The relationship between digital transformation and strategic agility

Abstract

A fundamental change in the way economic life is experienced and managed is underway. This paradigm shift is being driven by the emergence of a general-purpose technology platform upon which new business value chains and ecosystems are being built. Digital transformation, the conduit to accessing this new-age infrastructure, has significant implications for organisations’ corporate strategic evolution in response to environmental stimuli, with strategic agility playing an increasingly central role in business survival. The importance of digital transformation as an enabler of strategic agility has garnered both advocates and detractors in academia and business; some studies argue that digital transformation is the cornerstone of strategic agility, while others refute this stance. Based on this incongruity, the purpose of this research was to examine the relationship between digital transformation and strategic agility. The relationship between strategic agility and the elements of scale of digital transformation, scope of digital transformation and speed of digital transformation was assessed. Primary data from management level individuals across small, medium and large South African businesses was collected, prepared and analysed to draw conclusions on the observed relationship between the constructs. The study found that all three components of digital transformation have a significant positive relationship with strategic agility, and that collectively, they are significant predictors of organisations’ strategic agility. The relative importance of the contribution of the three components of digital transformation to strategic agility was also revealed, with speed and scale having the highest and lowest impact respectively. It was concluded that organisations should approach digital transformation iteratively, leveraging this difference in terms of the relative contribution of its components to achieve control over the desired impact on their strategic agility in the most cost-effective manner possible.