because the initial analysis revealed that large enterprises often adopt a variety of digital technology strategies, whereas most SMEs choose one major strategy. Second, we selected companies listed on China’s stock market (A-shares) to ensure access to public data such as annual and operating reports. The final sample consisted of 76 high-tech manufacturing companies. For each case, we conducted 2–4 h of face-to-face interviews with directors and executives in 2017 and 2018 to identify their digital transformation strategy and clarify the role of specific context configurations.

While our study focuses on Chinese manufacturing companies, the implications extend beyond this specific context. The challenges and strategies employed by these firms in balancing digital and legacy technologies are not unique to China. Many countries, especially those with emerging economies, face similar transitional phases. Thus, our findings offer a valuable framework for understanding how industries in different regions can navigate the complexities of technological integration during periods of economic slowdown.

Additionally, our research can provide a reference for enterprises formulating strategies. By studying the experiences and strategies of Chinese manufacturing enterprises, firms in other countries and regions can learn and develop corresponding strategies for their own development. Our research is not only applicable to Chinese manufacturing enterprises but also has significant implications for firms worldwide.

Table 3 provides a description of the sample, showing that most of the firms are distributed across four industries: electrical equipment, mechanical engineering, textile engineering, and chemical engineering. In terms of the digital technology strategy, 18 firms adopted the searching strategy (23.7%), 26 firms adopted the enhancing strategy (34.2%), 18 firms adopted the grafting strategy (23.7%), and 14 firms adopted the integrating strategy (18.4%). With respect to size, 10 firms have fewer than 100 employees (13.1%), 17 have 101–300 employees (22.4%), 25 have 301–500 employees (32.9%), and 24 have more than 500 employees (31.6%). Nine firms were established before 2005 (13.2%), 12 were established between 2006 and 2008 (17.6%), 13 were established between 2009 and 2010 (19.2%), 18 were established between 2011 and 2012 (26.4%), and 16 were established after 2013 (23.6%).

The interviews were conducted by two investigators. The interview questions explored the impact of emerging digital technology on a firm’s legacy technology, the distance between the two types of technologies, the type of technical search used by the firm to scout digital technology and leaders’ perceptions of emerging digital technology. All the interviews were recorded and then transcribed using systematic codes to generate the datasets. Supplementary data were obtained from the annual reports and public reports of the firms in the sample.

Digital technology strategy

We collected public documents from a sample of firms and examined the management discussion and analysis (MD&A) sections to identify statements on digital technology strategy. To assess digital technology strategies in these narratives, we drew from and refined the computer-aided text-analytic word lists developed by Short and colleagues ( 2010 ), using them to generate a deductive word list (McKenny et al., 2018 ; Short et al., 2010 ). We also identified all words that occurred three times or more in our subsample of texts to generate an inductive word list (Short et al., 2010 ).

We invited two of the authors to independently evaluate the vocabulary list to determine which words might reflect digital technology strategies in high-tech manufacturing firms. To minimize bias factor error, words that were regularly used in contexts not reflecting digital technology strategies were removed from the list. Conversely, words that were regularly used in relation to the digital technology strategy but not initially included in the word list were added. This process was iterated until no further additions or subtractions from the word list reduced the bias factor error (McKenny et al., 2018 ). Finally, a CAT scanner was used to measure the number of keywords related to the four strategies in the text. Examples of our descriptions of the digital technology strategy are shown in Table 4 .

In previous studies, the measurement of technology distance has utilized differences such as patent matching and technology location (Benner and Waldfogel, 2008 ). In this study, however, digital technology and legacy technology are considered to be essentially different, which makes it impossible to measure technological distance using patent matching and technical position. For this reason, we divide digital technologies into general and specific technologies on the basis of their attributes (Henfridsson and Bygstad, 2013 ; Banalieva and Dhanaraj, 2019 ). We argue that general technology is relatively distant from legacy technology, whereas specific technology is relatively close to a firm’s legacy technology.

We collected data on technology distance through interviews. Likert scales ranging from 1 (strongly disagree) to 5 (strongly agree) were used to assess the degree of agreement with the items. For general technology, we used three items: (1) The acquisition cost of this digital technology is very low compared with other digital technologies; (2) This digital technology is widely used in similar organizations; and (3) Compared with similar technologies in the industry, this digital technology is rapidly updated.” We took the average of the item scores as the final measurement data.

Specifically, we used the following items: (1) This digital technology is more difficult to imitate than other technologies; (2) This digital technology is the leading technology in the industry; and (3) This digital technology is more difficult to transfer than other technologies. We took the average of the item scores as the final measurement data.

We also used the interviews to collect data on the search type. Previous studies have measured search behaviours, such as patent citations, by focusing on firms’ internal searches along their technological trajectory (Katila, 2002 ; Katila and Ahuja, 2002 ). However, in this study, we emphasize the interaction effect between digital technology and legacy technology; therefore, we measure search breadth and search depth using both external and internal searches, respectively.

For search breadth, we defined an external search as a firm scouting a technology that deviates from its technological trajectory. The interviews included the following items: (1) The firm scouts technology from various channels; (2) The firm usually finds technology from different partners; and (3) The firm seeks technology to discover new technological opportunities. The items were scored from 1 (strongly disagree) to 5 (strongly agree), and the average of the three scores was taken as an indicator.

For search depth, we defined an internal search as a scouting technology that aligns with a firm’s technological trajectory. The interviews contained the following items: (1) The firm scouts technology according to its technological trajectory; and (2) The firm seeks technology from its competitors. The items were scored from 1 (strongly disagree) to 5 (strongly agree), and the average of the two scores was taken as an indicator.

We evaluated perceived usefulness and perceived ease of use through leaders’ recognition of technology as measured in the interviews.

Perceived usefulness was measured as the extent to which leaders believe that using the technology will improve job performance. The interviews included the following items: (1) Using digital technology improves my performance in my job; (2) Using digital technology in my job increases my productivity; (3) Using digital technology strengthens my effectiveness in my job; and (4) I find digital technology to be useful in my job. The items were scored from 1 (very unimportant) to 5 (very important), and the average of the four scores was taken as the perceived usefulness.

