Managing Organizational Explosions

During Digital Business Transformations

Performance improvements from digital business transformations require companies
to deal with four types of disruptive organizational changes, which we call “explo-
sions:” changing Decision Rights, adopting New Ways of Working, performing Orga-
nizational Surgery and creating a Platform Mindset. For these explosions to create—
rather than destroy—value, they need to be carefully designed, and their impacts
anticipated and managed. We provide five recommendations for digital leaders on
how to handle the explosions, by drawing on four case studies of companies on distinct
transformation pathways.1,2

Nick van der Meulen Peter Weill Stephanie L. Woerner

MIT Sloan School of MIT Sloan School of MIT Sloan School of
Management (U.S.) Management (U.S.) Management (U.S.)

Four Pathways to a Digital Future1,2

The digital transformation imperative is real. Yet while digital transformation is now a
top management priority at most companies, the vast majority of executives consider their
company’s digital maturity as early stage.3 Particularly challenging is that this transformation
is not primarily about technology; it requires a business transformation that leverages digital
capabilities to implement a step-change in delighting customers (i.e., improving the customer
experience), while simultaneously reducing costs (i.e., improving operational efficiency).
Companies that successfully transform both dimensions are able to outperform their peers by
an average of 16 percentage points above industry-adjusted net margins.4
Digital business transformation is hard work: large companies have typically developed
a wide range of products and services over many years, supported by an ingrained and non-
digital culture. These products and services are often organized in silos that are interconnected
by a complex web of processes, practices, systems and data. This complexity (often described
as “spaghetti”) makes it hard for employees to deliver value, resulting in a fragmented and
frustrating experience for customers.

1 Varun Grover is the accepting senior editor for this article.

2 The authors thank Varun Grover and the members of the review team for their thoughtful feedback and guidance throughout the
review process. We also gratefully acknowledge the support and contributions of the Research Patrons and Sponsors of the MIT
Sloan Center for Information Systems Research (CISR).
3 Kane, G. C., Palmer, D., Phillips, A. N., Kiron, D. and Buckley, N. “Coming of Age Digitally: Learning, Leadership, and
Legacy,” MIT Sloan Management Review and Deloitte Insights, June 2018, available at https://www2.deloitte.com/us/en/insights/
focus/digital-maturity/coming-of-age-digitally-learning-leadership-legacy.html This report is based on a survey of 4,352 business
executives, managers and analysts from organizations around the world.
4 Weill, P. and Woerner, S. L. “Is Your Company Ready for a Digital Future?,” MIT Sloan Management Review, Winter 2018, pp.
21-25.

