Digital Mess Up- Why Digital Organization Initiatives Fail

Abstract

Incumbent firms in pursuit of digital transformation (DT) often struggle with the implementation of adequate organizational structures. In response, some firms implement separate organizational units for exploring digital technologies or shift digital innovation projects to a separate space to facilitate organizational digital transformation. However, such initiatives often suffer from high failure rates and therefore fall short of their expected goal to foster DT. This research paper explores reasons why such initiatives are prone to failure by applying a flexible pattern matching approach on qualitative data gained from 11 interviews through 7 case studies. From a theoretical standpoint, digital transformation initiatives are examined through a dialectical process theory and corporate venturing lens. The study offers insights into the emerging phenomenon of digital units and digitalization projects with an entrepreneurial character and shows that the most prevalent reasons for failure are poorly designed governance structures and a lacking digital mindset among employees. Finally, a DT roadmap is presented that reconciles the strategic, individual, and operational level of digitalization in incumbent firms.