TitleTowards a strategic model of disruptions and equilibria in digital service systems
Publication Type04. Conference Papers
Year of Publication2017
AuthorsFritzsche, A.
Conference NameCompetitive Advantage in the Digital Economy (CADE)
Conference LocationVenice

Digital technology gives access to a vast manifold of new configurations of actors and resources in complex value creation systems. Out of this immense solution space for innovation, only a small fraction of actual configurations can actually be realized. One of the most important tasks in this context is therefore to understand which configurations are most likely to be realized and why.
Most research on digital industrial service systems has so far been exploring the new potential added by mobile, interactive and distributed technology on a clean slate. Currently, however, there seems to be a trend towards projects which give more consideration to existing industrial structures as a starting point for the digital transformation and the different paths which innovation can take from there. While this approach has the advantage to produce more realistic predictions of the near future, it bears the risk to underestimate the disruptive potential of digital technology and focus on incremental change.
This paper intends to develop a scientifically solid theoretical basis for industrial change due to the digital transformation which takes both incremental and disruptive processes into account. For this purpose, it combines elements of systems theory with others taken from evolutionary theory.  The paper turns the attention away from the optimal configuration of actors and resources in a service system towards the regulative processes which ensure the integrity of systemic operation. The underlying idea is that disruptive change goes along with a regulative failure which puts a system permanently out of its equilibrium and creates the need to adopt different systemic views of interaction.
To support nascent theory in this field, the paper presents case studies from projects concerned with the digital transformation of industry. It identifies different forms of regulative processes enabling and supporting systemic activities and discusses how they are likely to be compromised by the introduction of new technical devices and the appearance of new value streams. Using data from project documents, interviews and workshop sessions, it identifies three main dimensions of regulation which need to be considered: (1) engineering activities to install, run, and maintain the systems, (2) role adoption, conflict management and politics in organisations, and (3) symbolic representation and storytelling about value creation in the systems.
Current evidence suggests regulative processes are most likely to fail in the domain of value creation, while role adoption, conflict management and politics in organisations are the most reliable basis to ensure a return to equilibrate states of systems operation. Explorative approaches of disruptions in digital service systems should accordingly best proceed from a value creation perspective. Exploitative approaches which are more interested in actual paths taken by the digital transformation should rather consider organisational regulative processes.
The paper contributes to theory in the context of digital service systems by highlighting different forms of regulative processes. At the same time, it adds important insights to managerial practice regarding the recognition and enablement of incremental and disruptive change. Furthermore, it hopes to establish a new perspective on the digital transformation which can help the scientific community understand its own role in accompanying and guiding the digital transformation of industry. This might allow us to draw further conclusions about the function of such events as CADE 2017 and its strategic positioning.

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