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Holistic Digitalization: Strategy, Transformation, and Implementation

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In the new global digital economy, a holistic view of digitalization has become central for all non-profit and for-profit institutions. Recent developments in digital initiatives have heightened the need to investigate holistic digitalization. This paper aims to develop a holistic view to digitalization consisting of several fundamental levels for strategically oriented digitalization. These include digital strategy, digital transformation of business models, and digital implementation. Each level consists of an approach including a procedure model and main content. Combined with our previous work, we applied semi-structured interviews to develop an initial, grounded theory for a holistic view to digitalization. The paper offers a relevant concept and outlines an appropriate research methodology to advance this research field. This closes an existing research gap regarding the holistic view to digitalization.
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Holistic Digitalization: Strategy, Transformation, and
Implementation
Daniel Schallmo*
Hochschule Neu-Ulm, Wileystraße 1, 89231 Neu-Ulm, Germany.
E-mail: daniel.schallmo@hnu.de
Christopher A. Williams
Johannes Kepler University, Altenbergerstraße 69, 4040 Linz, Austria.
E-mail: chrs.a.williams@gmail.com
* Corresponding author
Abstract: In the new global digital economy, a holistic view of digitalization
has become central for all non-profit and for-profit institutions. Recent
developments in digital initiatives have heightened the need to investigate
holistic digitalization. This paper aims to develop a holistic view to
digitalization consisting of several fundamental levels for strategically oriented
digitalization. These include digital strategy, digital transformation of business
models, and digital implementation. Each level consists of an approach
including a procedure model and main content. Combined with our previous
work, we applied semi-structured interviews to develop an initial, grounded
theory for a holistic view to digitalization. The paper offers a relevant concept
and outlines an appropriate research methodology to advance this research
field. This closes an existing research gap regarding the holistic view to
digitalization.
Keywords: Holistic Digitalization, Digital Strategy, Digital Transformation,
Digital Implementation.
1 Introduction
In the new global digital economy, a holistic view of digitalization has become central for
all non-profit and for-profit institutions (Tidd, 2019; Schallmo & Tidd, 2021). Recent
developments in digital initiatives (Niemand et al., 2020) have heightened the need to
investigate holistic digitalization. The terms ‘digital transformation’ and ‘strategy-
oriented digitalization’ contain several overlapping features. However, it has been argued
that certain digitalization-level initiatives (e.g., digital process model) may also exhibit
strategy-oriented perspectives (Caputo et al., 2021). In addition, as with the term
Industry 4.0, companies might consider the idea of digital transformation to be too
abstract. A holistic view of digitalization research provides various concrete possibilities
for companies striving for concrete best practices that can be applied in real-life business
environments. Digitalization initiatives, especially in digital maturity, strategy,
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transformation, and implementation, provide a path for companies’ optimization and
development. Ultimately, holistic digitalization opens new networking possibilities and
enables cooperation among different actors, who, for example, exchange data and
subsequently initiate processes (Nikmehr et al., 2021). The key questions are what the
digital drivers (Weill & Woerner, 2015) towards holistic digitalization are and how these
drivers differ among countries, industries, and company sizes.
We posit that some of the key drivers towards holistic digitalization are digital strategy,
digital transformation of business models, and digital implementation. The development
of a digital strategy is just as integral to a company’s activities as the digital
transformation of business models. Although many companies have recognized the need
for a digital strategy (Bharadwaj et al., 2013; Peppard & Ward, 2016), developing that
strategy in a structured way and integrating individual digitization efforts into a strategic
concept still presents challenges (Butschan et al., 2019; Dutta & Sarma, 2020).
The digital transformation of business models concerns individual business model
elements, but questions remain on how digitally transforming one element of a business
model affects the other elements (Latilla et al., 2020; Schallmo et al., 2017). The key
questions are how digital strategies can be developed in a more structured manner and
what the effects are on a revised digital business model.
Digital implementation involves enacting a digital strategy and supports the digital
transformation of one or several business models of companies (Schallmo et al., 2019).
Due to the complex nature of empirically investigating digital implementation, future
research should use a mixed method or qualitative approach to properly investigate the
phenomena of implementing digital initiatives (Ivančić et al., 2019). The following areas
are relevant to digital implementation: organisation, technical implementation, skills, and
culture. The key question is how digital implementation and its essential areas can be
evaluated empirically using a mixed methods approach.
2 Theoretical Background
As previously argued and based on existing research, we consider the following three
essential aspects in the context of digitization: digital strategy, digital transformation of
business models, and digital implementation. These aspects are explained in the
following sections.
2.1 Digital Strategy
Based on our existing research, we propose the following insight on digital strategy
(Schallmo et al., 2018; Schallmo et al., 2019a; Schallmo et al., 2019b).
