Abstract
As the digital era unveils, it has become a must for many business firms to redesign their existing business processes to utilize the frontier technologies to become competitive. However, “digital transformation” has received less attention in prior literature, and no clear pathway to a successful digital transformation has been provided. This chapter builds on 12 in-depth interviews with top-level decision-makers of Sri Lankan business firms to develop a digital transformation model. The findings reveal that the solid foundation of a digital business firm relies on a “digital-first” mindset and three success pillars reflecting unique organizational characteristics (e.g., digital business transformation strategy, workforce, and firm resources) that collectively enable digital capability and dexterity. This chapter further argues that digital capability and dexterity are the critical hallmarks of a truly digital firm in a digital economy where technologies continue to improve exponentially.
TopIntroduction
Over the last three decades, technology has embarked on the voyage of digital transformation in business firms worldwide (Verhoef et al., 2021; Vial, 2021). The concepts of the Internet of things, blockchain and cryptocurrency, big data analytics, artificial intelligence and machine learning, quantum computing, and robotic process automation are empowering business firms operating in all sectors, including manufacturing, tourism and hospitality, banking and finance, retail, healthcare, and other service sectors (Vidmar et al., 2021). Consequently, today, managers in most business firms are constantly pressured to make strategic choices about exploiting the emerging frontier technologies to achieve a sustainable competitive advantage in the long run. As prior literature reveals, in most instances, business firms aiming to transform themselves into digital often focus on how to effectively utilize frontier technologies to achieve specific business objectives (e.g., how can we provide our service via a mobile application? how do we increase our likes on Facebook? etc.) (Verhoef et al., 2021; Tavoletti et al., 2022). However, most scholars have recently emphasized that a business firm cannot achieve a sustainable competitive advantage by simply adopting the technology itself (Kraus et al., 2021; Vidmar et al., 2021). Instead, a business firm should know how to utilize technology to transform the way it does business effectively (Tavoletti et al., 2022), disrupting established value chains and business models.
Research Gap
Although the notion of “digital transformation” has recently emerged as a buzzword, many business firms in the South Asian region are struggling with progress and still have a long way to go (Rhee et al., 2022), and Sri Lanka is not an exception. Similar to most business firms in the South Asian region, although the business firms in Sri Lanka are talking about the sophisticated technologies they are planning to offer, in most instances, these firms lack the skills and the mindsets needed to deal with this transformation effectively (Rassool & Dissanayake, 2019). Given the pace of change and the pressure to adapt, although some business firms in Sri Lanka have put in massive investments and efforts, most of these firms have fallen short of achieving successful digital transformation due to organizational barriers and shortcomings related to resistance to change (Fairooz & Wickramasinghe, 2019; Jayalath & Premarathne, 2021). On the other hand, despite the hype of the “digital transformation” notion, it has not been comprehensively studied in the business management literature (Nadkarni & Prügl, 2021; Verhoef et al., 2021). More specifically, little attention is paid to understanding a business firm’s approach to becoming digital by initiating digital transformation efforts (Hanelt et al., 2021). However, a business firm’s approach to digital should be studied in-depth as it has an immense impact on the nature of work, the spectrum of jobs, how employees are managed, and how the business will achieve its goals (Tavoletti et al., 2022). This chapter addresses these voids by addressing the following research question: What organizational changes and characteristics are associated with a business firm’s journey toward becoming a “digital master?”
This chapter attempts to answer the research question by proposing a digital transformation model based on 12 in-depth interviews with top-level decision-makers of 12 business firms representing diverse business sectors in Sri Lanka. While prior information system (IS) literature has contributed to increasing the understanding of the notion of digital transformation and its necessity to remain competitive in the digital world (Nadkarni & Prügl, 2021; Vial, 2021), this chapter furthers our understanding of the organizational changes and characteristics associated with successful digital transformation.
Theoretical Background
The following section discusses the resource-based view (RBV) theory from which this chapter draws its theoretical foundation. In addition, the key theoretical concepts related to the research problem are reviewed critically.
Key Terms in this Chapter
Digital Transformation: A cultural, structural, and operational change of a business firm through proper integration of digital technologies, tools, and competencies across all levels and functions in a staged and strategic manner.
Digital Firm: A business firm that executes its core business processes utilizing digital technologies.
Business Process Redesign: Is the radical redesign of the critical business processes to achieve organizational goals by cutting operational costs and removing process redundancies significantly.
Digital Dexterity: The ability of employees to adapt and adopt emerging technologies to achieve operational excellence and produce better results for their business firms.
Digital Capability: Refers to the skills and attitudes that business firms need to thrive in today's digital society.
Frontier Technologies: Emerging technologies that will reshape communications and industry standards by displacing existing business processes and providing urgently needed solutions to global challenges.
Digital-First Mindset: An attitude that reflects a business firm's broad tendency to seek digital solutions when approaching any new opportunity or problem.
Business Model Transformation: An umbrella term for making fundamental changes in how a business firm runs, focusing mainly on human resources, business processes, and technology deployment.