Perceived ease of use was measured as the extent to which leaders believe that using the technology will be free of effort. The interviews included the following items: (1) My interaction with digital technology is clear and understandable; (2) Interacting with digital technology does not require much mental effort; (3) I find digital technology easy to use; and (4) I find it easy to make digital technology do what I want it to do. The items were scored from 1 (very unimportant) to 5 (very important), and the average of the four scores was taken as the perceived ease of use.

Calibration

After the data coding and calibration process, we constructed a database consisting of 76 cases of high-tech manufacturing enterprises in China, with detailed narratives for each case. To analyse these datasets, we applied an fsQCA approach (Ragin, 2014 ). FsQCA analysis uses Boolean algebra to detect configurational relations between the outcomes of the dependent variable (the digital technology strategy chosen by high-tech manufacturing enterprises) and the underlying conditions determined by the independent variables (technology distance, technical search type and leadership perception). The approach systematically analyses which present (1), absent (0), or fuzzy (between 0 and 1) conditions are associated with a certain outcome (Fiss, 2011 ; Ragin and Fiss, 2009 ). Since there is no uniform calibration standard for the variables in our study, we used the average of all variables as the cut-off point, a method widely adopted in previous research (Cheng and Wang, 2021 ; Ong and Johnson, 2021 ). For a general technology, we set 3.2 as the crossover point, 4.1 as full membership, and 1 as full nonmembership; for a specific technology, the criteria were 3.5, 4.6, and 2.5, respectively. For search breadth, we set 3.4 as the crossover point, 4.5 as full membership, and 2.2 as full nonmembership; for search depth, the criteria were 3.6, 4.4, and 2.1, respectively. For perceived usefulness, we set 3.3 as the crossover point, 4.4 as a full membership, and 2.3 as full nonmembership; for perceived ease of use, the criteria were 2.9, 4.2 and 2.0, respectively.

Correlation analysis

Table 5 shows the correlations between digital technology strategy and the contextual variables, revealing several interesting relationships. First, general technology is positively related to the searching strategy ( r 1  = 0.224, p  < 0.05) but negatively correlated with the integrating strategy ( r 2  = −0.213, p  < 0.05). Specific technology is positively related to both the grafting strategy ( r 3  = 0.252, p  < 0.05) and the integrating strategy ( r 4  = 0.373, p  < 0.01). These results are consistent with Hypotheses 1a and 1b. Second, search breadth is positively related to the searching strategy ( r 5  = 0.461, p  < 0.01) and the enhancing strategy ( r 6  = 0.411, p  < 0.01). Search depth is positively associated with the grafting strategy ( r 7  = 0.405, p  < 0.01) and the integrating strategy ( r 8  = 0.234, p  < 0.05). Both of these results align with Hypotheses 2a and 2b. Third, perceived usefulness is positively correlated with the searching strategy ( r 9  = 0.261, p  < 0.01), which partially supports Hypothesis 3a; perceived ease of use is positively correlated with both the grafting strategy ( r 10  = 0.304, p  < 0.01) and the integrating strategy ( r 11  = 0.387, p  < 0.01), in line with Hypothesis 3b. We explore these findings further in our discussion of the fsQCA results in the section “fsQCA”.

Table 6 presents the fsQCA results for the digital technology strategy adoption of high-tech manufacturing firms. Each column displays a consistent configuration associated with a specific digital technology strategy. All the configurations meet the acceptable consistency threshold of 0.80 (Ragin and Fiss, 2009 ). The results indicate that three configurations are associated with the searching and enhancing strategies and that two configurations are associated with the grafting and integrating strategies.

Searching strategy

Configurations C1a–C1c represent the search strategy. The results show that general technology, search breadth, and perceived usefulness are present in these configurations, usually as core factors (e.g., general technology in C1a and C1c, search breadth in C1a and C1b, and perceived usefulness in C1b and C1c). Hence, Hypotheses 1a, 2a and 3a are supported.

C1a has general technology and search breadth as core elements, whereas perceived usefulness and perceived ease of use are peripheral conditions. Moreover, search depth is absent, and specific technology is unimportant. A CEO from the plastics production industry stated the following:

Under the increasing pressure of environmental protection, we need to use internet [technologies] to find more environmentally friendly technologies. We use these technologies [clean technologies] to replace the old ones … For this goal, our company will not be limited to existing partners but [will] try to contact many different cooperators to scout the suitable technology. Sometimes we worry about our competitors using these clean technologies in advance. (2#)

C1b highlights that the presence of search breadth and perceived usefulness are two core conditions for choosing a search strategy. The presence of general technology, specific technology, and perceived ease of use are peripheral factors, but search depth is absent. As the manager of a rubber manufacturing company told us,

When we feel that an emerging production technology is very effective for our company to improve the quality of rubber, we will get this technology as quickly as possible through various digital channels. (27#).

In C1c, the presence of general technology and perceived usefulness and the absence of perceived ease of use are the core conditions. In addition, the presence of a specific technology, search breadth and search depth are peripheral conditions. For example, as a manager of a textile equipment manufacturer explained,

Although the SAP system needs more testing, we have to adopt the SAP system to replace our original system because the boss believes that the SAP system can increase the on-time delivery rate of textiles to 95%, despite the system not being easy to use. (55#)

Enhancing strategy

Configurations C2a, C2b and C2c in Table 6 are related to the enhancing strategy. The findings indicate that search breadth is a core factor in C2a and C2b, supporting Hypothesis 2a; the presence of a general technology is a core condition in C2b, supporting Hypothesis 1a; and perceived usefulness is a core element in C2c, supporting Hypothesis 3a.