DOI: 10.17705/2msqe.00031
September 2020 (19:3) MIS Quarterly Executive 165
Managing Organizational Explosions During Digital Business Transformations
Figure 1: Four Digital Transformation Pathways
Our research identified four transformation
pathways (summarized in Figure 1) that
companies take to break free of the silos and
complexity and prepare themselves for the future.
Pathway 1 focuses on addressing the operational
complexity through digital industrialization
and standardization, which makes it easier to
improve the customer experience by reusing
modular business capabilities. Companies
following this pathway ultimately have the best
financial performance, but it can take years to
build reusable capabilities and the customer
experience. Meanwhile, existing competitors and
disruptive new entrants may force a company to
take one of the other transformation pathways.5
Companies may first need to focus on
customer initiatives by creating integrated, well-
designed user experiences and offerings while
hiding their operational complexity (Pathway 2).
Alternatively, they could follow Pathway 3 and
attempt to address both their operational and
customer experience capabilities iteratively. Or
they could choose not to transform the current
organization but instead follow Pathway 4, which
means they would create a new future-ready
5  For more details on the pathways and how they affect financial  customers, employees and partners. We identified
performance, see Weill, P., Woerner, S. L. and van der Meulen, N.
“Four Pathways to ‘Future Ready’ that Pay Off,” The European Busi-
ness Review, March-April 2019, pp. 11-15.
166 MIS Quarterly Executive | September 2020 (19:3)
company or subsidiary that isn’t burdened with
legacy processes and systems.
To understand what it takes to succeed along
the different digital transformation pathways,
we conducted a multiyear, multimethod study.
(Our research methodology is described in the
Appendix.) By analyzing survey data provided
by senior leaders representing 400 companies
worldwide, we learned that most companies were
still looking for ways to move away from their
complex “silos and spaghetti” state. On average,
these companies were 35% complete on the
journey to transform both their operational and
customer experience capabilities.
The good news is that progress along any
of the four pathways is beneficial in terms of
financial performance, though each pathway
yields different results on net margin and revenue
growth relative to competitors. The bad news is
that no matter the chosen pathway, a company
will have to deal with difficult organizational
changes to develop new operational and
customer experience capabilities. We call these
changes “organizational explosions,” because
that’s what they feel like to those that have to
deal with them. They are significant, disruptive
changes that affect most of a company’s
four types of organizational explosion:
1. Changing Decision Rights
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
2. Adopting New Ways of Working
3. Performing Organizational Surgery
4. Creating a Platform Mindset
These explosions are not new; some have
challenged companies for decades. However, of
all the organizational changes that companies
can engage in as part of their digital business
transformation efforts, we found that these
four types are the most critical and required for
transformation progress. For these organizational
explosions to create—rather than destroy—value,
they need to be handled carefully, with their
impacts anticipated and managed.
In this article, we describe four in-depth
cases—one for each of the transformation
pathways: Tetra Pak (a food packaging company),
CEMEX (building materials), KPN (telecoms)
and Domain Group (real estate). Although each
company experienced all four explosions, there
were differences in how they were handled and
in the order in which they were addressed. The
article concludes with five recommendations
for those leading these exciting and daunting
transformations.
Requirements for
Transformation Progress
The transformation journey requires new
or improved organizational capabilities.
Operationally, companies become modular and
agile, automating core processes, refining their
process orientation (identifying the best way
to do each business process) and leveraging
data and technology to drive efficiencies. They
also build customer experience capabilities
focused on meeting customer needs rather than
pushing particular products. Customer data
becomes a strategic asset (i.e., it needs to be
shared and made available to all those in the
company who need it), as does partnering more
effectively to either orchestrate or participate
in digital ecosystems. The goal is to become the
go-to destination for customers by providing
an integrated (multiproduct and multichannel)
customer experience.
In our research, we investigated the
development of these capabilities by interviewing
over 50 senior executives who were driving
their companies’ digital business transformation
journeys. The analysis of these interviews
identified the most important challenges
and practices within our four overarching
organizational explosion themes: Decision Rights,
New Ways of Working, Organizational Surgery and
Platform Mindset.
Changing Decision Rights
Given that transformation is about changing
what a company had before and how it got to
where it now is, this first type of organizational
explosion is typically about changing who
makes and is held accountable for key decisions.
Examples are: who decides when to change
a process, which projects to fund, and what
products to discontinue and launch.
Specifying decision rights has long been
a key component of effective IT governance,6
but now extends beyond the IT department
to envisioning, provisioning and using digital
technology throughout the entire company.
Rather than focusing on generating value through
business-IT alignment, companies focus on
moving toward a state of business-IT cohesion,
where technology becomes pervasive and thus
rooted in the very fabric of the company.7 As such,
reaching agreement on the scope and priorities
of digital business transformation efforts and
getting the right people to lead key areas of the
company become crucial. These changes are
typically accompanied by a significant revision of
performance metrics, incentives, budgets, policies
and approval processes, which heavily influence
the power dynamics within a company.
Adopting New Ways of Working
Achieving digitally enabled transformation
also requires rethinking how work is performed.
Companies have long taken advantage of new
technologies for automating some aspects of
work and improving productivity. Real value,
however, stems from redesigning work to create
new sources of value for customers and the
6 See, for instance: 1) Sambamurthy, V. and Zmud, R. W. “Arrange-
ments for Information Technology Governance: A Theory of Multiple
Contingencies,” MIS Quarterly (23:2), June 1999, pp. 261-290; and
2) Weill, P. and Ross, J. W. IT Governance: How Top Performers
Manage IT Decision Rights for Superior Results, Harvard Business
School Press, 2004.
7 Peppard, J. “Rethinking the Concept of the IS Organization,”
Information Systems Journal (28:1), January 2018, pp. 76-103.
September (19:3) MIS Quarterly Executive 167
Managing Organizational Explosions During Digital Business Transformations
business.8 Companies have, for instance, started
to cocreate products and services with customers,
engage in test-and-learn experimentation,
encourage more evidence-based behaviors and
set up cross-functional teams that work in more
iterative and agile ways.
These new ways of working also require
companies to pay more attention to the employee
experience. Top performing companies have
made the work environment (physical, virtual
and organizational) more adaptive to the needs
of employees and fostered collective work habits
that not just enable employees to work more
effectively but also in more empowered and
innovative ways.9
Performing Organizational Surgery
Also known as restructuring or reorganization,
this type of organizational explosion involves
changes that remove organizational complexity
and help the business focus on integrated
customer offerings. Most companies have
gone through different forms of occasional
organizational surgery for decades; it helps
prevent inertia, can reduce the cost base and
supports changes in strategic direction in
response to a major industry transformation.10
Organizational surgery typically involves
reworking business processes, integrating
company silos and (more recently) flattening
hierarchies, along with corresponding revisions
of functional roles and reporting lines. One bank
we studied, for instance, combined operations,
IT and most of its product divisions into a single
group called engineering banking services. The
bank’s CEO explained that: “in the digital area
these three capabilities are the same, and we
should stop spending time and money on aligning
them.”
8  Hagel, J., Schwartz, J. and Wooll, M. “Redefining Work for New  processes, thereby increasing reliability, decreasing operational costs,
Value: The Next Opportunity,” MIT Sloan Management Review,
December 2019.
9 Dery, K., Sebastian, I. M. and van der Meulen, N. “The Digital
Workplace is Key to Digital Innovation,” MIS Quarterly Executive
(16:2), June 2017, pp. 135-152. For more information on employee
experience, see Dery, K., Sebastian, I. M., and van der Meulen, N.
Employee Experience: Enabling Your Future Workforce Strategy,
Research Briefing (18:9), MIT Sloan Center for Information Systems  13 Between 2016 and 2018, Tetra Pak received “Total Productive
Research, September 2018.
10  Girod, S. J. G. and Karim, S. “Restructure or Reconfigure?,”  from the Japan Institute of Plant Maintenance (for an overview of the
Harvard Business Review, March-April 2017.
168 MIS Quarterly Executive | September 2020 (19:3)
Creating a Platform Mindset
The fourth type of organizational explosion—
creating a Platform Mindset—produces (reusable)
digital services that enable the company to
innovate and scale its operations and offerings
quickly.11 The platforms typically provide
digital services that exploit the company’s key
capabilities. These platform services may be
geared toward:
• Internal operations (with the goal of
automating processes and speeding up in-
house product and service development)
• External developers (offering what makes
the company great as modular, digitally
enabled services)
• Customers (providing multichannel
distribution platforms)
• Other stakeholders in the industry
(enabling ecosystem creation).12
Four Cases of Digital Business
Transformation Journeys
Table 1 summarizes our four case companies.
Each company designed the organizational
explosions differently—but all four types
of explosion were essential to their digital
transformation efforts. The journeys we describe
started between three and six years ago and are
ongoing.
Each company has already achieved
considerable cost savings and/or improved
customer experience. Tetra Pak’s Industry
4.0 efforts radically improved plant efficiency,
resulting in several prestigious manufacturing
innovation and excellence awards.13 CEMEX
achieved 96% global recurring customer
adoption of its new CEMEX Go platform
within 18 months. CEMEX Go, recognized as
a groundbreaking supply chain management
concept that revolutionizes the customer
11 A digital platform “standardizes and automates [core business]
and ensuring quality,” as per Weill, P. and Ross, J. W. IT Savvy: What
Top Executives Must Know to Go from Pain to Gain, Harvard Busi-
ness Press, 2009, p. 16.
12 For more on platform ecosystems, see Van Alstyne, M. W.,
Parker, G. G. and Choudary, S. P. Platform Revolution: How Net-
worked Markets Are Transforming the Economy – and How to Make
Them Work for You, W. W. Norton & Company, 2016.
Maintenance” awards for 20 manufacturing facilities worldwide
awards and categories, see: https://www.jipm.or.jp/en/activity/pm/).
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations

