Managing Digital Transformation : Challenges and Choices in Organizational Design and Decision-Making

Abstract

Interplays between organizations and technologies are crucial to companies’ sustainable success. Like two pivotal threads in a woven fabric, companies must tie and interlace both in their organizational design and decision-making (Zammuto et al. 2007). The research has looked into aspects of this interplay for several decades and has specifically acknowledged IT’s importance to foster competitive advantages (see e.g. Hickson et al. 1969; Mata et al. 1995). Companies now face the paradigm shift of digitalization, which offers extensive opportunities but also poses new challenges and threatens companies’ existence (Sebastian et al. 2017). Thus, our assumptions, practices, and underlying concepts of IT in organizations are changing drastically (Baskerville et al. 2020). Emerging digital technologies such as cloud computing, mobile computing, extended reality, artificial intelligence, and distributed ledger technology require and enable business model innovations (Nambisan et al. 2017). Thus, the paradigm shift of digitalization is forcing companies to reconsider common practices for organizational design and decision-making to remain viable in times of such environmental turbulence (Pavlou and El Sawy 2010; Sambamurthy and Zmud 2000). As an effort to cope with digitalization’s new requirements, companies often engage with digital transformation to reconfigure their deep structures, i.e. their prior choices on organizing and routines (Besson and Rowe 2012; Gersick 1991). However, digital transformation entails an entirely new organizational identity, requiring a profound understanding and appropriate responses to be successful (Wessel et al. 2020). In this thesis, I pursue the overarching research aim to elucidate the challenges and choices in organizational design and decision-making for companies engaging with digital transformation. Contributing to its overarching research aim, this thesis consists of six individual essays. These use digital transformation, organizational design, ambidexterity, and IT governance as their locus and primary theoretical lenses. Further, I structure the essays in three research fields, with corresponding research goals: First, I seek to conceptualize organizational change in the digital age. In this regard, Essay 1 identifies five perspectives on continuous change that foster a successful digital transformation and extend the literature’s prior focus on episodic change models. Essay 2 unveils the changes to organizations’ assumptions and practices in digital transformation as well as the distinct differences between organizing for IT and organizing for digital. Second, I seek to foster the understanding of ambidextrous IT organizations’ design as a common organizational response to digital transformation. Thus, in Essay 3, I identify relevant design options for agile IT setups and seven salient archetypes of organizational design. In Essay 4, I address the challenges and IT governance mechanisms in ambidextrous IT organizations and posit five managerial paradoxes. Third, I seek to provide guidance for organizational decision-making for the management of digital technologies. In Essay 5, I provide a process framework to successfully manage client-provider relationships in cloud computing. In Essay 6, I transfer a risk quantification approach from the automotive industry to technology platforms in the Internet of Things so as to derive implications for security governance. Considering each essay’s distinct questions and approaches, this cumulative thesis follows a multi-methodological research approach to study different facets of organizational design and decision-making (Goldkuhl 2012; Kaplan and Duchon 1988; Mingers 2001). In sum, with this thesis, I provide a thorough and multifaceted investigation of digital transformation. Further, I contribute to the research, reflecting the associated challenges and guiding organizations toward appropriate responses (Yoo et al. 2012). Thus, I add to the discourse in IS research and organizational studies to extend our thinking and theorizing about companies’ fabric of organization and technology. This stimulates further research to understand and successfully guide companies’ digital transformation.