The development of a strategy involves two essential processes:
1. Strategy formulation
2. Strategy implementation
The formulation of a long-term strategy requires a company to assess its resources and
capabilities to determine its competitive advantage. The resource-based view (RBV) and
dynamic capabilities (DC) are widely cited as key concepts of strategy formulation,
particularly when investigating a company’s resources and potential competitive
advantage. According to Tywoniak (2007), RBV provides a fresh understanding of a
company’s competitive advantage by relying on both internal and external analyses
(Collis, 1991). Peteraf (1993) defined RBV as a model of how firms compete, which is
unique to the field of strategic management. The importance of RBV for formulating a
strategy lies in its focus on optimizing the use of resources and capabilities to create a
competitive advantage (Wang & Ahmed, 2007). RBV provides a framework for
measuring the value of resources based on how much they are valuable, rare, inimitable,
and non-substitutable (V.R.I.N).
While some scholars praise RBV for offering a theory for creating both unique value
(Peteraf & Barney, 2003) and competitive advantages (Barney, 1991), others have
criticized RBV for being too static (Eisenhardt & Martin, 2000). One example of the
static nature of RBV is its inability to explain how the competitive advantage changes in
a dynamic environment (Teece et al., 1997). DC can be considered an answer to the static
nature of RBV by connecting the capabilities to the dynamic nature of the market (Wang
& Ahmed, 2007).
DC has been considered a clear extension of RBV (Barney, 2001; Helfat & Peteraf, 2003;
Ahmad et al., 2018). Although differences of opinion remain, there appears to be some
agreement that Teeces (2012, p. 1395) definition of DC as higher-level competences
that determine the firm’s ability to integrate, build, and reconfigure internal and external
resources/competences to address, and possibly shape, rapidly changing business
environments embodies the essence of the concept. Based on past studies, there is clear
evidence that DC more effectively measures a company’s competitive advantage in
dynamic business environments (Lin & Wu, 2014). Although extensive research has been
carried out on both RBV and DC, no single study offers a generic framework for
formulating a (digital) strategy. Lin and Wu (2014) suggested the complexity of
combining RBV and DC (Danneels, 2011) when making strategic decisions as one
explanation for this gap.
The past twenty years have seen increasingly rapid advances in the field of strategic
management, particularly when researchers consider the heightened need for competitive
advantages in digital environments. Koch and Windsperger (2017) offer a network
perspective for understanding firms’ resources and how these resources create
competitive advantages in a volatile digital environment. The authors first argued that DC
may provide a competitive advantage only compared to RBV in specific circumstances,
but DC can also simply constitute best practices, which can be substituted as needed
(Eisenhardt & Martin, 2000). Secondly, the authors claim that the rise of digitization
challenges the traditional approaches to strategic formulation (i.e., competitive
advantage). Thus, they say, from a network-centric perspective, it can be concluded
that firms’ resources and capabilities extend beyond firm boundaries and [are] embedded
in a set of relationships between firms (Eisenhardt & Martin, 2000, p.7).
Digital strategy is a term frequently used in the literature, but there is no consensus to
date about a commonly accepted definition. When reflecting on the definition of digital
strategy, the terms should be considered individually (for definitions of digital, see
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Albayrak & Gadatsch, 2017; Heuermann et al., 2018; Hippmann, et al. 2018; i-SCOOP;
Schawel & Billing, 2018; Wolf & Strohschen, 2018; also: digitization) (for definitions of
strategy, see Andrews, 1980; Ansoff, 1965; Chandler, 1962; Drucker, 1954; Henderson,
1989; Hungenberg, 2014; Johnson et al., 2008; Mintzberg, 1979; Porter, 1996; Steiner &
Miner, 1977; Schallmo & Williams, 2018).
The terms digitalization strategy, digital business strategy, digitization strategy, and
digital transformation strategy are used often interchangeably (see Schallmo et al.,
2019a; Schallmo et al., 2019b).
There are several main focuses and classifications (definitions) of the digital strategy
within the existing definitions and additional publications. For example, Fraunhofer IAO
(2016) or Rauser (2016) consider digital strategy to be a part of the business strategy that
concentrates on digitization projects.
Based on the literature, we propose the following definition of digital strategy for our
research (Schallmo et al., 2019a; Schallmo et al., 2019b).:
A digital strategy is the strategic form of digitization intentions of companies.
The short- and mid-term objectives are to maintain or create new competitive
advantages. Within the digital strategy, digital technologies and methods are
applied to products, services, processes, and business models. To develop a
digital strategy, the company and its environment must be analysed as a basis
for several future scenarios. The digital strategy consists of a vision, mission,
strategic objectives, strategic success factors, values, and measures.
Within the framework of definitions and existing approaches, there are different
perspectives on the relationship between digital and corporate strategies (see Schallmo et
al., 2019a; Schallmo et al., 2019b).