Table 1. Summary of the Four Digital Business Transformation Cases

Case Platform Tetra Pak CEMEX KPN Domain Group
Employees (FTE,
25,488 42,024 12,431 850
2018)
€11.2 billion Mex$276.9 billion €5.6 billion A$357.3 million
2018 Revenue
(US$12.3 billion) 16 (US$12.1 billion) (US$6.2 billion) (US$235.7 million) 17

Food packaging and

Industry Building materials Telecoms Real estate
processing

Pathway 2: Focus Pathway 3: Focus

Pathway 1: Focus Pathway 4: Create
first on improving alternated between
first on improving a new future-
customer experience operational
Transformation operational ready company by
by building a multi- efficiency and
approach efficiency through separating from
device customer customer experience
smart manufacturing parent company
integration platform (Simplification and
(Industry 4.0) Fairfax Media
(CEMEX Go) Innovation)

1. Platform 1. Decision Rights 1. Decision Rights 1. Decision Rights

Mindset + New Ways of 2. New Ways of + New Ways
Order of 2. Decision Rights Working Working of Working +
organizational 3. Organizational 2. Platform 3. Platform Organizational
explosions Surgery Mindset Mindset Surgery
4. New Ways of 3. Organizational 4. Organizational 2. Platform
Working Surgery Surgery Mindset

experience in the building materials industry, Pathway 1 (Industrialization and

now processes 45% of the company’s total global
sales.14 KPN’s transformation resulted in €570
million ($621 million) in cost savings and a Net
Promoter score (NPS) improvement of 20 points.
And Domain Group developed a popular mobile-
centric platform15 that offers agility as well as a
lower cost base, ultimately resulting in an IPO
that exceeded both its equity value at former
parent company Fairfax Media and projected
valuations by analysts.
14 The disruptive success of the CEMEX Go platform in the build-
ing materials industry, which has been recognized by LOGISTIK
HEUTE through the Supply Chain Management Award 2018, has
led CEMEX to further monetize the platform by licensing it to other
global industry participants. For more information on the LOGISTIK
HEUTE award, see: https://logistik-heute.de/news/scm-award–
2018-cemex-holt-die-trophaee–16340.html.
15 Domain has received numerous awards for the design and func-
tionality of its real estate app, which was awarded “Editor’s Choice”
on Google Play, and named one of Google Play’s Best Local Apps
for 2016. For more information, see “Google Play names 2016’s
best property app,” Real Estate Business Newsletter, December 16,
2016, available at https://www.realestatebusiness.com.au/breaking-
news/11420-google-play-names-best-property-apps.
Standardization): Tetra Pak1617
“Our starting point is strong. We already
have a range of industry-leading activities
underway in the digital arena; we have put
in place a single shared platform on which
we run our entire global business; and we
have lean and modern IT operations in
many areas that provide a solid foundation
on which to use information as a strategic
asset.” Dennis Jönsson, Chief Executive
Officer, Tetra Pak18
Tetra Pak, part of the privately owned Tetra
Laval Group, is a global market leader in aseptic
food and beverage carton packaging, with a total
2019 annual revenue of €11.5 billion ($12.6
16 All currency conversion rates as of May 2020.
17 Revenue numbers pro-forma for FY18, as Domain separated
from Fairfax Media Ltd. (now: Nine Entertainment Co.) on 22
November 2017.
18 Tetra Laval 2016 2017, p. 18, available at https://tlcomprod2.
azureedge.net/static/documents/tetralaval-2016-2017.pdf.

