Contemporary business leaders and corporate policymakers are obligated to transform their operations to harness the strategic business value of digital technology. Organizational change has gained more importance in recent years because of the disruptive changes that have affected the corporate world1. Having a Digital Business Strategy (DBS) has become an essential component of competitiveness in the modern corporate world.
An increasing number of businesses are using disruptive technologies such as Big Data Analytics, Artificial intelligence, cloud computing, social media, robotics, wearables, and the Internet of Things (IoT) to gain a competitive advantage over rival companies2. The strategic transformation process required for success in the business in the 21st century involves a series of steps and connects stakeholders and departments across the organizational structure. For a company to extract maximum business value from digital business technology, it has to intelligently extract and analyze large volumes of data.3 Business managers can achieve competitiveness by developing and implementing a vision and a digital business strategy.
To achieve their strategic goals many businesses have begun using digital technologies to leverage data for innovation and management.4 Some of the world’s leading companies have begun using artificial intelligence to make decisions and control the daily operations of their companies. It is becoming increasingly obvious to many business leaders that artificial intelligence will influence many management functions to free human business leaders with the task of making critical decisions. Further, other paradigms of conducting business, such as Industry 4.0 combine information technologies with smart machines to add value to a company’s products5.
According to Chi et al., the implications of digital technologies on corporate strategies and the way companies compete are far-reaching.6 Other scholars have established that the rate of cross-border data flow has increased more than 50 times in the last 15 years.7 8 9 As a result, centralized supply chains have morphed into decentralized ones and customers are more involved in global value chains. Other academics have established that through digitization, a company can become lean and global simultaneously.10 Several highly skilled employees and a robust, automated supply chain are enough to globalize a lean company in the digital age.
The main requirements of this globalization process include a collection of digital systems, innovations, and partners. Many digital business ecosystems often comprise computer hardware, AI software, and networks.11 All these components have to work symbiotically for the business to effectively harness the strategic business value of digital technology.
Digital and Information technology has been on the business management agenda for ages and it was initially focused on data collection and analysis in the digital business ecosystem. However, recent research is replete with information about the strategic implications of digital technology. Despite the existence of a clear distinction between information technology (IT) and business strategy, it is becoming increasingly evident that the two paradigms of entrepreneurship cannot be separated.
In the 21st century, information technology has dominated business strategy formulation.12 Not only are digital technologies disrupting markets, but the innovative products manufactured as a result of big data analytics are also playing a big role in disrupting industries. Many scholars agree that digitalization has transformed our society in a manner that can only be likened to the first industrial revolution.13 14 15 The merger between the physical and digital dimensions of the business world impacts companies’ operations and boundaries.
There is a dearth of research about ways to harness the strategic business value of digital technology, despite the existence of extensive academic discourse on how business value is shifting. Furthermore, the technology base that supports these systems is still evolving and many small and medium sized enterprises (SMEs) are ill-equipped to regularly update their hardware and software. The lack of robust structures and standards when venturing into the internet of things ecosystem increases the likelihood of failure for young upstarts in business.16 Urbach et al. affirm that conventional business strategy is not equipped well enough to meet the demands of digitalization.17 Many innovative business leaders are rethinking their business strategies as more information from academia trickles into the corporate world.
Digital technologies such as big data analytics and Industry 4.0 have impacted operations management significantly. A study by the American Society for Quality (ASQ) showed that 82% of the companies that claimed to have integrated smart manufacturing in their operations reduced product defects by more than 45% and the satisfaction levels of their customers increased by 45% in 2014 alone.18 Some other benefits of using technology in business include less production time and costs, better coordination between stakeholders, improved customer relations, and higher productivity, among many other improvements.19
Moreover, research affirms that the fusion of digital strategies into a company’s business model will result will transform a company’s core competencies.20 Managing all aspects of production can be challenging for many managers who supervise hundreds of workers and thus the application of artificial intelligence is a welcome relief for many.