2.2 Digital Transformation of Business Models
There is still no commonly accepted definition for the term digital transformation.
Moreover, the terms digitalization and the digital age are used often interchangeably
(BDI & Roland Berger, 2015). Based on our existing research, we propose the following
theoretical background for digital transformation (Schallmo, 2019; Schallmo & Williams,
2018; Schallmo et al., 2017). Selected definitions in the context of digital transformation
can be found in Schallmo (2019), Schallmo & Williams (2018), and Schallmo et al.
(2017).
Based on the proposed definitions, we define the digital transformation of business
models as follows (Schallmo, 2016; Schallmo, 2019; Schallmo & Williams, 2018;
Schallmo et al., 2017):
The digital transformation of business models relates to individual business
model elements, the entire business model, value-added chains, and the
networking of different actors in a value-added network. The degree of digital
transformation concerns the incremental (marginal) as well as the radical
(fundamental) change of a business model. The reference unit with regard to the
level of novelty is primarily to the customer, but it can also affect its own
business, partners, industry, and competitors. Within digital transformation of
business models, enabler(s)or, rather, technologies (e.g., big data)are used
to generate new applications or services (e.g., on-demand predictions). These
enablers require skills that enable data collection and exchange as well as
analysis and use them to calculate and evaluate options. The evaluated options
are used to initiate new processes within the business model. Digital
transformation of business models is based on an approach with a sequence of
tasks and decisions related to one another in a logical and temporal context. It
affects four target dimensions: time, finance, space, and quality.
2.3 Digital Implementation
In one of our previous works, we proposed insights on digital implementation (Schallmo
& Williams, 2020). As digital implementation has had a significant relationship with the
change of organizations, we considered Leavitt’s System Model, also known as Leavitt’s
diamond model (Leavitt, 1965). This is seen as an integrated model for organizational
change management. According to Leavitt, with a change in any component of a system
(=organization), the impact on other components should be evaluated, and the proper
balance should be found.
The four main components of an organization are as follows:
Structure: grouping of individuals and teams in and organizationhierarchical
structure, relationships, communication patterns, and coordination
Technology: tools applied to fulfil tasks
People: skills, attitudes, and behaviours in the workforce
Tasks: fulfilled by individuals and teams
3 Research Objective, Research Questions, and Methods
3.1 Research Objective and Research Questions
Several existing approaches have advanced our knowledge of digitalization. However,
they do not address digitalization from a holistic, strategy-oriented perspective. Based on
the problem described and our current understanding, we aim to develop a holistic view
of digitalization. This research will answer the following research questions:
What are fundamental strategy-oriented levels relevant to structure digitalization in a
holistic way?
What does an approach to the development of a digital strategy look like, and what
do generic options for digital strategies look like?
What does an approach to the digital transformation of business models look like,
and which enablers (e.g., sensors, big data) and applications are relevant?
What does an approach for digital implementation look like, and what are the most
important dimensions?
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3.2 Methods
3.2.1 Research Design
It is well established that theories can be built based on the grounded theory approach
(Glaser & Strauss, 1967; Martin & Turner, 1986; Glaser, 1992; Baskerville & Wood-
Harper, 1998; Kromrey, 2009). The foundation is laid by data collection and analysis.
The theory is built through iterative data collection and analysis to integrate practical
rather than abstract experience (Kromrey, 2009).
Based on our research objective and the research questions, we included our previous
work on digital strategy, digital transformation of business models, and digital
implementation (e.g., Schallmo et al., 2019a; Schallmo et al., 2017; Schallmo &
Williams, 2020; Schallmo et al., 2019b; Schallmo et al., 2018; Schallmo & Williams,
2017).
Figure 1 Research Design
Due to the complexity of investigating digitalization, it is recommended that researchers
and practitioners use a mixed-methods approach (i.e., qualitative and quantitative).
Qualitative methods like semi-structured interviews are considered an appropriate
research method to develop approaches. Therefore, data collection followed a qualitative
research approach using semi-structured interviews (Schmidt, 2004).
Combined with our previous work, we applied semi-structured interviews to develop an
initial grounded theory (i.e., conceptual model) for holistic digitalization. Our research
design is shown in Figure 1.