In configuration C2a, search breadth and perceived ease of use are core elements, whereas the presence of specific technology and perceived usefulness and the absence of search depth are peripheral conditions for the enhancing strategy. The CEO of an automotive software manufacturer stated the following:

Innovation activities in our products always face high risk, so we need to scout the similar technologies, as many as possible, and find the best one. More importantly, provided our technical team recognizes it [the technology] is easy to operate and master, we then take it. (#9)

C2b indicates that the presence of general technology and search breadth are core conditions; search depth and perceived ease of use are peripheral factors, whereas specific technology and perceived usefulness are irrelevant. A representative of a power equipment manufacturer explained the following:

When we are looking for some solutions to improve the competitiveness of technologies, we tend to develop it [the legacy technology] with the aid of a lot of digital technologies that have been widely used, such as energy storage techniques in electrics. (21#)

In C2c, the presence of specific technology and perceived usefulness and the absence of search depth are the core elements. The presence of general technology, search breadth, and perceived ease of use are peripheral factors. A manager of a metal manufacturing company emphasized the following:

Our company emphasizes the unique technology in the external technical market because the competition in metal producing is fierce. Once we find a technology that is very useful, we will buy it quickly. (47#)

Grafting strategy

Configurations C3a and C3b are related to the grafting strategy. The results indicate that search depth is a core factor in C3a and C3b, supporting Hypothesis 2b. The presence of a specific technology is a core condition in C3a and a peripheral condition in C3b, supporting Hypothesis 1b.

In C3a, the presence of a specific technology and search depth are the core conditions, along with the absence of search breadth. The presence of perceived usefulness and perceived ease of use and the absence of general technology are peripheral conditions. A member of the R&D staff of a pharmaceutical company stated the following:

Finding a new drug is a technology accumulation process, so the external technique [the latest producing technique] we are looking for is very scarce. We pay great attention to the matching of external techniques with our core technology. (15#)

In C3b, search breadth and search depth are core conditions, as is the absence of general technology. The presence of specific technology and perceived usefulness and the absence of perceived ease of use are peripheral conditions. A medical software producer explained as follows:

Our products are provided for variable healthcare systems to meet different treatment requirements; hence, the digital techniques we collect must meet the medical professional requirements and adapt to different medical systems at the same time. (33#)

Integrating strategy

Configurations C4a and C4b represent the integrating strategy. The results show that search depth and perceived ease of use are core conditions in C4a and C4b, which supports Hypotheses 2b and 3b. Specific technology is a core condition in C4b and a peripheral condition in C4a, which supports Hypothesis 1b.

In C4a, search breadth, search depth, and perceived ease of use are core conditions; specific technology and perceived usefulness are peripheral conditions; and general technology is irrelevant. These results show that when an enterprise conducts a broad, in-depth search for a new technology and the leader perceives it as easy to use, the company will tend to integrate the digital technology into its existing core technology. This point was made by a chemical company manager:

We always search for all useful technologies as much as possible. We will apply them [technologies] if our team argues they can be used easily. (14#)

In C4b, specific technology, search depth, perceived usefulness, and perceived ease of use are the core factors; the absence of general technology and the presence of search breadth are peripheral conditions. This further validates the argument that when the leader perceives a specific technology as useful and easy to use, the company will acquire this technology through an in-depth search and implement the integration strategy. An interviewee from a small clothing production company provided an example:

We believe that data capture technology is very useful for customer portraits today, and this technology is easy to use. We can use it to guide our clothing design for different customers. (60#)

Robustness checks

To demonstrate the robustness of our results, we conducted two types of checks. First, we focused on the process of coding the qualitative data acquired from face‒to‒face interviews into four technology strategies and three variables (technology distance, technical search type, and leadership perception). Although the methods we used allow rich contextual and nonverbal information to be collected, bias based on personal impressions can affect the subsequent coding process (Barrick et al., 2009 ). To avoid potential bias, the coding was carried out separately by two investigators and an independent colleague who was not part of the research project (Li and Bathelt, 2020 ). Their findings were then compared, and any differences were discussed and resolved collectively. This procedure helped alleviate concerns regarding the identification of variables.

Second, following Fiss ( 2011 ) and Witt and Jackson ( 2016 ), we used regression analysis to check the fsQCA findings. Table 6 shows the results of a probit model that we ran separately for each digital technology strategy as a dependent binary variable (Li and Bathelt, 2020 ). Overall, the regression results support the findings of the fuzzy set analysis. Specifically, regarding technology distance, as suggested in Hypotheses 1a and 1b, general technology is positively linked to the searching strategy, whereas specific technology is more closely associated with the grafting and integrating strategies. With respect to the type of technical search, the regression results show that firms adopting search breadth tend to choose the searching and enhancing strategies, which is in line with Hypothesis 2a. In terms of leadership perception configurations, as specified in Hypothesis 3a, perceived usefulness is associated with the searching and enhancing strategies; perceived ease of use is positively related to the integrating strategy, providing partial support for Hypothesis 3b.

A comparison of the regression results for the digital technology strategies with the configurations identified by fsQCA clarifies the differences between the two methods (Tables 6 and 7 ). In fsQCA analysis, for example, three different factors generate three configurations that align with the searching strategy. In contrast, the regression analysis provides only one set of regression coefficients for this strategy, representing an overall combined impact of the dependent variables (Li and Bathelt, 2018 ). While the two methods yield partially consistent results, an advantage of fsQCA is that it allows for multiple solutions in terms of configurations that produce the same outcome, referred to as equifinality (Fiss, 2011 ; Ragin, 2009 ). With regression analysis, it is not possible to examine the nuanced differences in possible conditions that lead to the same outcome, limiting our ability to provide a comprehensive account of the variety of technology strategies in our setting (Bathelt et al. 2018 ).

Discussion and conclusions

On the basis of our review of the literature on digital transformation and digital technology, we identified four digital technology strategies that can facilitate a firm’s digital transformation by reinforcing its legacy technology: searching, enhancing, grafting, and integrating. Employing a configurational approach, we formulated several hypotheses to explore the impact of three antecedents—technology distance, technical search type, and leadership perception—on the selection of a digital technology strategy during a company’s digital transformation process.