Since the turn of the century, the use of mobile devices has become almost universal. Nearly every modern shopper owns a smartphone and has an active presence across multiple online social and commercial platforms.21 To effectively harness the strategic business value of technology, product designers should replace mechanical components of machines with software or simplify them. An example of John Deere is given to explain how technology affects efficiency and customer satisfaction.22 The company would design many different engines of varying horsepower to cater to the need of its customers. Moreover, the advent of 3D printing and information and communications technology enables designers to produce spare parts of machines near the consumers.23
With the development of IT, consumers are more empowered to participate in the production process.24 Of utmost importance in the digital age is the optimization of a company’s digital infrastructure. A company should build upon the social, mobile, analytics and cloud (SMAC) foundation to manage and deliver exciting end-user experiences to its consumers.25 To fully realize the benefits of technology, one should optimize the data center by installing fabric computing architectures and Software Defined Networks Principles.26 Further the usage of cloud management and investing in protecting company data, a manager can harness the business value of IT. By using the IoT, a company can exchange intelligent information across networks and individuals, hence collaboration and performance will improve.27 28
Additionally, a shrewd business manager should secure the firm’s hardware and software using passwords, antivirus programs, and firewalls among others. In the ultracompetitive digital business environment, data mining companies often find ways to harvest data that will help them gain a competitive advantage over their rivals. Therefore, it is critical for a business leader to create a security perimeter to ensure that third parties do not access company data without authorization. Cloud and hybrid information technology platforms allow flexibility, reduced costs as well as easy access. To optimize the experience a company should adopt a pay-as-you-go subscription model.29 To provide a highly curated shopping experience, the firm should use big data to understand the context of the consumer.
The increased machine-to-human interaction will enable innovators to significantly improve the shopping experience for the consumer. Besides allowing people to shop online, some companies can further increase efficiency by using unmanned drone deliveries once security issues have been dealt with. 30 31 If such changes continue to disrupt the market and the innovation process, then new businesses will have a much easier route to success. By exploiting the expanding interconnectivity between machines, software, and humans, small firms will find it easier to penetrate global markets. Business managers can harness the increased reach provided by giant online marketplaces such as Alibaba and Amazon to globalize.
The best way to transform the business strategy of an enterprise to meet the challenges of the digital revolution is to use intelligence to identify the consumers’ personas. Then, using a team of strategists and analysts the firm should deploy the technologies to increase the agility and automation of the process. Additionally, managers should work like designers in the way that they harness other people’s creativity to improve the company’s products. Artificial intelligence gives managers more autonomy to focus on making key strategic judgments and manufacturers valuable time for research and experimentation.
Given the array of technologies at the disposal of modern business managers and strategists, they can intelligently use the technologies to improve the competitiveness of the company. However, the corporate chiefs should be careful when using Big Data Analytics, Artificial Intelligence, cloud computing, social media, robotics, wearables, and the IoT to increase the strategic business value of the company. With insufficient resources, such as hardware and software the decision-making process can be frustratingly complex. Therefore, key employees should be kept motivated and assured of their job security when trying to harness the business value of technology using intelligence.
Berghaus, S. and Back, A., ‘Stages in Digital Business Transformation: Results of an Empirical Maturity Study.’ MCIS Proceedings, 2016, p. 1-17.
Bock, R., Iansiti, M., and Lakhani, K.R., ‘What the companies on the right side of the digital business divide have in common.’ Harvard Business Review, vol. 31, no. 01, 2017.
Butner, K., ‘Six Strategies That Define Digital Winners.’ Strategy & Leadership, vol. 47, no. 5, 2019, pp. 10-27.
Carson, B., Romanelli, G., Walsh, P., and Zhumaev, A., ‘Blockchain Beyond the Hype: What Is the Strategic Business Value.’ McKinsey & Company, 2018.
Chi, M., Zhao, J., and Li, Y., ‘Digital Business Strategy and Firm Performance: The Mediation Effects of E-Collaboration Capability.’ In Wuhan International Conference On E-Bisnis. Association for Information Systems AIS Electronic Library, (ASEL) Wuhan, China C, 2016.
Evans, N. D., Mastering Digital Business: How Powerful Combinations of Disruptive Technologies Are Enabling the Next Wave of Digital Transformation. BCS Learning & Development, 2017.
Fettermann, D.C., Cavalcante, C.G., Domingues A.T., and Tortorella, G.L., ‘How Does Industry 4.0 Contribute to Operations Management?’ Journal of Industrial and Production Engineering, vol. 35, no. 4, 2018, pp. 255-268.