3.2.2 Data Collection
To gain insights from experts on digitalization, we developed a schedule for semi-
structured interviews. The interview schedule was tested previously and includes the
following three blocks of questions (also see Appendix 1 for more details):
Current status in the context of digitization (implementation, structure, initiatives,
and experiences)
Current status in the context of digital maturity (implementation, structure,
initiatives, and experiences)
Model for the measurement of digital maturity with levels of strategy-oriented
digitalization, procedure to measure and improve digital maturity, and in-depth
analysis (assessment, practicability, missing elements, superfluous elements)
We interviewed six experts on digitalization from Germany from 30 April to 10 May
2021. The semi-structured interviews conducted are shown in Table 1.
Table 1 Experts Interviewed
Position
Company/Institution
Date
Expert 1 &
Expert 2
Digital Transformation
Manager
Manufacturing company
for packaging machines
30 April 2021
Expert 3
Project Manager and Lead
Autonomous Mobility
Company for engineering
services and software
development
30 April 2021
Expert 4
Partner und Director Digital
Solutions
Consulting company for
transformation and
digitization of business
models, products, and
processes
30 April 2021
Expert 5
Executive Vice President
Industry
Company for consulting
and IT services
30 April 2021
Expert 6
Managing Director
Company for IT services
10 May 2021
Within our data analysis, we focus on the results regarding the fundamental levels for
digitalization. Experts 1 and 2 were interviewed together since they both belong to the
same company.
3.3.3 Quality Criteria
To ensure a high level of validity of the results (Denzin, 1970), we applied triangulation
in several ways by gaining data from several sources. First, we conducted an extensive
literature review and combined existing approaches to digitalization to utilize advantages
and insight from existing knowledge (Denzin, 1970). Second, we applied six semi-
structured interviews to gain insights from experts on digitalization.
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The reliability of our approach was ensured by transcribing the results of the semi-
structured interviews in a report with memos. The information thus gained formed an
empirical data pattern and, combined with the previous work, forms the basis for a
holistic approach to digitalization. Objectivity was ensured by pretesting with researchers
including existing approaches and the interview schedule. In addition, we applied
subsequent data analysis. The generalizability of our approach is a challenge requiring
adaptation of the approach to the needs of each company.
4 Findings on the fundamental levels of strategy-oriented digitalization
Based on the interviews and transcripts (see Appendix 2), we deliver the following
excerpts for the levels of strategy-oriented digitalization:
‘…[T]he three levels are very important and very sensible….’ (E1)
‘…[W]ith the implementation that one then must make very concrete, it is of course
also important that it is not only at a high levelsome terms that people somehow
throw at one anotherbut that one really gets into doing something really
concrete....’ (E1)
‘...[T]echnology, digital products, what we havethis is an extra pillar with the
business models. That would be at the lowest level, but I think that is also a good
way to put that into this second level, because it is a more strategic issue than the
other areas.’ (E1)
‘…[I]f it [digital strategy] is at the beginning and you can build on it, [it] can drive
the digital transformation….’ (E2)
‘…[E]very company should have a digitalization strategy. That is why this is only
conclusive….(E3)
‘…[O]f course, I must adapt in certain areas and with my business models and then
with the four areas [technology, organization, skills, culture]….’ (E3)
‘…[W]hat I am missing here [digital strategy] is differentiation. So, what we had: the
digitization of the business model. So, we differentiate between two areas. On one
hand, I have digitization of my business model, i.e., digitization of my range of
services, my products et cetera. And on the other hand, the digitization of my service
delivery....’ (E4)
‘…I see the topic of culture as a superior.... How do I empower my organization,
how do I communicate, take everyone with me? And for me, this is more of a
framework on which the whole thing takes place….’ (E4)
‘…[T]here are no superfluous issues here [in the model]….’ (E4)
‘…[O]n one hand, of course, via the complete supply chain, this is part of my service
delivery, but of course [it] also [affects] my customers. How do the processes work
for my customers? How can I optimize this? That is also part of it….’ (E4)
‘…[S]o, we have structured this in this way in our company as well as with our
customers….’(E5)
‘…[F]or us, I'm saying the aspect, the business model and the bottom of the digital
implementation, I don't experience it so much as separating these two levels. But we
tend to go and look down. Culture rather from the point of view of organization….
(E5)
‘…[B]ut these are the elements [on the level of implementation] of technology,
organization, people, and business with the fields of business administration,
psychology, sociology, IT, and computer science.’ (E5)
‘…[R]ather look at the relationship, e.g., between organization and business
management, according to the mottodo we have to change the organization a little
bit and be better positioned in terms of business?’ (E5)
‘…[N]o, [the model] fits, so if you flatten it a bit, then it fits our view.’ (E5)
‘…[S]o, I'm missing the whole topic of measuring the digital strategy. So, the one
thing is to bring and implement and plan initiatives. But this whole topic of
measurementmeasurement of progress and of the digital maturity degreethis [is]
continuous…’ (E6)
‘…[O]therwise, it is logically structured and clear and unambiguous for me….’ (E6)
Based on the levels of strategy-oriented digitalization described and the interview
excerpts, the following conclusions are relevant to further develop the model:
The three levels in general should be kept but must be adaptable to specific company
needs.
Technology is already included in the business model and in the roadmap for digital
transformation but should be pointed out more clearly.