This study explores the impact of general and specific digital technologies on the strategic choices firms make in their digital transformation efforts. Our findings indicate that the adoption of general technology tends to steer companies towards employing searching and enhancing strategies (C1a, C1c, and C2b), supporting Hypothesis 1a. Notably, C1a and C2b share core conditions of general technology adoption and search breadth, suggesting that the combination of these factors significantly influences a firm’s propensity to adopt searching and enhancing strategies during digital transformation.

Conversely, the widespread use of specific technology in digital transformation leads manufacturing firms to favour grafting and integrating strategies (C3a and C4b), in line with Hypothesis 1b. However, the core conditions for C3a and C4b diverge significantly. For C3a, the critical factors are the presence of specific technology and search depth, coupled with the absence of search breadth. In C4b, the determinants are perceived usefulness and ease of use, with search breadth playing a less central role. These distinctions underscore that while specific technology is a crucial motivator for adopting grafting and integrating strategies, its effectiveness is contingent upon a combination of other variables (Pagani and Pardo, 2017 ; Cheng and Wang, 2021 ).

Our investigation into the role of search breadth in the digital transformation of firms reveals that it is a pivotal factor in all configurations leading to the adoption of searching and enhancing strategies, confirming Hypothesis 2a. Specifically, search breadth is identified as a core condition in configurations C1a, C1b, C2a, and C2b. Notably, configurations C1a and C2b share the core conditions of general technology and search breadth, guiding manufacturing firms toward searching and enhancing strategies. In configuration C1b, perceived usefulness emerges as another core factor, whereas in C2a, perceived ease of use is highlighted as a critical condition. These findings underscore the significance of search breadth, in conjunction with leadership perception, in steering firms towards either searching or enhancing strategies under various circumstances.

Our results demonstrate that search depth is a central condition in all configurations associated with the grafting and integrating strategies (C3a, C3b, C4a, and C4b), supporting Hypothesis 2b. These configurations reveal complex solutions; for example, in the grafting strategy, C3a emphasizes the presence of specific technology and the absence of search breadth as core factors, whereas C3b points to the absence of general technology and the presence of search breadth as crucial conditions. For the integrating strategy, the core factors in C4a include search breadth, search depth, and perceived ease of use, whereas, in C4b, search breadth is a peripheral condition, with specific technology and leadership perceptions as core conditions. These findings illustrate the contingent nature of technical search types across different configurative contexts in influencing the choice of digital technology strategy.

This study explores the influence of perceived usefulness and perceived ease of use on a firm’s choice of digital technology strategy. Our findings indicate that when leaders in a manufacturing company perceive new technology as useful, they tend to adopt the searching and enhancing strategies in the firm’s digital transformation (C1b, C1c, and C2c), as Hypothesis 3a predicts. In contrast, when the perceived ease of use of the new technology is considered, manufacturing firms are likely to choose the integrating strategy (C4a and C4b), which is in partial agreement with Hypothesis 3b. The findings further suggest that manufacturing companies need to align leaders’ decisions with their different digital technology strategies. For example, perceived ease of use is a core element in C2a, which is related to the enhancing strategy, and perceived usefulness is a core factor in C4b in relation to the integrating strategy.

Theoretical contributions

This study makes three main theoretical contributions to research on the digital transformation of firms. First, by focusing on the digital transformation process of Chinese high-tech enterprises, we demonstrate that their competitive advantage arises from the combination of digital technology and legacy technology. This adds to the literature on digital transformation by emphasizing the role of legacy technology (Ceipek et al., 2020 ; Lanzolla et al., 2021 ). Our findings deepen the understanding of how digital technology can strengthen a firm’s legacy technology. Therefore, this study not only addresses controversies regarding the effects of digital technology on digital transformation (Goran et al., 2017 ; Hossain et al., 2022 ; Warner and Wäger, 2019 ), but it also responds to recent calls to investigate how enterprises can select appropriate digital technologies (not necessarily the most advanced) for their digital transformation (Gong and Ribiere, 2021 ; Matarazzo et al., 2021 ).

Second, we construct a novel framework for digital technology strategies. Drawing on the perspective of digital technology as a means to strengthen legacy technology, we identify four digital technology strategies: searching, enhancing, grafting, and integrating. These strategies encompass the various ways in which digital technology can reinforce legacy technology. Our empirical results indicate that manufacturing firms use the search strategy to find new technologies to replace old technologies during digital transformation. In the context of the enhancing strategy, digital technology is used to develop legacy technology, thereby improving a firm’s competitiveness in a digital economy. For the grafting strategy, we find that some medical and pharmaceutical companies connect digital technology with legacy technology to offer products and services tailored to patients with different needs. Finally, chemical firms combine digital technology with legacy technologies to develop new technologies conducive to their digital transformation. Unlike previous studies, which have focused on the outcomes of digital transformation (Hilbolling et al., 2020 ; Matarazzo et al., 2021 ), our inclusion of these four digital technology strategies highlights the interaction between digital and legacy technologies, providing a valuable framework for successful transformation in manufacturing firms.

Third, prior studies have examined the impact of digital technology on the digital transformation of enterprises (Dery et al., 2017 ; Hess et al., 2016 ). We extend this research by using the fsQCA method to explore the configurative influences of technology distance, technical search type, and leadership perceptions on the adoption of the four digital technology strategies. Our findings reveal different pathways to the adoption of these strategies. For example, in configuration C1a, both general technology and search breadth are present; in C1b, search breadth and perceived usefulness work together; and in C1c, general technology, and perceived usefulness are present, whereas perceived ease of use are absent. Despite these different paths, all lead to the adoption of the searching strategy, thereby providing a nuanced understanding of the conditions under which different digital technology strategies are chosen.

