Organizing for Digital Innovation

Digital innovations and their inherent digital technologies pose unprecedented questions about the interaction of information systems and organizational forms in the digitized world. Digital innovation is both a necessary and a challenging endeavor for most firms. To achieve progress in this regard, firms across contexts increasingly engage in strategic initiatives to supply organizational and capability determinants for digital innovation. Striving to overcome the organizing and capability gap in digital innovation, incumbents of industrial-age contexts have been developing internal digital innovation units, which aim to bring in new skills and working procedures related to digital technologies. Yet, these post-bureaucratic organizational alterations face certain hurdles and tensions. More specifically, their growth and even survival are challenged. First, the digital innovation outcomes need to be compatible with the main organization’s pre-digital restrictions to ensure applicability. Thus, while being explicitly committed to digital innovation, firms need to be sensitive to the requirements of integration. Second, digital innovation units compete with multiple other internal and external digital innovation initiatives, such as collaborations with tech giants or digital mergers and acquisitions. In the face of these competitors, digital innovation units have to fight for scarce resources. Third, digital innovation units are separated from their main organizations both geographically and with regard to their techniques, skills and working styles. This separation is problematic because digital innovation in these contexts is about the combination of digital and physical components that impose fundamentally different demands but also belong together.