The differentiation between digitization of products and services and service delivery
(external and internal digitization) is included in the business model and roadmap for
digital transformation but should be pointed out more clearly.
Culture and communication should be included from the beginning and on all three
levels.
The mutual influence of the four areas (technology, organisation, skills, and culture)
is include on the implementation level but should be pointed out more clearly.
The measurement of progress at each level is included in the procedure but should be
pointed out more clearly.
5 Holistic View to Digitalization
Strategy-oriented digitalization can be structured into the following three fundamental
levels: the digital strategy, digital transformation of business models, and digital
implementation influenced by the macro- and micro-environment (Schallmo et al.,
2019a). This enables companies to gain a holistic view of digitalization. The three
fundamental levels of strategy-oriented digitalization are shown in Figure 2.
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Figure 2 Classification in the context of digitalization (Schallmo et al., 2019a)
5.1 Digital Strategy
5.1.1 Approach for the Development of a Digital Strategy
Based on our research, including the description and comparison of eight approaches,
interviews with six researchers and seven practitioners (consultants), interviews with ten
practitioners (company representatives), and the description and comparison of case
studies, we are now able to present an integrated approach for the development of a
digital strategy (Schallmo et al., 2018; Schallmo et al., 2019a; Schallmo et al., 2019b).
This integrated approach is based on a procedure model with six phases, as shown in
Figure 3.
Figure 3 Procedure model for digital strategy development
These six phases of the procedure model are explained in the following sections; the
strategic options (phase 5) are explained in more detail.
External Strategic Analysis
This phase involves analysis of influencing factors from the macro- and micro-
environment (Kraewing, 2017; Greiner et al., 2017; Rauser, 2016; Peppard & Ward,
2016). The analysis of the macro-environment (PESTEL) focuses on technologies and
technology trends, and the analysis of the micro-environment (5 Forces) focuses on
customers and competitors. Within the framework of the analysis, a fundamental
understanding of existing influencing factors is gained, which serves to develop scenarios
in a digital context.
Scenario Development
The objective of this phase is to develop future scenarios. The factors influencing the
macro- and micro-environment will be selected regarding their future relevance in the
digital context and supplemented. A typical observational horizon is ten years. After that,
a forecast (e.g., ten years) is made for the development of the influencing factors, and
they are subsequently prioritized. Based on these influencing factors, coherent scenarios
are developed that include aspects of the macro- and micro-environment (Kraewing,
2017; Cordon et al., 2016b; Hille et al., 2016).
Internal Strategic Analysis
The objective of this phase is to analyze the company and its different divisions in the
digital context (Kraewing, 2017; Greiner et al., 2017; Rauser, 2016; Hille et al., 2016). In
addition, the digital maturity level of the company is surveyed. This enables the company
to discover potential for the digital strategy.
Digital Strategy Statement
The objective of this phase is to identify current and future fields of action with focus on
digital initiatives based on the previous phases. The objective is also to develop a digital
strategy statement for the company (Kraewing, 2017; Greiner et al., 2017; Rauser, 2016;
Petry, 2016).
Strategy Options
The objective of this phase is to derive strategic options, evaluate them, and select a
strategic option (Kraewing, 2017; Cordon et al., 2016b; Hille et al., 2016). Generic digital
strategies are utilized, and the results of the previous phases can be used in this phase
(e.g., digital strategy statement).
Digital Strategy Formulation
The aim of this phase is to formulate a digital strategy based on the strategic option
selected (Kraewing, 2017; Rauser, 2016; Peppard & Ward, 2016; Petry, 2016; Cordon et
al., 2016b). Projects and measures are defined and compared to the corporate strategy and
the mission statement. In combination with the mission statement developed, the projects
and measures represent the digital strategy.
The digital strategy is the starting point for digitally transforming existing business
models or developing new digital business models. The process model seeks to develop a
digital strategy in a structured way. In addition to applying the entire process model, it is
also possible to adapt the process model to company-specific requirements. For example,
individual phases and activities can be combined or skipped.
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5.1.2 Generic Options for a Digital Strategy
Generic digital strategies are also used within the integrative approach. These generic
digital strategies are based on the following two dimensions:
Deliverables: What is the focus regarding deliverables? What services are provided?
Is the focus on material services (e.g., products/components) or intangible services
(e.g., services/information)?
Roles: What is the focus regarding the role? What is the primary role? Is the focus on
the creation of services or on the building/operation of a platform?
The two dimensions can be combined, resulting in a matrix with four generic digital
strategies, which are shown in Figure 4: Product Provider, Service Provider, Product
Platform Operator, Service Platform Operator.
Figure 4 Matrix with four generic options for a digital strategy
Product Provider
The focus here is on the provision of material services, such as products and components.
These material services are then offered either directly or on a platform or by a platform
operator. Examples of this are manufacturers of notebooks and suppliers of automotive
parts.