Managerial implications

Our empirical results yield three main practical insights. First, in addition to digital technology, legacy technology is an important factor to consider in digital transformation. For example, managers can scout digital technology in relation to their firm’s legacy technology to find a suitable and effective match. Second, our results highlight which digital technology strategy applies to legacy technology in an enterprise’s digital transformation. The four digital technology strategies represent different paths to promoting a firm’s legacy technology. Managers can determine the appropriate digital technology strategy according to the combination of their legacy technology and digital technology. Third, the configurative antecedents identified in this study should be considered when manufacturing firms are in the process of choosing a digital technology strategy. For example, when the types of searching and leadership perceptions differ, managers should consider different digital technology strategies for digital transformation.

Limitations

Three main limitations of this study should be noted, which also provide opportunities for future research. First, although we took steps to ensure that our sample was as broad and random as possible, our data represent only high-tech manufacturing enterprises in China. More evidence from other industries and countries will help strengthen and expand the findings of this study. Second, we applied fsQCA, a case-based method. Although this set-theoretical approach is suitable for a deeper understanding of the relationships among rich theoretical concepts, the generalizability of the findings requires robust verification. Third, we examined the configurative influence of three antecedents on the choice of digital technology strategy. While it is reasonable to assume the involvement of technology distance, technical search type, and leadership perceptions in digital technology strategy, other variables, both organizational and cultural, should be considered in future research.

The relationship between generative artificial intelligence technology and this study may not be explored in detail in this paper. The relationship between embodied cognitive technology and this study is also worth exploring. For example, sensors can be used to obtain a user’s emotional state to better understand the user’s needs and intentions and provide more accurate services. There may be some relevance between generative artificial intelligence technology and this study, such as the use of generative models to obtain samples of assisted writing. The relationship between these digital technologies and this study is an area that can be expanded and further studied. In addition, future research can consider more variable factors and explore how to address the impact of these factors to improve the adaptability and flexibility of the system. In summary, future research can better cover relevant digital technologies and expand and deepen the study by combining more technologies and considering more factors.

Data availability

In the supplementary materials, the author uploaded relevant data on the three configurations of technological distance, technology search types, and leadership conceptions in relation to four digital technology strategies. The datasets generated and/or analysed during the current study are available from the corresponding author upon reasonable request.

In 2015, the Ministry of Industry and Information Technology of China released a list of 5000 high-tech manufacturing enterprises across seven categorized industries and 15 subsectors. Of these, 95% are large companies with more than 1000 employees, representing the highest level of manufacturing in China

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This article is supported and funded by the Major Programme of the National Natural Science Foundation of China (Project No. 72342029).

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Unlocking success in digital transformations

As digital technologies dramatically reshape industry after industry, many companies are pursuing large-scale change efforts to capture the benefits of these trends or simply to keep up with competitors. In a new McKinsey Global Survey on digital transformations, more than eight in ten respondents say their organizations have undertaken such efforts in the past five years. 1 The online survey was in the field from January 16, 2018, to January 26, 2018, and garnered responses from 1,793 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. Of them, 1,521 have been part of at least one digital transformation in the past five years at either their current or previous organizations. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP. Yet success in these transformations is proving to be elusive. While our earlier research has found that fewer than one-third of organizational transformations succeed at improving a company’s performance and sustaining those gains, the latest results find that the success rate of digital transformations is even lower.

The results from respondents who do report success point to 21 best practices, all of which make a digital transformation more likely to succeed . These characteristics fall into five categories: leadership, capability building, empowering workers, upgrading tools, and communication. These categories suggest where and how companies can start to improve their chances of successfully making digital changes to their business.

Transformations are hard, and digital ones are harder

Years of research on transformations has shown that the success rate for these efforts is consistently low: less than 30 percent succeed . 2 We define a successful transformation as one that, according to respondents, was very or completely successful at both improving performance and equipping the organization to sustain improvements over time. In our 2016 survey, the rate of success was 20 percent; in 2014, 26 percent; and in 2012, 20 percent. This year’s results suggest that digital transformations are even more difficult. Only 16 percent of respondents say their organizations’ digital transformations have successfully improved performance and also equipped them to sustain changes in the long term. An additional 7 percent say that performance improved but that those improvements were not sustained.

Even digitally savvy industries , such as high tech, media, and telecom, are struggling. Among these industries, the success rate does not exceed 26 percent. But in more traditional industries, such as oil and gas, automotive, infrastructure, and pharmaceuticals, digital transformations are even more challenging: success rates fall between 4 and 11 percent.

Success rates also vary by company size. At organizations with fewer than 100 employees, respondents are 2.7 times more likely to report a successful digital transformation  than are those from organizations with more than 50,000 employees.

The anatomy of digital transformations

Whether a change effort has succeeded or not, the results point to a few shared traits of today’s digital transformations. For one, organizations tend to look inward when making such changes. The most commonly cited objective for digital transformations is digitizing the organization’s operating model, cited by 68 percent of respondents. Less than half say their objective was either launching new products or services or interacting with external partners through digital channels. Digital transformations also tend to be wide in scope. Eight in ten respondents say their recent change efforts involved either multiple functions or business units or the whole enterprise. Additionally, the adoption of technologies plays an important role across digital transformations. On average, respondents say their organizations are using four of 11 technologies we asked about, with traditional web tools cited most often and used in the vast majority of these efforts.

At the same time, the results from successful transformations show that these organizations deploy more technologies than others do (Exhibit 1). This might seem counterintuitive, given that a broader suite of technologies could result in more complex execution of transformation initiatives and, therefore, more opportunities to fail. But the organizations with successful transformations are likelier than others to use more sophisticated technologies, such as artificial intelligence, the Internet of Things, and advanced neural machine-learning techniques.

The keys to success

Having these technologies on hand is only one part of the story. The survey results indicate how, exactly, companies should make the technology-supported changes that differentiate successful digital transformations from the rest (Exhibit 2).