September (19:3) MIS Quarterly Executive 169

Managing Organizational Explosions During Digital Business Transformations

billion). While packaging is its biggest source of Unfortunately, the platform also added
revenue—the company produces over 180 billion complexity for customers: Tetra Pak had unified
packages a year—it also offers food processing plant management, but not its customer journeys.
and adjacent services. During their end-to-end journeys, customers still
At the start of the 21st century, Tetra Pak had to deal with representatives from various
recognized the importance of operational processing, packaging and/or services units:
efficiency on a global scale. Rather than operating
as a collective of over 160 companies selling the “At some point it hit us: our customers
same base product, management focused on feel like they’re dealing with four or five
developing a coherent model driven by process different companies. They need us to act
automation and a single standardized ERP like one company, and here comes the
solution to become a global company selling in explosion on the map; we are not organized
over 160 countries. Then, in 2015, its strategy and to do that. We can say we are one company
IT departments recognized the potential impact all we want, but if we don’t change the way
of digital technologies that had become readily we meet the customer, it’ll never happen.”
available, such as social media, mobile, analytics, Mark Meyer, Chief Information Officer,
cloud and Internet of Things (IoT) solutions. Tetra Tetra Pak
Pak’s digital transformation effort is focused
To improve its platform and further
on “Industry 4.0:” creating fully integrated
differentiate customer offerings in a competitive
collaborative systems that are more efficient
market, Tetra Pak steadily shifted its focus
and respond in real time to changing customer
from operational efficiency toward customer
demands and conditions in factories.
experience. This shift required two additional
The development of a unified plant
organizational explosions: first, there was a
management service that offers end-to-end
radical change in Decision Rights, which triggered
control of operations continued Tetra Pak’s
the need for Organizational Surgery.
strategic focus on operational efficiency but
Rather than create a centralized customer
required a radical change—the company needed
experience division, Tetra Pak first realigned
to create a Platform Mindset. To handle this
decision rights with front-end units to improve
organizational explosion, Tetra Pak chose to
customer journeys across all of its touchpoints.
strategically partner with technology leaders
Cross-functional Key Account teams took end-
to guide the company on how it could best
to-end responsibility for customers locally,
use its data as a strategic asset, and to help
integrating interactions and leveraging deep
service-enable what makes the company great:
understanding of individual customer needs.
its plant operations. The platform focused on
This required changes to metrics and incentives,
three main areas: 1) connecting equipment
away from back-end efficiencies and cost savings
and devices for consistent provision of useful
(which became the responsibility of centralized
data across the company’s entire ecosystem; 2)
operational divisions) toward sales and Net
leveraging that data through advanced analytics
Promoter customer experience scores. Although
to forecast critical failures and conduct predictive
this approach helped solve some initial customer
maintenance; and 3) making the company’s
frustrations of dealing with multiple business
collective knowledge and expertise available to
units, it did not address the underlying business
employees globally by means of mobile devices
complexity and suboptimization. The packaging,
and augmented reality.
processing and services silos still existed, and
The technology providers were more than
Key Account managers had limited control over
suppliers: they understood Tetra Pak’s business
back-end operations—a key requirement for
and engaged in mutual learning. These strategic
further improvement of the customer experience.
partnerships were key in ensuring that the
That is why the company undertook a major
company could experiment (e.g., by using
reorganization (i.e., performed Organizational
Microsoft’s HoloLens smart glasses to aid service
Surgery) under the theme “one company, three
engineers across the globe) and execute its digital
businesses.”
strategy on a global scale.