Service Provider
This generic digital strategy primarily provides intangibles such as services and
information. These are then offered either directly or on a platform or by a platform
operator, analogous to the product provider. Examples of this are insurance companies
and logistics service providers.
Product Platform Operator
In this generic digital strategy, the focus is on building and operating a product platform.
In this scenario, proprietary/third-party material services are offered individually or as a
bundle on a platform. Examples include online retailers of electronic goods or shoes.
Service Platform Operator
The service platform operators generic digital strategy focuses primarily on building and
operating a service platform. In this scenario, proprietary/third-party intangible services
are offered individually or as a bundle on a platform. Examples of this are a comparison
platform for electricity and a platform for the brokerage of overnight stays.
The four generic digital strategies offer different entry points and development
opportunities depending on the initial situation and objectives. This means that a
company might be a product provider at the moment but would like to develop into a
future service platform provider. The matrix for generic digital strategies also supports a
classification of competitors and their digital strategy.
5.2 Digital Transformation of Business Models
5.2.1 Approach for the Digital Transformation of Business Models
Based on existing approaches to digital transformation, existing theories about business
model innovation (see: Rusnjak, 2014; Schallmo, 2013; Schallmo, 2014; Thomas, 2014)
and our previous research (Schallmo, 2019; Schallmo & Williams, 2018; Schallmo et al.,
2017), we present an approach for the digital transformation of business models shown in
Figure 5. The approach consists of various phases.
Figure 5 Procedure Model for Digital Transformation of Business Models (Schallmo,
2016, p. 23)
These six phases of the procedure model are explained in the following sections; within
phase 3 (digital potential), we focus on the detailed description of digital enablers.
Digital Reality
In this phase, the company’s existing business model is sketched along with a value-
added analysis related to stakeholders and a survey of customer requirements. This
provides an understanding of the digital reality for this company in different areas.
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Digital Ambition
Based on the digital reality, objectives with regard to digital transformation are
defined. These objectives relate to time, finances, space, and quality. Digital ambition
postulates which objectives should be considered for the business model and its elements.
Subsequently, objectives and business model dimensions are prioritized.
Digital Potential
Within this digital potential phase, best practices and enablers for the digital
transformation are collected. This serves as a starting point in terms of digital potential
and the design of a future digital business model. For this purpose, different options are
derived for each business model element and logically combined.
Digital Fit
The digital fit phase looks at options for the design of the digital business model, which
are evaluated to determine digital fit with the existing business model. This ensures that
one fulfils customer requirements and that business objectives are achieved. The
evaluated combinations are then prioritized.
Digital Implementation
Digital implementation includes finalization and implementation of the digital business
model. The various combination options are further pursed within a digital
implementation framework. The digital implementation also includes the design of a
digital customer experience and the digital value-creation network that describes
integration with partners. In addition, resources and capabilities are also identified in this
phase.
5.2.2 Enablers for Digital Transformation
Enablers allow applications or services to be used for the digital transformation of the
business model. Four categories for enablers and applications/services are explained
below:
Digital data: The collection, processing, and analysis of digitized data to facilitate
and improve predictions and decisions
Automation: The combination of classical artificial intelligence technologies that
enables autonomous work and self-organizing systems. This reduces error rates,
increases speed, and makes it possible to reduce operating costs.
Digital customer access: The mobile Internet enables direct access to the clients,
who, in turn, are provided with high transparency levels and new services.
Networking: Mobile or wired networking of the entire value-added chain of high-
broadband telecommunications allows the synchronization of supply chains, which
leads to a reduction of production times and innovation cycles.
Enablers are listed with their applications/services in a digital radar, which is shown in
Figure 6.
Figure 6 Digital radar with enablers and applications (Bouée & Schaible, 2015)
5.3 Digital Implementation
Based on our research, including the review of existing approaches, we now present an
integrated approach to digital implementation (Schallmo & Williams, 2020).
5.3.1 Approach for Digital Implementation
The integrated approach for digital implementation is also based on a procedure model
with five phases. These phases are iterative and are shown in Figure 7.
Figure 7 Procedure Model for the Digital Implementation
The five phases of the procedure model are explained in the following section. We also
explain the dimensions and their influence relevant in phase 4 (execute digital agenda).
Derive Digital Initiatives
Within this phase, digital initiatives are derived, mainly based on the following sources.
The first is the company’s analysis (Rauser, 2016; Hille et al., 2016; Kraewing, 2017;
Greiner et al., 2017) across the relevant areas (e.g., organization, processes, IT,
infrastructure, systems, technologies, capabilities, and existing initiatives) and digital
maturity analysis. Ideally, these analyses are conducted in the context of digital strategy
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development and the defined digital strategy with projects and measures (Rauser, 2016;
Peppard & Ward, 2016; Petry, 2016; Cordon et al., 2016a; Kraewing, 2017). The second
is the digitally transformed business model, which is based on best practices, digital
transformation enablers, the digital value network, and digital customer experiences. The
derived digital initiatives are assigned to the categories of the TOSC-Model with
technology, organization, skills, and culture (Schallmo et al., 2019a).
