Digital strategizing as a new way of doing strategy
What happens when the processes of crafting and executing strategies become digitalized and how does this process change our current understanding of how actors develop strategy? In this essay, we show that considering the dynamics and social processes related to the digitalization of the strategy making process results in an epistemological shift from digital strategy to digital strategizing. Specifically, when engaging in digital strategizing, we witness new digital practices, a change towards digital practitioners, and a new way of performing practices. In the following, we clarify key differences between digital strategy and digital strategizing and illustrate the advantages and challenges of a sociologically-informed understanding of digital strategizing.
Online communities, platforms, and artificial intelligence are only some of the many digital technologies that organizations increasingly use for strategy making. Current research illustrates the relevance of putting digital technologies front stage as part of strategies, such as participating in ecosystems or engaging in business model innovation. Thus, research has so far mostly focused on digital strategy, i.e. the outcomes of strategy making processes that guide a firm’s future efforts to maintain and sustain a competitive advantage by using digital technologies. But what happens when the processes of crafting and executing strategies become digitalized and how does this process change our current understanding of how actors develop strategy?
The role of digital technologies for developing new business strategies
In the last few years, scholars have increasingly examined digital strategy – how to leverage digital resources to create competitive advantage (Bharadwaj et al., 2013). Within this focus on the content of digital strategy, three themes are salient. The first theme is competitive strategies based on platforms and ecosystems (Adner, 2017; Trischler et al., 2021). A second theme concerns the capabilities for digital strategies – how organizations build and execute capabilities to make digital strategies work (Altman & Tushman, 2017). Finally, a third theme relates to new business models for digital technologies, typically arguing for a digital substitution of some elements of firms’ business model. While these themes have advanced our knowledge of business strategies in a digital age, scholars have paid scant attention to the social processes that bring these strategies to life.
Digital strategizing: A sociologically-informed view on making digital strategies
Digitalization in strategy making refers to the process to develop and execute strategies that is enabled by new digital information technologies (Yoo et al., 2012). We argue that embracing this shift requires a perspective that acknowledges the processes and social dynamics of making strategy based on and through digital technologies. The practice-theoretical approach provides such a perspective.
In particular, practice theory offers three interrelated concepts that acknowledge the social dynamics of digital strategy making: practices, practitioners, and praxis (Whittington, 2006). Practices are routinized forms of behavior that consist of several interconnected bodily-material and mental activities that make sense to actors through shared cognition. Practitioners refer to the actors who enact practices. As carriers of these practices, practitioners’ skills and initiatives are instrumental for the performance of practices. Finally, the concept of praxis refers to how strategy practices are actually performed by strategy practitioners in an ongoing flow of activities. By studying the strategy praxis, local variations and pathways of practices become visible. In the following, we describe each concept in the context of digital strategizing and highlight key future themes.
Future Themes related to Digital Practices
Three themes related to practices challenge existing understandings of strategy practices:
1) the rise of a new virtual materiality,
2) the increase of fragility of shared understandings in new digital strategy practices, and
3) the interrelation of traditional and digital strategy practices.
First, the rise of distributed digital technologies such as social media, smartphones and Big Data urges us to rethink the materiality of strategy practices (Flyverbom, et al., 2017;). As the materiality of digital technologies is more fluid, intangible and contested (Leonardi, 2010), strategy practices are likely to adopt a new kind of digital materiality. In addition, it has been shown that agency becomes more distributed, fluid and intangible through digitalization. Thus, bodily movements, such as gestures and non-verbal communication that shape traditional face-to-face strategy-making (Dameron et al., 2015) are likely to be displaced by new forms of bodily movements in relation to virtual materiality.
Second, digitalization is likely to increase the fragility of shared understandings in new strategy practices. In digital contexts, practices are oftentimes characterized through terms like “referentiality” (Stalder, 2018) that highlight that digital information can be altered, adapted, recombined, linked and shared across a large audience. As this information affects strategic decision-making, strategic decision-making practices might be in a constant state of flux (Constantiou & Kallinikos, 2015).