170 MIS Quarterly Executive | September 2020 (19:3) misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
Alongside the other organizational explosions,
Tetra Pak is making steady progress toward a
New Way of Working, where employees take a
systems perspective of the business—focusing
on what’s required to succeed as one company—
and how it approaches customers. Tetra Pak
initiated a large training program to raise
awareness and understanding of key elements
of the transformation, including Industry 4.0
components, customer journey mapping and
the agile methodology. The latter is especially
challenging for a company that has long
focused on efficiency and unified operations, as
employees are less inclined to use “test and learn”
approaches:
“[One of the] biggest challenges we’re
having is the change management with
people. I’m not at all worried about the
technology. It will work well. It is to change
the way people work. That is going to be
tremendously difficult.” Goren Liden, IT
Director, Tetra Pak
The New Way of Working explosion is ongoing,
but Tetra Pak is already seeing early benefits
from new and enhanced customer offerings. This
explosion has, for instance, created the capability
to print unique QR codes on packages, which
enhances quality assurance efforts and opens up
new promotional and tracking opportunities for
the company and its clients.
Pathway 2 (Integrated Customer
Experience): CEMEX
“The future for our industry will be driven by
the quality of the customer experience, not
just the quality of the products and services.
Our customers are increasingly expecting
to have the same kind of experiences in
working with businesses that they have in
the consumer space.” Fernando A. Gonzalez,
Chief Executive Officer, CEMEX
CEMEX is a building materials company
headquartered in Monterrey, Mexico. It
manufactures, distributes and markets cement,
ready-mix concrete, aggregates and related
building materials in over 50 countries. Like
Tetra Pak, CEMEX has spent considerable
time improving its operations to gain global
efficiencies (called the CEMEX Way), and
building a strong reputation for quality,
safety and materials innovation. For its digital
business transformation, however, it embarked
on a journey along Pathway 2—using new
technological developments to reinvent its
customer experience rather than focus on its
already excellent operational efficiency. The
decision to prioritize customer centricity was
made in 2014, when newly appointed CEO
Fernando Gonzalez made it part of the company’s
new strategic direction. Helping customers
succeed became CEMEX’s second most important
strategic imperative, after its long-standing
“Health and Safety First” policy.
This decision by the CEO was the first among
several changes in Decision Rights, which
directly affected funding and project approvals
throughout CEMEX. Although the CEO was fully
involved in the digital business transformation
effort, he did not lead it by himself. First, he
delegated responsibility to three separate heads
of digital. Then, as the transformation grew
in importance, he moved the responsibility to
shared ownership by the executive committee.
Simultaneously, the executive committee
recognized that true customer experience
improvements required greater autonomy for
digital development teams, along with major
changes relating to New Ways of Working.
Blended learning and development programs
(which leveraged face-to-face training with
online learning platforms) laid the groundwork
for CEMEX’s digital business transformation.
Employees were made fully aware of the
company’s new strategic direction and the
concepts, practices and tools needed to
implement that strategy. Particularly important
was the development of a “digital mindset,” which
comprised five agile components:
1. A focus on customer centricity and
customer journeys
2. Iterative (time-boxed) work processes
3. Collaborative work habits that transcend
silos and hierarchies
4. Test-and-learn environments that foster
experimentation
5. Embracing continuous change.
This digital mindset supported a discovery
process, during which employees conducted
September (19:3) MIS Quarterly Executive 171
Managing Organizational Explosions During Digital Business Transformations
customer interviews, panel discussions and
customer surveys to identify customer pain
points in dealing with CEMEX. The primary
finding of this discovery process was an
unmet industry need for real-time information
and transparency to improve the decision-
making, productivity and operational control
of customers. Employees therefore increasingly
experimented with new customer-facing
initiatives and collaborated with technology
partner IBM to develop new custom applications.
Executive education, as well as workshops on
topics related to digital business transformation,
helped CEMEX’s senior leadership team to
develop a common language to guide and align
the company’s customer-facing efforts toward
developing a single platform—CEMEX Go.
CEMEX’s Platform Mindset focused on simplifying
and streamlining customers’ interactions with
the company. Customers referred to CEMEX Go
as a “one-stop shop,” a platform that allowed
them to: seamlessly place, schedule or adjust an
order; receive instant notifications of their order
status; track delivery trucks in real time from
the moment they leave CEMEX facilities; and
manage invoices and payments for those orders
from multiple devices (including computers,
smartphones, tablets and smartwatches).
Following a speed-to-market approach, CEMEX
was able to quickly develop its customer-facing
platform and scale it worldwide. However, it soon
had to shift its attention and investments back
toward operational improvements:
“We had to push the brakes. We could not
continue evolving without taking care of
some bugs and [back end] issues that were
escalating to a level that was not healthy. If
we didn’t fix those, the adoption rate would
start to decline.” Fausto Sosa, Information
Technology VP, CEMEX
The global rollout of CEMEX Go required
standardizing many of CEMEX’s processes,
solutions and (former) shadow IT efforts.
Organizational Surgery facilitated this
standardization effort. CEMEX split its traditional
IT department into a “digital enablement”
unit (comprising customer-facing projects,
analytics and the development of CEMEX’s
digital capabilities/platform) and a “global
IT operations” unit (comprising data centers,
172 MIS Quarterly Executive | September 2020 (19:3)
sourcing/partnerships and CEMEX’s operational
backbone). These units also introduced new job
functions (e.g., advanced global analytics and user
experience and design) and new local customer
experience offices to consolidate local customer
priorities.
These organizational changes meant that
CEMEX Go could evolve beyond its initial
customer-facing goals. For example, the changes
enabled CEMEX to start supporting internal
operations, including components for CRM,
order fulfillment and analytics. CEMEX also
service-enabled what makes the company
great (its products and efficient operations) by
setting up the CEMEX Go Developer Center. This
latest addition to the platform facilitates the
connectivity of CEMEX processes with customers
through the use of public and private application
programming interfaces (APIs). The Developer
Center enables other companies to integrate
CEMEX products and services into their own
digital offerings and prepares CEMEX to set its
sights on its next goal: leading an ecosystem of
construction materials partners.
Pathway 3 (Developing Capabilities
Iteratively): KPN
“Technology is an essential part of who we
are and what we do. Everything we want to
achieve for our customers and society has
an effect on our own business operations.
The KPN Simplification program and the
associated digital transformation ensure
that we work in an increasingly uniform
manner across all our channels.” Eelco
Blok, former Chief Executive Officer, KPN19
KPN is a provider of information and
communications technology (ICT) services in
the Netherlands, serving consumer and business
markets with a range of products that include
mobile and broadband connectivity and cloud
services. As the Dutch market leader in mobile
telephony, KPN had over 5.5 million customers
and employed approximately 13,000 FTEs in
2018. Just five years earlier, KPN was under
significant financial strain. Strong competition
19 Everyone Connected: KPN Integrated Annual Report 2017, p.
2, available at https://ir.kpn.com/download/companies/koninkpnnv/
Quarterly%20Reports/KPN_Integrated_Report_2017_final.pdf. 
Maximo Ibarra succeeded Eelco Blok as CEO of KPN in April 2018.
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
had reduced prices in saturated markets,
regulations had capped termination rates
and roaming fees, and over-the-top (OTT)20
companies such as WhatsApp, Skype, Spotify and
Netflix had eroded legacy revenue streams (from
voice and text) while placing a heavy burden
on network capacity.21 KPN needed to radically