Prioritize Digital Initiatives
The derived and categorized digital initiatives are then evaluated in terms of their impact,
time, cost, and so on. They are also included in an influential matrix to measure their
mutual influence. The result is an active and passive sum of each digital initiative
revealing its influence on (active sum) and by other initiatives (passive sum) (Vester &
Hesler, 1980). Then, they are included into a digital initiative matrix with four categories:
1. Slow digital initiatives
2. Active digital initiatives with a prime influence
3. Passive digital initiatives, being highly influenced
4. Critical digital initiatives, making it possible to prioritize the derived digital
initiatives and to focus on the most important and immediate
Setup Digital Agenda
The prioritized digital initiatives are included in a visual tool, the digital agenda. The
digital initiatives are accompanied by two important propositions: change and
communication management (esp. internal communication), which includes the purpose
definition applying the why, how, what principle (Sinek, 2009; Cameron et al., 2014).
In addition, the digital initiatives are described in detail, including responsibilities,
timeframes, key performance indicators, objectives, resources, actions, and a budget.
Execute Digital Agenda
Within this phase, the digital agenda is executed. This means that all the digital initiatives
are implemented properly, applying agile methods (e.g., scrum, lean). The
implementation of digital initiatives is checked and adjusted if necessary. In addition, the
influence on customer experiences, operational excellence, and digital excellence is
measured, and the defined digital strategy and digitally transformed business model
should be considered regarding the measurement of the influence.
Check Digital Results
The last phase is to check the digital results within the three main categories of customer
experience, digital excellence, and operational excellence. Thus, the previously defined
objectives of the phase 3 setup digital agenda are relevant. The deviation is identified,
and the actions, objectives, and so on are adjusted. The checked/reviewed digital results
are executed permanently while still allowing for adjustments throughout the process.
5.3.2 Dimensions for Digital Implementations
The most relevant dimensions of the digital implementation are represented in the TOSC-
Model (Schallmo et al., 2019a):
Technology: e.g., use of sensors, creation of databases, networking of components
Organization: e.g., definition of structures and responsibilities, establishment of
departments, definition of processes
Skills: e.g., IT know-how (hardware, software application/development, etc.), use of
collaboration tools, development of leadership and collaboration skills, acquisition of
methods
Culture: e.g., cultural anchoring in the company, sensitization of employees,
communication within the company
These dimensions interact, are interdependent, and, therefore, influence each other. They
support the achievement of the digital strategies goals and contribute to the operational
excellence, customer experience, and digital excellence, as shown in Figure 8.
Figure 8 TOSC-Model and Influence
5.4 Combination of Approaches
Figure 9 combines the three approaches and procedure models for digital strategy, digital
transformation of business models, and digital implementation. Every procedure model is
iterative and can be applied separately depending on what digital maturity exists at each
level. This is applicable if the effort should be reduced.
The three procedure models can also be combined and interdependent. In this case, the
procedure models are not exclusive and can have some redundances in some places. For
example, the internal strategic analysis (digital strategy development) phase is
generating some output that can be applied in the digital reality (digital transformation
of business models) and derive digital initiatives (digital implementation) phases.
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Figure 9 Combination of Approaches
6 Summary
6.1 Contributions and Practical Implications
This research contributes a holistic view to digitalization. This view consists of several
fundamental levels for strategy-oriented digitalization. The fundamental levels include
digital strategy, digital transformation, and digital implementation. We also provide
procedure models for each fundamental level and additional insights (e.g. generic option
for digital strategy). This closes an existing research gap regarding digitalization.
Senior managers and business developers will gain from the findings by having a holistic
view of digitalization covering several levels. The holistic view enables companies to
take advantage of their digital potential. By developing each fundamental level further,
companies are able to optimize their current situation and create a distinct competitive
advantage. Specific requirements of companies should be covered by adjusting the view
presented.
6.2 Limitations and Recommendations for Further Research
This paper aimed to continue our existing research on digitalization and report our initial
findings on the applicability of our fundamental levels. We see the following limitations
to this paper. Readers must be aware that, due to theoretical constraints and the lack of
primary data sources, the presented results may not be generalizable. Furthermore, the
outlined principles and proposed research methodology require further investigation.
Further research on the holistic view would be worthwhile. Practitioners should be
included even more in further research as the holistic view could be tested intensively,
providing additional empirical data for comparison. It would be interesting to create an
overall accessible and anonymized database or a knowledge-building community to be
able to analyse which fundamental levels and procedure models are relevant and how
applicable they are. This database would allow researchers to gain insights from different
industries, regions, or countries; practitioners would access a reliable benchmarking tool
providing recommendations for further actions inside their companies.
