Digital Transformation Requires the Right Managerial Mindset

Investing in new digital technologies offers huge potential for companies to transform their business and push performance to ensure competitive advantage. Yet only relatively few projects generate an expected return on these investments. Several reasons have been put forward as explanations, such as organizational resistance, silo governance, and lack of skills. Yet, an additional and equally important reason is that managers maintain their existing mindset, and thereby forego new business opportunities brought about by new digital technologies. Even organizations that try to emulate best practices of successful competitors often end up only emulating competitors’ new technologies and not the managerial mindset and business models that ensure the successful use of new digital technologies. To ensure that a digital transformation journey is supported with the right strategic mindset, we introduce a mindset framework that helps managers identify their dominant mindset and make scholars aware of the importance to control for this. We identify four mindsets: promote and sell; listen and learn; connect and collaborate; and empower and engage, each of which introduces a unique orientation toward and interaction with the market, and consequently a unique use of digital technologies. We use three case studies to illustrate how organizations went through a strategic transformation by changing their mindset, which positively affected their business model and generated entirely new market interactions. We also show, based on a managerial mindset analysis of 870 managers, how managerial mindsets diverge both within and across management layers and within organizations. We show how a mindset analysis can assist companies by visualizing mindset gaps among managers, companies’ strategic orientation, and not least consumers’ preferred interactions. Finally, this leads to an identification of the optimal managerial mindset as well as relevant data and digital technologies, issues that are equally important for scholars to attend to when investigating managerial decision making.