Our research points to a set of factors that might improve the chances of a transformation succeeding (see sidebar, “Twenty-one keys to success”). 3 The survey tested for best practices in a digital transformation by using different types and structures of questions. To make commensurate comparisons of each practice’s impact on the likelihood of transformation success, Total Unduplicated Reach and Frequency (TURF) and Shapley value analyses were run. TURF analysis was conducted among respondents reporting successful transformations to identify the most common combinations of the 83 practices tested in the survey. This analysis was carried out by determining the proportion of respondents agreeing with or selecting at least one practice, then calculating the incremental value of including or excluding each practice. Shapley value analysis was then applied to the TURF output to rank the practices by their average expected marginal contribution to the likelihood of a successful transformation. The 21 keys to transformation success are the practices with the highest Shapley values. These factors fall into five categories:

Twenty-one keys to success

Out of 83 practices that were tested in the survey, 1 The survey tested for best practices in a digital transformation by using different types and structures of questions. To make commensurate comparisons of each practice’s impact on the likelihood of transformation success, Total Unduplicated Reach and Frequency (TURF) and Shapley value analyses were run. TURF analysis was conducted among respondents reporting successful transformations to identify the most common combinations of the 83 practices tested in the survey. This analysis was carried out by determining the proportion of respondents agreeing with or selecting at least one practice, then calculating the incremental value of including or excluding each practice. Shapley value analysis was then applied to the TURF output to rank the practices by their average expected marginal contribution to the likelihood of a successful transformation. The 21 keys to transformation success are the practices with the highest Shapley values. the following are those that best explain the success of an organization’s digital transformation:

• Implement digital tools to make information more accessible across the organization.
• Engage initiative leaders (leaders of either digital or nondigital initiatives that are part of the transformation) to support the transformation.
• Modify standard operating procedures to include new digital technologies.
• Establish a clear change story (description of and case for the changes being made) for the digital transformation.
• Add one or more people who are familiar or very familiar with digital technologies to the top team.
• Leaders engaged in transformation-specific roles encourage employees to challenge old ways of working (processes and procedures).
• Senior managers encourage employees to challenge old ways of working (processes and procedures).
• Redefine individuals’ roles and responsibilities so they align with the transformation’s goals.
• Provide employees with opportunities to generate ideas of where digitization might support the business.
• Establish one or more practices related to new ways of working (such as continuous learning, open physical and virtual work environments, and role mobility).
• Engage employees in integrator roles (employees who translate and integrate new digital methods and processes into existing ways of working to help connect traditional and digital parts of the business) to support the transformation.
• Implement digital self-serve technology for employees’ and business partners’ use.
• Engage the leader of a program-management office or transformation office (full-time leader of the team or office dedicated to transformation-related activities) to support the transformation.
• Leaders in transformation-specific roles get more involved in developing the digital transformation’s initiatives than they were in past change efforts.
• Leaders in transformation-specific roles encourage their employees to experiment with new ideas (such as rapid prototyping and allowing employees to learn from their failures).
• Senior managers get more involved in digital initiatives than they were in past change efforts.
• Leaders in transformation-specific roles ensure collaboration between their units and others across the organization when employees are working on transformation initiatives.
• Senior managers ensure collaboration between their units and others across the organization.
• Engage technology-innovation managers (managers with specialized technical skills who lead work on digital innovations, such as development of new digital products or services) to support the transformation.
• Senior managers encourage their employees to experiment with new ideas.
• Senior managers foster a sense of urgency within their units for making the transformation’s changes.
• having the right, digital-savvy leaders in place
• building capabilities for the workforce of the future
• empowering people to work in new ways
• giving day-to-day tools a digital upgrade
• communicating frequently via traditional and digital methods

Having the right, digital-savvy leaders in place

Change takes place at all levels during a digital transformation, especially when it comes to talent and capabilities. Nearly 70 percent of all respondents say their organizations’ top teams changed during the transformation—most commonly when new leaders familiar with digital technologies joined the management team.

Indeed, adding such a leader is one of the keys to transformation success. So is the engagement of transformation-specific roles—namely, leaders of individual initiatives and leaders of the program-management or transformation office who are dedicated full time to the change effort. Another key to success is leadership commitment. When people in key roles (both the senior leaders of the organization and those in transformation-specific roles) are more involved in a digital transformation than they were in past change efforts, a transformation’s success is more likely.

Other results indicate that when companies achieve transformation success, they are more likely to have certain digital-savvy leaders in place. Less than one-third of all respondents say their organizations have engaged a chief digital officer (CDO) to support their transformations. But those that do are 1.6 times more likely than others to report a successful digital transformation.

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Building capabilities for the workforce of the future.

The survey results confirm that developing talent and skills throughout the organization—a fundamental action for traditional transformations —is one of the most important factors for success in a digital change effort. Of our 21 keys to success, three relate to the workforce’s digital capabilities. First is redefining individuals’ roles and responsibilities so they align with a transformation’s goals, which can help clarify the roles and capabilities the organization needs. Respondents are 1.5 times more likely to report a successful digital transformation when this practice is in place.

Two other keys relate to engaging the specific roles of integrators and technology-innovation managers, who bridge potential gaps between the traditional and digital parts of the business. People in these roles help foster stronger internal capabilities among colleagues. Integrators are employees who translate and integrate new digital methods and processes into existing ways of working. Because they typically have experience on the business side and also understand the technical aspects and business potential of digital technologies, integrators are well equipped to connect the traditional and digital parts of the business. For their part, technology-innovation managers possess specialized technical skills and lead work on a company’s digital innovations.

Beyond these three keys for success, we found that companies with winning transformations have a better-funded and more robust approach to talent than others do. Transformation success is more than three times likelier when respondents say their organizations have invested the right amount in digital talent .

Success is also more likely when organizations scale up their workforce planning and talent development (Exhibit 3). For example, 27 percent of respondents report successful transformations when their companies set cross-functional or enterprise-wide hiring goals based on specific skill needs—nearly twice the share of respondents whose organizations do not.

During recruitment, using a wider range of approaches also supports success. Traditional recruiting tactics, such as public job postings and referrals from current employees, do not have a clear effect on success, but newer or more uncommon methods do. Success is at least twice as likely at organizations that run innovative recruiting campaigns (such as having recruits play games or find hidden messages in source code as part of the recruiting process) or host technology conferences or “hackathons.”

