Organizations Facing the Disruptive Change

Organizations Facing the Disruptive Change

DOI: 10.4018/978-1-5225-6270-2.ch005

Abstract

Organizations take the lead of any innovation process and thus they pave the way for further social changes. Small companies and start-ups are in the avant-garde of innovations, proposing disruptive solutions on the market. In the present chapter the author will analyze the role of organizations in the framework of new digitalization shift. The first part of the chapter will discuss organizational development from institutional point of view. Then there will be outlined the main understanding of organizational change, organizational change management in the framework of the system theory. Further there will be assessed the mechanisms and methodologies for measuring maturity assessment models and its impact on organizational capacity to adopt new technologies. Finally, there will be analyzed some of the key findings of digitalization processes including business model innovations and organizational transformation. In the end, a general analysis will be made about digitalization shifts, company transformation, and the role of the institutions in this process.
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Introduction

During the last few years, the terms as digitalization, digital disruption and digital transformation became part of the common business language (Dornberger Inglese, Korkut, & Zhong, 2018). Digital technologies provided a new battlefield for organizations, expanding their capacity to reach the global scale operations. Considered as a source of new efficiencies and innovations, digital transformation is highly prioritized in strategic business agendas (Schallmo, & Williams, 2018). However it is important to state that digitalization do not affect only business operations. Digitalization strategies aim not only to outperform company’s operational processes, products or services. Actually today, digitalization is a new cultural mindset and reflects organizational attitude and capacity to innovate, its market positioning models and determine its future role in the new complex socio-economic and technological ecosystems. In the same time, the inherent technological risk for developing and implementing new business solutions based on artificial intelligence, blockchain or cyber-physical systems is still high. There still lack enough evidences, statistics and business cases, good and bad examples for digitalization models in practice. Digitalization is not about buying advanced operational robot or migrate to a cloud service for storing company data. Digital transformation stays for implementing new business models and building a new digital architecture merging digital and real-world processes, products and services in a complex ecosystem.

The complexity of the digital transformation is high, and the claims for “everything digitalization” should be carefully assessed by every organization (Andriole, 2017). This makes it difficult for the companies to justify investments and to plan next steps for further digital transformation. Furthermore, the returns, performance indicators and success rates within many innovative digital sectors do not provide sound statistical basis for making investments. On the other hand, there is no time for waiting as new disruptive businesses constantly evolve and take new market positions. Market dynamics is increasing but the dominant business logic is still stacked in the existing paradigms of consumerism, short-term growth, cost-based competition and resource exploitation (Holmlund, Strandvik, & Lähteenmäki, 2017). The pressure over the companies intensified also by the stakeholders’ expectations. End-users and clients, other businesses, suppliers, shareholders, competitors, investors, media, policy makers and all other third parties further look for new digital success stories. Currently everybody anticipates that all businesses and organizations, big and small, local and international, should digitalize and reshape their main processes and models of operations in order to survive the next industrial shift. Furthermore, the promoters of the Fourth industrial revolution, industry gurus and tech giants assert the need for largely experimentation with new business models and value-creation mechanisms. Thus, digital transformation processes and adoption of innovative digital technologies nowadays induce an increasing stress for the companies.

All businesses operate in specific socio-political ecosystem, determining actually all of their factors of production, all of their possible action plans, future developments and growth perspectives. Formal organizations are generally understood to be systems of coordinated and controlled activities that arise when work is embedded in complex networks of technical relations and boundary-spanning exchanges. Institutionalized products, services, techniques, policies, and programs function as powerful myths, and many organizations adopt them ceremonially. In this perspective, Meyer and Rowan (1977) prove that the formal structures of many organizations dramatically reflect the myths of their institutional environments, instead of the demands of their work activities. Thus a considerable part of the company’s strategies for success or survival largely depends from its specific business and cultural environment and external market conditions. In these settings, complex socio-economic and political institutional frameworks, formal and informal regulations and rules have a major impact on the business ecosystem.

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