improve both its operational efficiency and its
customer experience nearly simultaneously to
remain competitive, making the iterative Pathway
3 its only viable option.
At the start of the company’s transformation,
a few customer experience initiatives—such
as creating a single customer identity for
digital services and improving the order-
capture process—seemed especially promising,
with large potential returns. Unfortunately,
KPN’s distributed (and mostly outsourced)
IT capabilities restricted the company from
immediately executing these initiatives:
“Our capabilities were horrible. We had
outsourced, offshored way too much. … If
we really wanted to make the dream of a
digital telco come true, then we had to build
the capabilities ourselves.” Bouke Hoving,
Chief Information Officer, KPN
Before KPN could pursue the goal of creating
a better customer experience, it had to make
several improvements to its operational
foundation—to first move toward the right on
its iterative pathway before moving up (see
Figure 1). This process started with changes in
Decision Rights: the CIO obtained a mandate from
the CEO to form a transformation unit called
Simplification and Innovation (S&I), in which he
could centralize all business process redesign, IT
architecture and IT development capabilities. As a
result, all commercial business unit directors had
20 An over-the-top (OTT) media service is a streaming service of-
fered directly to consumers via the Internet. OTT companies bypass
cable, broadcast and satellite television platforms, the companies
that traditionally act as a controller or distributor of such content.
While commonly applied to video-on-demand platforms, the term
also refers to audio streaming, messaging services and internet-based
voice calling solutions.
21 On average, European telecoms companies’ revenues declined
by 33% between 2008 and 2017. For an overview of these economic
developments, see: 1) The Mobile Economy – Europe 2017, GSMA,
October 17, 2017, available at https://www.gsmaintelligence.com/re-
search/?- file=89a59299ac2f37508b252124726a1139&download; and  The changes initiated by KPN’s new talent
2) Mobile Economy Europe 2013, GSMA, September 5, 2013, avail-
able at https://www.gsmaintelligence.com/research/?file=6b321d- 
25537f3bf708ffa34fabcdbf91&download.
to give up their individual change rights and the
CIO put all localized back-end transformations
(which had mostly been outsourced) on hold.
This freed up significant amounts of capital and
helped shift the focus toward creating New Ways
of Working that could deliver new customer
solutions.
Bringing developers and designers in-
house energized innovation and brought IT
development closer to the business. S&I relied on
specialized external firms to recruit “magnets”
to work at KPN—the very best digital talent in
a particular field who had the power to draw
other talent into the company. The unit also
relocated from KPN’s headquarters in The
Hague to Amsterdam—a location that would be
more attractive to an international candidate
base—where it created a new and exciting
digital workplace. The difference was more than
physical: new hires initiated a shift away from
traditional processing systems to open-source
and cloud-based environments and worked in
agile teams. This New Way of Working—internally
referred to as “Digital Craftsmanship”—enabled
more collective work habits, experimentation and
the development of the teams’ craft. Embedding
these agile practices within the existing corporate
governance proved challenging, however, because
S&I’s new way of working did not map to KPN’s
traditional reporting policies and management
mechanisms:
“The biggest explosion was our internal
target to cancel all the steering committees,
KPI spreadsheets, internal management
letters, management layers, and also the
corporate appraisal system—which were
all big inhibitors for our staff.” Bouke
Hoving, Chief Information Officer, KPN
S&I’s leadership therefore appointed
“proxies:” individuals who maintained tight
communication lines with the rest of the
company and ensured that S&I adhered to
KPN’s standard reporting requirements. This
eliminated unnecessary overhead for the agile
teams, allowing them to learn (without fear of
negative performance evaluations) from mistakes
occurring during the agile development process.
had a positive effect on the company’s bottom
line and Platform Mindset. KPN decommissioned
September (19:3) MIS Quarterly Executive 173
Managing Organizational Explosions During Digital Business Transformations
25% of its systems while replacing every legacy
platform and phasing out traditional software,
replacing it with open source and cloud-based
environments. Early in the transformation, S&I’s
agile teams developed a “digital engine” that
enabled API access to over 300 legacy services
from KPN’s back end, allowing developers to
quickly realize new customer-oriented initiatives.
For instance, one of the first digital engine
projects redesigned the process to reduce the in-
store order capture time for KPN’s popular quad-
play bundle of services from 30 minutes to three.
S&I’s goal was to show results early and
often, thus demonstrating transformation
momentum. Only after initial improvements to
customer experience had been made did S&I
set its sights on a greenfield transformation of
KPN’s operational backbone. A next-generation
business support system was introduced, further
improving the APIs and enabling a second wave of
customer experience improvements.
Before S&I migrated customers to the new
operational backbone, it worked closely with
the commercial consumer unit—which had also
relocated to Amsterdam—to help rationalize
KPN’s product portfolio. Together, the two units
initiated Organizational Surgery, starting with a
two-year commercial product freeze. During this
time, they cut 80% of KPN’s product offerings
and harmonized processes among the remaining
products. This simplification effort helped to
break down internal silos and solidified the
company’s change of focus from products toward
the customer.
KPN’s digital business transformation is
ongoing, but over the course of four years,
the company greatly improved its operational
efficiency, reducing downtime by 90% and
achieving €570 million ($622 million) in savings
(90% above the original target). Perhaps more
importantly, the company strongly improved
its customer experience—achieving an NPS
improvement of 20 points. By mid-2018, KPN was
ready to lead innovation in the 5G era under new
CEO Maximo Ibarra.
Pathway 4 (Creating a New Future-
Ready Unit): Domain Group
“Domain is well placed as it continues to
strengthen its platform and position itself
174 MIS Quarterly Executive | September 2020 (19:3)
at the center of Australia’s real estate
ecosystem. By building on its core strength
as a [property] listings business, Domain is
capturing new revenues from all aspects of
people’s involvement with property.” Greg
Hywood, Chief Executive Officer, Fairfax
Media22
Domain Group is an Australian real estate
media and technology services business. Starting
in the late 1990s as a print and online real estate
classified ads subsidiary of Fairfax Media (a large
media conglomerate), it has since become a go-
to destination to inform, inspire and connect
people throughout the entire property life cycle.
Its ecosystem serves residential and commercial
real estate agents and includes partnerships
with complementary services companies to offer
home loans, insurance services and residential
utilities connections. Domain Group became a
publicly listed company on the Australian Stock
Exchange in November 2017, creating A$0.75
billion (US$0.49 billion) of new value for majority
shareholder Fairfax Media on its first day of
trading. Such separation is a popular strategy for
parent companies that have successfully followed
Pathway 4 of creating (or separating) new units,
though this was not the initial goal of Fairfax
Media:
“We didn’t decide immediately that
[Domain] would be separate. What we
decided was they should be separable.
From a technology point of view, you want
to create strategic options; you don’t want
technology to be a thing that holds back
your strategy.” Robyn Elliott, former Chief
Information Officer, Fairfax Media
The digital business transformation journey
of Domain started in 2012. As one of the many
subsidiaries of Fairfax Media, it was traditionally
regarded as a classified ads marketplace
extension of Fairfax’s publishing business. This
meant it faced the same operational efficiency
and cost-cutting imperatives as the rest of the
company, which was grappling with declining
revenues across the media landscape.
22 Consideration of Domain Group Separation, Media Release,
Fairfax Media Limited, February 22, 2017, available at https://
www.fairfaxmedia.com.au/ArticleDocuments/193/2017-02-22_Do-
main%20Announcement.pdf.aspx. Fairfax Media merged with Nine
Entertainment Co. in December 2018.
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations

