Education for managing digital transformation: a feedback systems approach

Abstract

"Digital transformation" is becoming the newest mantra of business leaders. It is clear that there are tremendous business opportunities resulting from this revolution, but there is also a price to be paid. Most management literature focuses on the benefits of digitalization, reflecting the desire to increase performance and efficiency in selected business activities. However, digital transformations may lead to the disruption of established ways of doing the work of the firm, stakeholder power may be fundamentally changed, and there is the potential for redefining the nature of the firm itself. Consequently, the decision to “go digital” requires managers to develop perspectives that have the requisite variety to cope with these challenges. Feedback systems thinking is a powerful means for managers to develop and communicate business models that include those aspects of digitalization that affects their firm’s theory of success. The Uber case illustrates the principles of applying feedback systems thinking to the radical changes that it has presented the public transportation sector. This paper analyzes Uber’s platform business by presenting an endogenous explanation of the drivers and eventual constraints to growth of the theory of success upon which the firm is based. This type of analysis has implications for all firms considering implementing a significant digital transformation process.