Digital governance mechanisms and principles that enable agile responses in dynamic competitive environments

Abstract

ABSTRACT Being an agile company today is no longer just about timely recognition of early signs of change in order to defend an existing competitive position but rather being able to perpetually transition between a series of short-lived, temporary competitive advantages. While traditional IT governance approaches have lent themselves well to extracting value from a long-lasting competitive advantage, they can become a liability if agile companies need to continuously reinvent themselves in pursuit of a new, “transient” competitive advantage. To that end, a temporal dimension of IT governance (when and how fast to decide) becomes as important as its structural (who decides what) and procedural (how to decide) aspects. In this paper, we adopt a “ternary” view on governance and build on the extant literature in IS, strategy, and organisation design as well as exemplar case studies to explore how traditional approaches to IT governance structures, processes, and relational mechanisms are altered to improve sensing, deciding, and responding capabilities in turbulent business environments. These mechanisms are then summarised into four digital governance principles to guide future research and practice. Those principles are: 1) disciplined autonomy, 2) IS-Business convergence, 3) permeable boundaries, and 4) incremental financial commitment including fast experimentation.