How do concrete business unit practices drive digital transformation and improve day-to-day operational performance?

Host: Welcome to A.I.S. Insights — powered by Living Knowledge. I'm Anna Ivy Summers.

Expert: And I'm Alex Ian Sutherland.

Host: Today, we are discussing a study titled "Beyond Strategy: A Practice-Based View on Digital Transformation at the Business Unit Level," authored by Tim Scheerschmidt and Dennis Renee Metzler for the International Conference on Information Systems in 2026.

Expert: This study looks at how digital transformation strategies are formulated and executed within a specific business unit, rather than only looking at the enterprise-wide level.

Host: Let's start with the central issue. Digital transformation is a top priority across industries, but reports suggest that up to 70 percent of these initiatives fail to achieve their goals. Why is that?

Expert: A primary reason is that prior research and managerial attention have focused heavily on high-level corporate strategies. However, the actual operationalization—turning strategic goals into daily working reality—happens inside business units. When organizations lack frameworks to translate high-level strategies into concrete practices within individual units, transformation efforts frequently break down.

Host: How did the authors examine this issue?

Expert: They conducted an exploratory single-case study of the global finance unit in an established pharmaceutical manufacturing firm with revenues exceeding five billion euros. To assess the transferability of the findings, they also conducted interviews with management consultants from six different firms. Analytically, they applied the practice-based view, which examines observable, transferable sets of activities and their direct relationship to measurable performance.

Host: What did the study find regarding how transformation unfolds in a business unit?

Expert: It revealed that transformation operates through an iterative, three-phase cycle: digital strategizing, digital implementation, and digital follow-up. In the case firm, the finance unit actually initiated its own transformation strategy before an organization-wide digital strategy existed, acting as an internal pioneer.

Host: What specific factors triggered that unit-level process?

Expert: The authors identified several internal and external contextual variables. Internal drivers included increasing cost pressures, legacy IT challenges, and changing employee expectations. External drivers included tighter regulatory reporting demands and new technological capabilities. These conditions shaped the concrete practices adopted across the three phases.

Host: What were the direct organizational outcomes of these practices?

Expert: The study identified three major intermediate outcomes. First, structural reorganization, particularly expanding shared service centers to centralize up to 95 percent of transactional processes. Second, a shift in job profiles toward hybrid roles combining domain expertise with data science and technology management. And third, the automation-driven substitution of routine, manual tasks.

Host: And how do those outcomes translate into business performance?

Expert: The model connects those outcomes directly to operational performance gains. These gains are measured through concrete indicators: higher process standardization rates, reduced error rates, shorter process execution times, and measurable cost reductions in operations.

Host: That provides a clear link from high-level goals down to measurable unit metrics. What are the key takeaways for business leaders?

Expert: First, leaders should recognize that digital transformation does not have to be strictly top-down. Individual units can serve as testbeds and role models for broader organizational change. Second, the study offers a structured operational roadmap. Managers can use the three-phase cycle to sequence transformation initiatives, assign accountability, and establish measurable performance metrics rather than relying solely on abstract strategic milestones.

Host: By focusing on concrete practices and intermediate indicators, business units can better manage the execution gap. Alex, thank you for sharing these insights.

Expert: You are welcome, Anna.

Host: Thank you for listening to A.I.S. Insights — powered by Living Knowledge. Join us next time as we examine more research shaping modern business.