Frank, M, Roehrig, P, and Pring, B., What to Do When Machines Do Everything: How to Get Ahead in a World of Ai, Algorithms, Bots, And Big Data, John Wiley & Sons, 2017.
Giones, F, and Alexander B, ‘Digital Technology Entrepreneurship: A Definition and Research Agenda.’ Technology Innovation Management Review, vol. 7, no. 5, 2017.
Grover et al., ‘Creating Strategic Business Value from Big Data Analytics: A Research Framework.’ Journal of Management Information Systems, vol. 35, no. 2, 2018, pp. 388-423.
Herterich, M.M., Uebernickel, F., and Brenner, W., ‘Stepwise Evolution of Capabilities for Harnessing Digital Data Streams in Data-Driven Industrial Services,’ MIS Quarterly Executive, vol. 15, no. 4, 2016.
Holler, M., Uebernickel, F., and Brenner, W., ‘Understanding The Business Value of Intelligent Products for Product Development in Manufacturing Industries.’ In Proceedings of the 2016 8th International Conference on Information Management and Engineering, Istanbul, Turkey, Association for Computing Machinery, 2016, pp. 18-24.
Holotiuk, F., and Beimborn, D., ‘Critical Success Factors of Digital Business Strategy,” International Conference on Wirtschaftsinformatik, 2017, pp. 991-1005.
King, K., Using Artificial Intelligence in Marketing: How to Harness AI and Maintain the Competitive Edge. Kogan Page Publishers, 2019.
Kolbjørnsrud, V., Richard A., and Thomas, R.J., “How artificial intelligence will redefine management.” Harvard Business Review vol. 2, 2016, pp. 1-6.
Kopalle, P.K., Kumar V., and Subramaniam, M., “How legacy firms can embrace the digital ecosystem via digital customer orientation.” Journal of the Academy of Marketing Science, vol. 48, no. 1, 2020, pp. 114-131.
Li, A.Q., and Found, P., ‘Towards sustainability: PSS, digital technology, and value co-creation,’ Procedia CIRP, vol. 64, 2017, pp. 79-84.
McAfee, A, and Brynjolfsson, E, Machine, platform, crowd: Harnessing our digital future. WW Norton & Company, 2017.
Schaeffer, E. and Sovie, D., Reinventing the Product: How to Transform your Business and Create Value in the Digital Age. Kogan Page Publishers, 2019.
Sedkaoui, S., ‘How Data Analytics Is Changing Entrepreneurial Opportunities?’ International Journal of Innovation Science, vol. 10, no. 2, 2018, pp. 274-294.
Senyo, P. K., Liu, K., and Effah, J., ‘Digital Business Ecosystem: Literature Review and A Framework for Future Research.’ International Journal of Information Management vol. 47, 2019, pp. 52-64.
Shaughnessy, H., ‘Harnessing Platform-Based Business Models to Power Disruptive Innovation.’ Strategy & Leadership, vol. 44 no. 5, 2016, pp. 6-14.
Strange, R. and Zucchella, A., “Industry 4.0, Global Value Chains, and International Business.” Multinational Business Review, vol. 25, no. 3, 2017, pp. 174-184.
Teece, D. J., and Linden, G., “Business Models, Value Capture, and The Digital Enterprise.” Journal of Organization Design, vol. 6, no. 1, 2017, pp. 1-14.
Urbach, N., Drews, P., and Ross, J., ‘Digital Business Transformation and The Changing Role of the IT Function.’ MIS Quarterly Executive, vol. 16, no. 2, 2017, pp. 1-4.
Zysman, J., and Kenney, M., ‘The Next Phase in the Digital Revolution: Intelligent Tools, Platforms, Growth, Employment.’ Communications of the ACM, vol. 61, no. 2, 2018, pp.54-63.
- Bock, Robert, Marco Iansiti, and Karim R. Lakhani. “What the companies on the right side of the digital business divide have in common.” Harvard Business Review 31, no. 01, 2017.
- Butner, Karen. “Six strategies that define digital winners.” Strategy & Leadership. 2019.
- Grover, Varun, Roger HL Chiang, Ting-Peng Liang, and Dongsong Zhang. “Creating strategic business value from big data analytics: A research framework.” Journal of Management Information Systems 35, no. 2, 2018, pp. 388-423.
