Developing Digital Transformation Strategy for Manufacturing Firms. Applying Interpretive Structural Modelling to Explore Causal Relationships of Organisational Management Factors

Abstract

Digital transformation represents an unprecedented strategic challenge for established manufacturing companies, but the theoretical understanding of its implications is still lacking. It is accordingly difficult for management to develop an adequate digital transformation strategy and decide on appropriate organisational implementation measures. The aim of this work is therefore to address the organisational management challenges related to digital transformation of manufacturing companies through strategic digital transformation programmes. It is based on the input of 39 managers with diverse backgrounds, digital and non-digital, within the manufacturing industry. This study enhances the open systems organisational theory approach and the concepts of temporary organisations. It identifies 21 different organisational management factors that are relevant for the digital transformation of a manufacturing company. Interpretive Structural Modelling (ISM) has been applied to derive an empirical model that organises those factors according to their level of influence. The factors related to organisational leadership, internal organisational structures and operational capabilities have the strongest influence on the digital transformation challenges. This includes the understanding that in the context of digital transformation, a strategic programme cannot be conceived separately to the embedding company organisation. The practical implications of the empirical model on management are derived by this study as well. It suggests that the non-linear nature of digital transformation requires management to continuously embrace and not restrict organisational and operational complexity. Instead, focus should be placed on establishing frameworks that provide operational guidance, supported by substantial management efforts to foster commitment across all organisational levels towards digital transformation goals.