Unleashing Digital Agility: A Review of Literature on Agile Responses to Digital Challenges

Introduction

In today's digital era, organizations are facing unprecedented challenges due to the rapid pace of technological advancements. The emergence of digital technologies has disrupted traditional business models, forcing companies to adopt agile responses to remain competitive. Digital agility, the ability to quickly adapt to digital disruptions and opportunities, has become a crucial factor in organizational success. Therefore, it is essential to understand how organizations can unleash digital agility to respond effectively to digital challenges. According to a recent survey by McKinsey¹, 92% of companies consider digital transformation as their top priority, yet only 16% have fully implemented digital strategies to cope with this changing business landscape. This highlights the need for organizations to develop agile responses to digital challenges. However, there is a lack of understanding of how to unleash digital agility effectively, as not more than 30% of organizations have succeeded in achieving measurable benefits from such changes. Simultaneously, the existing academic literature on this topic is fragmented and unbridled across different domains.

While there has been extensive academic research on the topic of digital agility (Salmela et al., 2022) and to position it in the current era, there have been limited attempts to bridge the fragmented knowledge development while building on its origins of strategic organizational capabilities. This study responds to recent calls in the Information System literature to advance this knowledge on digital agility (Tallon et al., 2019); a topic that has increasingly more attention from executives for the ability to maintain customer satisfaction, employee engagement, and operational effectiveness in a turbulent environment (Kappelman et al., 2021). Previous research described agility as an organization’s ability to sense or anticipate changes in the internal and external environment, and the ability to respond effectively and efficiently in a timely and cost-effective manner (Lu & Ramamurthy, 2011; Seo & La Paz, 2008; Tallon & Pinsonneault, 2011; Teece et al., 2016). As Birkinshaw et al. (2016) emphasized, success in a business environment challenged by digital turbulence requires the right set of dynamic capabilities, the ability to grab opportunities before rivals do, and the proactive ability to transform the business. In this context, digital turbulence is the result of greater uncertainty and transformative business models based on emerging technologies and platforms that provide new functionalities (Day & Schoemaker, 2019; Schoemaker & Day, 2021). The development of digital technology, artificial intelligence, and other front-line technologies have fundamentally changed how organizations function and compete to sustain a competitive advantage and respond to client needs faster and more effectively than before. In a rapidly evolving business environment, organizations need to improve constantly, be more flexible, adapt, and correct, when needed to ensure customer satisfaction. With planned and pertinent strategic adoption of digital technologies, organizations can speed up their response to market changes and lead to greater productivity, resulting in higher performance and remaining ahead of the competition (Chan et al., 2019).