Empowering people to work in new ways

Digital transformations require cultural and behavioral changes such as calculated risk taking, increased collaboration, and customer centricity, as our previous research has shown . In this survey, the results suggest two primary ways in which companies with successful transformations are empowering employees to embrace these changes.

The first is reinforcing new behaviors and ways of working through formal mechanisms, long proved as an action that supports organizational change. One related key to transformation success is establishing practices related to working in new ways. Respondents who say their organizations established at least one new way of working, such as continuous learning or open work environments, as part of their change efforts are more likely than others to report successful transformations. Another key is giving employees a say on where digitization could and should be adopted. When employees generate their own ideas about where digitization might support the business, respondents are 1.4 times more likely to report success.

Read our latest thinking on digital transformations

A second approach to empowering workers is ensuring that people in key roles play parts in reinforcing change. Success depends on both senior leaders and those engaged during the transformation. 4 The survey asked which of the following roles were engaged by the organization to support the execution of the digital transformation: initiative leaders, integrator roles, leaders of the program-management or transformation office, technology-innovation managers, chief digital officers, and coaches. One related factor is encouraging employees to challenge old ways of working. Respondents who say their senior leaders and the people engaged in transformation-specific roles do this are more likely than their peers to report success (1.5 times more for senior leaders and 1.7 times more for those in key transformation roles). Another factor for success relates to risk taking. Success is more likely when senior leaders and leaders who are engaged in the transformation all encourage employees to experiment with new ideas—for example, through rapid prototyping and allowing employees to learn from their failures. A third key to success is people in key roles ensuring that their own units are collaborating with others when working on transformations. When respondents say their senior leaders and those in transformation-related roles have done so, they are 1.6 and 1.8 times, respectively, more likely than others to report success.

Giving day-to-day tools a digital upgrade

For organizations to empower employees to work in new ways, the survey findings show how, and by how much, digitizing tools and processes can support success. We asked respondents about seven structural changes their organizations had made since the transformations began (Exhibit 4). Three of these changes—each of which involves making the use of digital tools a new organizational norm—emerged as keys to success.

The first key is adopting digital tools to make information more accessible across the organization, which more than doubles the likelihood of a successful transformation. The second is implementing digital self-serve technologies for employees, business partners, or both groups to use; transformation success is twice as likely when organizations do so. A third key, focused on technology in company operations, is organizations modifying their standard operating procedures to include new technologies. Beyond these factors, an increase in data-based decision making and in the visible use of interactive tools can also more than double the likelihood of a transformation’s success.

Communicating frequently via traditional and digital methods

We also found that using remote and digital communications to convey the transformation’s vision does a much better job of supporting success than in-person or traditional channels. When senior managers and initiative leaders use new digital channels to reach employees remotely, the rate of success is three times greater.

Looking ahead

While respondents say that many digital transformations fall short in improving performance and equipping companies to sustain changes, lessons can be learned from those who report success. The survey results suggest steps companies can take to increase their chances of success during a transformation:

• Reimagine your workplace. The results show that success requires both digital-savvy leaders and a workforce with the capabilities to make a digital transformation’s changes happen, which other McKinsey research also confirms. 5 For more, see James Manyika and Kevin Sneader, “ AI, automation, and the future of work: Ten things to solve for ,” McKinsey Global Institute, June 2018; Jacques Bughin, Peter Dahlström, Eric Hazan, Susan Lund, Amresh Subramaniam, and Anna Wiesinger, “ Skill shift: Automation and the future of the workforce ,” McKinsey Global Institute, May 2018; and Pablo Illanes, Susan Lund, Mona Mourshed, Scott Rutherford, and Magnus Tyreman, “ Retraining and reskilling workers in the age of automation ,” McKinsey Global Institute, January 2018. The workforce implications of digitization, automation, and other technological trends are significant, and companies will need to invest in and hire for radically different skills and capabilities. Whether or not an organization has already begun a digital transformation, it is important for all companies to think critically about the ways in which digitization could affect their businesses, in the near and longer term, and the skills they will need to keep up. One critical step is for organizations to develop clear workforce strategies to help determine the digital skills and capabilities that they currently have—and will need—to meet their future goals.
• Upgrade the organization’s “hard wiring.” As digital requires new ways of working as well as changes to the organization’s overall culture, employees must be empowered to work differently and keep up with the faster pace of business. The implementation of digital tools and upgrading of processes, along with the development of a nimbler operating model—that is, the hard wiring of the organization—will support these changes. Of course, leaders have important roles to play, too, by letting go of old practices (command-and-control supervision, for example). Since not all leaders will have the experience to support or enact such changes, dedicated leadership-development programs could help leaders and employees alike to make the necessary shifts in mind-sets and behaviors.
• Change the ways you communicate. Good communication has always been a key success factor in traditional change efforts, and it is just as important in a digital transformation. In a digital context, companies must get more creative in the channels they are using to enable the new, quicker ways of working and the speedier mind-set and behavior changes that a digital transformation requires. One change is to move away from traditional channels that support only one-way communication (company-wide emails, for example) and toward more interactive platforms (such as internal social media) that enable open dialogues across the organization. Another key to better communication is developing more concise—and even tailored—messages for people in the organization, rather than lengthier communications.

Stay current on your favorite topics

The contributors to the development and analysis of this survey include Hortense de la Boutetière , a partner in McKinsey’s Paris office, and Alberto Montagner and Angelika Reich , an associate partner and partner, respectively, in the Zurich office.

They wish to thank Cristy Chopra, Carolyn Dewar, Julie Goran, and Michael Krüsi for their contributions to this work.

