Digital Transformation Requires a New Organizational Logic

In this chapter, digital transformation is conceived as a successive disruption in a series of digital revolutions that exalt digitalization to a new institutional level and call for a respective new organizational logic that is in line with the increasing complexity of the environment. Putting forward a vertical typology of capabilities and an ordinal typology of organizational logics, it is argued that organizations that are adaptive in the face of today’s turbulent digital environment exhibit co-adaptation logic along four aspects—embeddedness, association, awareness, and potentiality—at all levels of capability ranging from zero capabilities at the level of concrete work to adaptive capabilities at the level of interorganizational ecosystems. It is concluded that requisitely “digital” organizations are highly interdependent at all levels, the human intentions and values of all stakeholders are genuinely appreciated, and the future potential of the organization is both recognized and acted upon with the digital affordances. The conjectures shed light on why some organizations seem more capable in their digital transformation efforts than others and why most organizations fall short in their digital transformation.