Digital Transforming Capabilities
Introduction
Transforming capabilities are necessary to execute digital strategies and realize the full potential of strategic change, requiring continuous renewal of assets and organizational structures.
Definition and Importance of Digital Transforming
Digital transforming capabilities are needed to realize the full potential of strategic change once opportunities have been sensed and seized.
An organization with transforming capabilities actively cultivates an agile, entrepreneurial mindset internally and takes a broad approach to external network-building. These capabilities support the continuous strategic renewal of assets and organizational structures to ensure responsiveness in fast-changing environments. The core purpose for established companies is to manage tensions related to balancing internal and external collaboration, redesigning flexible governance structures, and improving the digital maturity of the workforce.
Sub-capabilities of Digital Transforming
Digital transforming capabilities consist of microfoundations relating to:
- Navigating innovation ecosystems: Managing relationships and collaborations within a broader network of partners.
- Redesigning internal structures: Adapting organizational structures to be more flexible and responsive.
- Improving digital maturity: Enhancing the digital skills and readiness of both externally recruited and internally promoted employees.
Challenges for established companies in Transformation
Digital transformation is particularly challenging for established companies, who often face four broad competing concerns even when willing to embrace digital innovation: • Balancing new innovation capabilities with existing product innovation practices. • Managing process and product innovations simultaneously. • Handling collaborative tensions between employees and external partners. • Developing governance structures that ensure both flexibility and control.
Many established companies are still in the early stages of digital transformation, as most of their revenues still come from traditional products and services.
Therefore, they need to develop digital strategies that leverage digital technologies for rapid innovation and responsiveness, leading to new value propositions and operational excellence. Understanding how organizations build these dynamic capabilities for digital transformation remains a paramount strategic question.