- Ibid, 389.
- Berghaus, Sabine, and Andrea Back. “Stages in Digital Business Transformation: Results of an Empirical Maturity Study.” In MCIS, 2016, p. 22.
- Chi, Maomao, Jing Zhao, and Yuanxiang Li. “Digital business strategy and firm performance: the mediation effects of E-collaboration capability.” In Wuhan International Conference On E-Bisnis. Association for Information Systems AIS Electronic Library (AISeL), 2016.
- Fettermann, Diego Castro, Caroline Gobbo Sá Cavalcante, Tatiana Domingues de Almeida, and Guilherme Luz Tortorella. “How does Industry 4.0 contribute to operations management?.” Journal of Industrial and Production Engineering 35, no. 4, 2018, pp. 255-268.
- Carson, Brant, Giulio Romanelli, Patricia Walsh, and Askhat Zhumaev. “Blockchain beyond the hype: What is the strategic business value.” McKinsey & Company 2018,pp. 1-13.
- Frank, Malcolm, Paul Roehrig, and Ben Pring. What to do when machines do everything: How to get ahead in a world of ai, algorithms, bots, and big data. John Wiley & Sons, 2017.
- Giones, Ferran, and Alexander Brem. “Digital technology entrepreneurship: A definition and research agenda.” Technology Innovation Management Review 7, no. 5, 2017.
- Berghaus, Op. cit. 22.
- Zysman, John, and Martin Kenney. “The next phase in the digital revolution: intelligent tools, platforms, growth, employment.” Communications of the ACM 61, no. 2, 2018, pp.54-63.
- Fettermannet al. Op. cit. 257.
- Evans, N. D., Mastering Digital Business: How powerful combinations of disruptive technologies are enabling the next wave of digital transformation. BCS Learning & Development, 2017.
- Teece, David J., and Greg Linden. “Business models, value capture, and the digital enterprise.” Journal of organization design 6, no. 1, 2017, pp. 1-14.
- Urbach, Nils, Paul Drews, and Jeanne Ross. “Digital business transformation and the changing role of the IT function.” MIS Quarterly Executive 16, no. 2, 2017, pp. 1-4
- Ibid, 3.
- King, Katie. Using Artificial Intelligence in Marketing: How to harness AI and maintain the competitive edge. Kogan Page Publishers, 2019.
- Holler, Manuel, Falk Uebernickel, and Walter Brenner. “Understanding the business value of intelligent products for product development in manufacturing industries.” In Proceedings of the 2016 8th International Conference on Information Management and Engineering, 2016, pp. 18-24.
- Holotiuk, Op. cit.
- Kopalle, Praveen K., V. Kumar, and Mohan Subramaniam. “How legacy firms can embrace the digital ecosystem via digital customer orientation.” Journal of the Academy of Marketing Science 48, no. 1, 2020, pp. 114-131.
- Li, Ai Qiang, and Pauline Found. “Towards sustainability: PSS, digital technology and value co-creation.” 2017, pp. 79-84.
- McAfee, Andrew, and Erik Brynjolfsson. Machine, platform, crowd: Harnessing our digital future. WW Norton & Company, 2017.
- Schaeffer, Eric, and David Sovie. Reinventing the Product: How to Transform your Business and Create Value in the Digital Age. Kogan Page Publishers, 2019.
- Kopalle. Op.cit.. 116.
- Kolbjørnsrud, Vegard, Richard Amico, and Robert J. Thomas. “How artificial intelligence will redefine management.” Harvard Business Review 2 2016, pp. 1-6.
- Shaughnessy, Haydn. “Harnessing platform-based business models to power disruptive innovation.” Strategy & Leadership, 2016.
- Sedkaoui, Soraya. “How data analytics is changing entrepreneurial opportunities?.” International Journal of Innovation Science 2018.
- Strange, Roger, and Antonella Zucchella. “Industry 4.0, global value chains and international business.” Multinational Business Review, 2017.
- Senyo, Prince Kwame, Kecheng Liu, and John Effah. “Digital business ecosystem: Literature review and a framework for future research.” International Journal of Information Management 47, 2019, pp. 52-64.
- Butner. Op.cit.