Table 2. Overview of How the Four Case Companies Approached and Managed the
Organizational Explosions
Case Platform Tetra Pak CEMEX KPN Domain Group
Initial industrialization CEO is fully involved CIO obtained Appointed a
effort transferred in transformation: transformation separate executive
back-office decision primarily focuses mandate team for the new
rights from country- investments on unit, including
specific managing customer experience All business a newly hired
directors to initiatives process redesign, (entrepreneurial) CEO
centralized shared IT architecture and and a CTO
service functions IT developments
Moved responsibility transferred from Negotiation of
Realigned with from three heads of individual business decision rights
Decision Rights front-end units digital to executive units into a new for various
and Key Account committee digital unit (S&I) decision domains,
teams for complete most notably
responsibility for Management gave Canceled nearly all the technology
customers on a local up control to provide official reporting and infrastructure, with
level more autonomy to appraisal mechanisms the goal of making
digital teams for digital unit; use Domain separable,
Changes in metrics of “proxies” for not separate, from
and incentives: focus reporting and liaising Fairfax Media
on sales and Net
Promoter scores
Created training Created blended Insourced front-end Designated director
program on learning and talent (recruiting responsible for
digitalization and development “magnets”) for the employee experience
Industry 4.0 to foster programs to creation of 250 so- fostered work habits
systems perspective develop a “digital called “agile to the geared toward
of company and mindset:” customer- max” (autonomous, innovation and
raise awareness focused; iterative; cross-functional, progress; focus on a
of key elements of collaborative; empowered) teams sales (rather than an
transformation effort experimental; editorial) culture
New Ways of embracing Focus on employee
Working Gradual introduction continuous change craftsmanship and Instilled agile
of agile approaches continuous learning; methodologies
(where applicable) in Senior management customer focus; data and test-and-learn
product development aligned driven approaches for
and IT transformation speed-to-market
efforts through
participation in
executive education
and workshops

