Digitization and Disciplined Autonomy

T he increasing digitization of the economy presents both opportunities and challenges for firms. On one hand, digitization can enable more degrees of freedom and sophisticated strategies that target each customer segment or even each customer individually with efficiency. For example, firms can now create rich and customized advertisements with almost laser precision without sacrificing tremendous reach. In addition, many firms are devising their digital strategies such that they not only directly sell to customers through their linear value chain or pipeline (as with Walmart) but also facilitate interactions among their consumers and complementors/ suppliers (for example, Amazon Marketplace or Google’s Android platform).1 Think of Walmart acquiring Jet.com or Amazon acquiring Whole Foods as exemplars of digital strategies that encompass elements of pipelines as well as platforms. On the other hand, digitization requires firms to become more nimble and innovate with high quality and velocity. Tech firms such as Apple, Google, and Amazon constantly introduce novel, high-quality products and services that meet or even create customer demands. These firms often appear to follow strategies that defy conventional guidelines emphasizing the pursuit of binary “either-or” strategies, such as either efficiency or innovation and either exploitation of current resources or exploring and embracing new opportunities. However, pursuing dual strategies, especially those that deliver on both efficiency and innovation, is not easy, as firms such as 3M have discovered.2 Therefore, it is worth considering how managerial and IT practices can contribute to the success of dualfocused and ambidextrous strategies. Based on our research and observations, we argue that successful firms often deploy and demonstrate what we call disciplined autonomy to more fully leverage opportunities presented by digitization. We also suggest how executives and IT professionals can foster disciplined autonomy.