Third, scholars recently argued that digitalization does not replace analogue practices (such as whiteboards or flip-chart brainstorming) and that analogue and digital practices in fact form new assemblages (Stalder, 2018). This argument raises the question whether we can speak of distinct, yet interrelated analogue and digital strategy practices or whether strategy-making might be better explained as eclectic.
Future Themes related to Digital Practitioners
Digitalization also alters our current understanding of practitioners. We see three themes in particular:
1) the relationships between conventional strategy practitioners and new types of practitioners,
2) the growing influence of new, “peripheral” strategy practitioners on strategy making, and
3) the increasing importance of non-human actors.
First, digitalization enables the widening of practitioner participation, such as crowds, communities or lower-level employees (Matzler et al., 2014). However, with this increased participation, traditional strategists such as middle managers or consultants might find it difficult to exert influence on the strategy process.
The second theme concerns the indirect influence of practitioners at the “periphery” of strategy making. Besides new actors who have a say in the strategy process due to new digital technologies, these technologies also allow actors to indirectly influence strategy making, such as technology bloggers who increasingly gain control over digitalized content (Vaast et al., 2013).
The third theme relates to the role of non-humans in strategy making. A typical example are AI bots which produce certain content and attempt to appear as humans (Ferrara et al., 2016), thus challenging the dominant focus on humans as the main carriers of agency in strategy making. Ferrera et al. (2016: 96) contend that artificial intelligence bots are powerful instruments to “infiltrate political discourse, manipulate the stock market, steal personal information, and spread misinformation” – thus pointing to the need to reconsider agency in digital strategy making.
Future Themes related to Digital Praxes
Finally, there are two key themes related to the praxis of strategy-making:
1) increased velocity of strategy-making, and
2) digital rhetoric.
First, there are several indicators that digitalization will increase the velocity of the praxis of strategic decisions-making. For example, the more widespread use of algorithms might change the praxis of strategy making, which is already considered in other domains (Kitchin, 2017). Another indicator is the diffusion of complex data analytics. As information based on data analytics becomes more readily available, the timing of strategy praxis is likely to become more fluid, flexible and anachronistic.
The second theme relates to how digital rhetoric shapes strategic praxis. Rhetoric – the means of persuasively using language – has been identified as crucial for shaping the praxis of traditional strategy-making (Vaara & Whittington, 2012). Rhetoric in strategy making is likely to change through digitalization: Firms increasingly produce videos to more effectively communicate their strategy to employees on their websites and blogs. Similar to the use of visuals in organizations more broadly (Meyer et al., 2013), visuals will become more important for the rhetoric of digital strategy making.
While the spotlight is currently on digital strategies, digital strategizing – how digital strategies are crafted and implemented – has so far received less attention in both theory and practice. By showcasing the potential of a practice-theoretical perspective on the role of digital technologies in the strategy making process, we attempt to make a first step towards a sociologically-informed epistemology of doing strategy in the digital age.
About the guest authors
Violetta Splitter is a doctoral researcher/”Oberassistent” at the University of Zurich and a long-time member of the Strategy-as-Practice (SAP) community.
Maximilian Heimstädt heads the research group “Reorganizing Knowledge Practices” at Weizenbaum Institute in Berlin and is an affiliated postdoctoral researcher (“Habilitand”) at Witten/Herdecke University.
Thomas Gegenhuber is professor for socio-technical transations at the Johannes Kepler University Linz and visiting professor at the Leuphana University Lüneburg.
Georg Reischauer studies digital strategy, digital organization, and digital sustainability at WU Vienna University of Economics and Business as well as at Johannes Kepler University Linz.
All authors are also the organizers of the scientfic network “Strategizing in a digital economy” funded by the German Research Foundation (DFG). More information are available under https://www.digital-strategizing.org
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