Digitalization and corporate transformation: The case of European oil & gas firms

Abstract

• Digital transformation initiatives suffer from poor governance and are understudied in the energy sector. • Eisenhardt's framework is used to build theories from case study research. • Internal, external and mixed strategic tools used in the energy sector are analyzed. • Two matrices are developed to guide digital transformation in the energy sector. Digital technologies have had a tremendous impact on the world and have forced companies to adapt their business models, strategies and management practices. There is a scarcity of research about digital transformation in the energy sector, so this paper aims to analyze this phenomenon in the Oil & Gas sector through a comparative case analysis of eight market leading European Oil & Gas companies. To ensure an adequate methodological approach, the authors have applied Eisenhardt's framework to build theories from case study research. This article relies on multiple data collection methods. 26 interviews with 18 senior executives from the sample energy firms and two global consulting firms were completed in two separate phases. To complement these interviews, information and data were collected from a range of public sources, such as newspapers, video interviews, business magazines and analyst reports, as well as public information from the eight companies under analysis, such as annual and financial reports, company presentations, regulatory filings and announcements and company news. Our research highlights several transformational moves in the firms under study that bring substantial new capabilities and allow them to achieve market-leading positions in new and digitally native business areas -although modest in size. The sample firms mainly opt for combinations of small transformational strategies to achieve their large transformation goals. However, in many organizations, digital and business transformation initiatives suffer from poor governance and are typically just a collection of unconnected activities, piecemeal strategies and pilot projects. Developing a coherent transformation strategy, with the right structure and governance, remains a challenge for most organizations. This paper, leveraging the collective learnings from the eight companies studied, aims to help decision-makers with a conceptual guideline to select the most appropriate strategic tools when undergoing a transformation, based on four dimensions that are of high relevance across multiple strategic environments.