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Appendix 1. Semi-structured interview schedule
Actual status in the context of the digitalization
Is digitization implemented in your company, and, if so, how (e.g., organizational
anchorage; responsibility)?
Is digitization structured in your company, and, if so, how (e.g., the different levels
that are looked at)?
Have you or your company begun or carried out initiatives and projects in the
context of digitization during the last two years, and, if so, which?
Which experiences have you had so far in the context of digitization?
Actual status in the context of digital maturity:
Is digital maturity implemented in your company, and, if so, how (e.g.,
organizational anchorage; responsibility)?
Is digital maturity measured in your company, and, if so, how (e.g., levels, degrees)?
Have you or your company begun or carried out initiatives and projects in the
context of digital maturity during the last two years, and, if so, which?
Which experiences have you had so far in the context of digital maturity?
Model for measuring digital maturity:
What is your assessment regarding the three levels of strategy-oriented digitalization
(digital strategy, digital transformation, and digital implementation)? Are these
practicable? What is missing? What is superfluous?
What is your assessment regarding the procedure to measure and improve digital
maturity (initial analysis of digital maturity, in-depth analysis, and derivation of
measurements)? Are these practicable? What is missing? What is superfluous?
What is your assessment regarding the in-depth analysis of digital maturity
(evaluation of digital maturity, potential of improvement, and relevance for the
company)? Are these practicable? What is missing? What is superfluous?
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... The needed far-reaching change should also involve the value chain process from research and development to services concerning the final use of products, by exploiting and customizing the digital potential at different degrees in every single step along the value chain with a holistic approach [5]. Concerning the call for holistic path in the digitalization era, there are reported attempts in the literature where it has been tried to outline relevant descriptors for the "holistic management" of the productivity [6], as well as attempts to design strategy-oriented digitalization which enable an holistic view [7]. Starting from this work, in order to support senior managers and developers, Schallmo et al. have proposed a meta-view of holistic digitalization obtained by combining different fundamental perspective, such as: digital strategy, digital transformation, digital maturity and digital implementations [8]. ...
... Combination of approaches in the meta-view of holistic digitalisation(Schallmo and Williams 2021b). ...
... Combination of approaches in the meta-view of holistic digitalisation(Schallmo and Williams 2021b). ...
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The purpose of this paper is to develop an integrated approach for a digital strategy including generic options. Our research is based on our previous contribution in which we analyzed and compared existing approaches on digital strategy. In addition, we applied 13 semi-structured interviews to gain insights from experts on digital strategy (researchers and consultants). We also applied the case study approach by conducting ten semi-structured interviews with company representatives. Our findings show that digital strategy is currently a significant topic across several industries but still in its infancy which is supported by the various insights gained. The paper offers an integrated approach to the development of a digital strategy which consists of six phases: strategic analysis external, strategic forecast, strategic analysis internal, strategic principle, strategic options, and strategy formulation. Within the integrated approach we also deliver four generic digital strategies: product provider, service provider, product platform operator, service platform operator. Moreover, the paper offers findings for further research.
Article
Full-text available
Due to its unique features and accessibility, the focus of implementing digital technology is no longer just to improve internal operations, but to expand internal dimensions, reach customers and external partners, affect services, integrate processes, disrupt markets, and fundamentally change industries. It is no surprise that the notion of digital transformation has garnered much research interest, especially from the practitioners’ point of view, but academic achievements are somehow lagging behind, possibly because frameworks for digital transformation are still evolving. In this article, we tried to address that gap by conducting holistic research of digital transformation in companies. We used a series of in-depth interviews to inform comprehensive case studies of three companies from different industries that are in different stages of digital transformation. We carefully investigated the companies’ experiences in the process of digital transformation, which are discussed here to provide valid theoretical framing. We conclude that, in addition to technology adoption, important factors for successful digital transformation are the ability of an organization to change and operational excellence in the integration of external digital services with internal IT support. In that light, we summarize our findings in a form of discovered (sub)dimensions that are the basis for the proposed digital transformation framing, while the narratives and case experiences provide with examples of best practice.
Book
What do vehicle manufacturers like Rosenbauer, logistics companies like DB Schenker, a compressor manufacturer such as Bauer, an elevator manufacturer such as ThyssenKrupp, and a hygiene goods manufacturer like Hagleitner all have in common? They all use the potential of digitization to offer smarter and faster services to customers and to actively shape the digital transformation of their business models. This book provides valuable insights with concise and established guidelines for the successful digital transformation of business models. Professionals in management, strategic planning, business development, as well as researchers and students from the fields of innovation/technology management, strategic management, and entrepreneurship would particularly benefit from this book.