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• DOI: 10.3390/su16166778
• Corpus ID: 271811583

Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis

• Asterios Stroumpoulis , Evangelia Kopanaki , Panos T. Chountalas
• Published in Sustainability 7 August 2024
• Environmental Science, Business, Computer Science

85 References

Forging pathways to circular economy excellence: integrating industry 4.0 with quality management, utilising digital twins to bolster the sustainability of logistics processes in industry 4.0, sustainable development and business strategies: an exploratory study of greek businesses, integrated lean-green practices and supply chain sustainability for manufacturing smes: a systematic literature review and research agenda, data science and big data analytics: a systematic review of methodologies used in the supply chain and logistics research, the changing landscape of digital transformation in supply chains: impacts of industry 4.0 in vietnam, the significance of warehouse management in supply chain: an ism approach, sustainable supply chain management, performance measurement, and management: a review, the role of technology adoption in sustainable development: overview, opportunities, challenges, and future research agendas, factors affecting organisations' supply chain agility and competitive capability, related papers.

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Enhancing sustainable supply chain management through digital transformation: a comparative case study analysis.

1. Introduction

2. theoretical background, 2.1. sustainable development and supply chain management, 2.2. digital transformation.

• Data collection and monitoring [ 40 ].
• Supplier assessment and compliance [ 41 ].
• Inventory and demand management [ 42 ].
• Transport optimization [ 43 ].
• Waste reduction [ 44 ].
• Carbon footprint monitoring [ 45 ].
• Product traceability [ 15 ].
• Stakeholder communication [ 15 ].
• Decision-making [ 46 ].
• Continuous improvement and adaptation [ 47 ].

2.3. Supply Chain Management Resources and Capabilities

2.4. business performance, sustainable impact, and business excellence.

• Enhanced reputation and image [ 52 ].
• Strategic supplier relationships [ 53 ].
• Improved efficiency [ 54 ].
• Optimized inventory management [ 55 ].
• Data-driven decision-making [ 56 ].

2.5. Sustainable Strategies

• The sustainable technology development strategy, which aims to develop IT capabilities that can contribute to sustainable development through innovation.
• The networking strategy, which aims to develop collaborative skills within the company and between all stakeholders.
• The sustainability strategy, which includes investments in feasibility-related technologies and aims to provide financial incentives for employees to propose and implement innovative ideas.
• The sustainable product marketing and promotion strategy, which aims to develop marketing and promote the benefits of sustainable products to customers in order to increase demand for products and services.
• The research and development strategy, which aims to develop research units within the company in order to improve products and processes.
• The sustainable skills and competencies development strategy, which aims to create an enabling environment for employees to develop green and sustainable skills.

2.6. Conceptual Framework

3. research method, 3.1. research design, 3.2. case selection, 3.3. data collection procedures, 3.4. data coding and analysis, 4. case studies’ description and findings, 4.1. case study—3pl company, 4.1.1. resources and capabilities.

• Efficient warehouse management through the “Mantis WMS”, which enabled the company to automate and effectively manage its processes, achieving accuracy and speed in the storage and preparation of orders.
• Automation, quick product identification, and information management through the use of “barcode” labels on each product and pallet and connection to wireless terminals, allowing operators to quickly access and alter information.
• Employee development through investment in staff training.

4.1.2. Sustainable Impact

4.1.3. business performance, excellence and sustainable strategies, 4.2. case study—retailer, 4.2.1. resources and capabilities.

• Driver information.
• Location at all times.
• Temperature in storage areas for the better and safer transport and monitoring of products.

4.2.2. Sustainable Impact

4.2.3. business performance, excellence and sustainable strategies, 4.3. case study—producer, 4.3.1. resources.

• Financial Supply Chain Management (FSCM);
• Logistics Execution (LE).

4.3.2. Capabilities and Sustainable Impact

• Commitment to sustainability.
• Resilience in financial performance.
• Social contribution and community support.
• Digital transformation.
• Ethics and compliance training.
• Effective management of distribution centers.

4.3.3. Sustainable Strategies

• Research and development.
• Networking.
• Marketing and promotion.

5. Results and Discussion

• Increasing productivity.
• Reducing operating costs.
• Efficient management of supply chain processes.
• Automation.
• Knowledge transfer and training.
• Customer satisfaction and loyalty.

5.1. Theoretical Implications

5.2. managerial implications, 6. conclusions, author contributions, institutional review board statement, informed consent statement, data availability statement, conflicts of interest.

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Stroumpoulis, A.; Kopanaki, E.; Chountalas, P.T. Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis. Sustainability 2024 , 16 , 6778. https://doi.org/10.3390/su16166778

Stroumpoulis A, Kopanaki E, Chountalas PT. Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis. Sustainability . 2024; 16(16):6778. https://doi.org/10.3390/su16166778

Stroumpoulis, Asterios, Evangelia Kopanaki, and Panos T. Chountalas. 2024. "Enhancing Sustainable Supply Chain Management through Digital Transformation: A Comparative Case Study Analysis" Sustainability 16, no. 16: 6778. https://doi.org/10.3390/su16166778

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Home > Conferences > ICIS > ICIS 2023 Proceedings > Practitioner-Oriented Research > 5

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Becoming a Data-Driven Organization: A Comparative Case Study on Digital Transformation Strategies

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Hannes Fischer , TU Dresden Follow

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In today’s data-centric era, organizations increasingly aim to operate more data-driven and therefore engage in digital transformations toward becoming a data-driven organization (DDO). To govern such transformations, top managers develop digital transformation strategies (DTS) characterized by different organizational ambidexterity approaches. This study analyzes how such DTS influence the process and (intermediate) outcomes of organizations’ digital transformations toward becoming a DDO by studying two organizations undertaking such DDO transformations using the concept of organizational ambidexterity as a theoretical lens. On this empirical basis, we find that DTS characterized by different organizational ambidexterity approaches lead to different transformation processes and (intermediate) outcomes. Thereby, this study contributes to existing academic literature in the field of DDOs and DTS, as such transformation journeys toward becoming a DDO have not been studied in its entirety yet. Furthermore, our paper offers practical guidance for top managers to develop and implement a DTS suitable for their organization.

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Fischer, Hannes, "Becoming a Data-Driven Organization: A Comparative Case Study on Digital Transformation Strategies" (2023). ICIS 2023 Proceedings . 5. https://aisel.aisnet.org/icis2023/practitioner/practitioner/5

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