Experimentation, Learning and Stress: The Role of Digital Technologies in Strategy Change

44 Pages Posted: 14 Feb 2019

See all articles by Jacques R. Bughin

Jacques R. Bughin

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECORE) ; McKinsey & Company

Tobias Kretschmer

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Nicolas van Zeebroeck

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite

Date Written: January 2019

Abstract

With the increasing availability of digital technologies, many firms are planning to develop digitally-enabled business models. Digital technologies can give an impulse to realign strategies through two channels: Initial use of digital technologies may help firms spot their potential and encourage firms to develop digitally-supported business models, or emerging digital technologies may present a threat to firms, who then initiate a process of strategic renewal to relieve the pressure. We study how the adoption of new digital technologies is associated with changes to the strategy of the firm, and how both are shaped by a firm’s perception of the competitive stress created by new technological developments. Using two detailed survey-based datasets on firms’ expectations, adoption and strategy renewal for a wide range of AI and digital technologies, we find a strong positive association between the degree of strategy change and the adoption of advanced digital technologies. This relationship does not seem mediated by the level of competitive stress from digital technology, which is itself strongly associated with strategy change. Our results suggest a tight coupling between (technological) structure and strategy.

Keywords: Digital Transformation, Strategic Organization Design, Technology Adoption, Strategic Renewal, Digital Strategy, Big Data, Artificial Intelligence

Suggested Citation

Bughin, Jacques R. and Kretschmer, Tobias and van Zeebroeck, Nicolas, Experimentation, Learning and Stress: The Role of Digital Technologies in Strategy Change (January 2019). Available at SSRN: https://ssrn.com/abstract=3328421 or http://dx.doi.org/10.2139/ssrn.3328421

Jacques R. Bughin

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECORE) ( email )

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Tobias Kretschmer

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Nicolas Van Zeebroeck (Contact Author)

Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, iCite ( email )

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Brussels, B-1050
Belgium
+3226503375 (Phone)

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