September (19:3) MIS Quarterly Executive 175

Managing Organizational Explosions During Digital Business Transformations

Table 2 (Continued). Overview of How the Four Case Companies Approached and
Managed the Organizational Explosions
Case Platform Tetra Pak CEMEX KPN Domain Group
Reorganization to Split IT into digital Collaboration Corporate
integrate silos and enablement and between digital unit restructuring made
remove complexity: global IT operations (S&I) and commercial Domain one of five
“one company, three units consumer unit to major divisions within
businesses” dismantle internal Fairfax Media
Created local silos by rationalizing
customer experience KPN’s product Official separation
Organizational
offices, along with portfolio (by 80%) from Fairfax Media
Surgery
new functions in and harmonizing through IPO on the
advanced global processes Australian Stock
analytics, user Exchange (after five
experience/design, years)
digital architecture
and emerging
technologies
Strategic partnerships Standardized Developed an API- Re-platformed
with technology processes, solutions enabled digital engine technology
leaders to develop and (former) shadow to make legacy infrastructure onto
the best possible IT efforts for global services available to lighter, purpose-
Industry 4.0 solutions use every developer built technologies
for workforce, that leveraged
analytics and a single Developed an Platform microservices
plant management integrated multi infrastructure team
service for end-to- device digital replaced every legacy Developed an
Platform end plant control platform that offers platform and phased ecosystem for the
Mindset services along the out traditional entire property
entire (end-to-end) software in favor journey through
customer journey of open source partnerships and
and cloud-based acquisitions, serving
Made CEMEX Go environments multiple stakeholders
an open ecosystem (most notably
through APIs for Replaced IT spaghetti consumers and real
external developers with one new (and estate agents)
simplified) back-end
system

Although Domain slowly grew its customer
base, which helped to offset declining publishing
revenues, it also substantially lagged behind
industry leader Real Estate Australia (REA).
Staying competitive required significant
investments—most notably in its technology
infrastructure. To support Domain’s growth,
the executive committee could, for example,
have agreed to investments in shadow IT
efforts. However, the committee decided that
Domain should operate as a standalone entity
to accelerate its development and enhance its
flexibility. Because Domain’s sales and customer
culture fundamentally differed from its parent’s
editorial culture, creating a separate unit made
the most sense.
Domain’s transformation journey started
with three types of (nearly simultaneous)
organizational explosion—Decision Rights,
Organizational Surgery and New Ways of

176 MIS Quarterly Executive | September 2020 (19:3) misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
Working. Corporate restructuring made Domain
a standalone division within Fairfax Media,
alongside divisions such as Australian Publishing
Media, Digital Ventures and Fairfax Radio. The
new division had its own executive team, which
included a newly hired and entrepreneurial
CEO and a chief technology officer. Together,
they negotiated local decision rights for
various decision domains, most notably for the
technology infrastructure. The intention was for
Domain to pursue its own strategies, while still
providing scaling benefits to—and leveraging
relevant centralized systems from—its corporate
parent. Fairfax Media’s cloud-based architecture
meant that costs were variable, allowing for
flexible technology recharge.
Rather than drawing on external consultants,
Domain relied on Fairfax Media for back-office
expertise, such as HR and internal auditing. In
terms of adopting New Ways of Working, Domain
drew heavily on its sales-oriented culture. In
a few months, the 200-person unit was living
and breathing digital product life cycles and
bringing new features to market using test-and-
learn approaches. Domain’s dedicated director of
employee experience focused on fostering work
habits geared to innovation and progress. Over
the next five years, these new ways of working
enabled Domain to rapidly scale up its sales,
product development and technology teams to
approximately 850 employees.
With the right strategy, structure, agreements,
funding, processes and work habits in
place, Domain could then focus on its key
differentiator—its Platform Mindset. Initially,
the goal was to develop an innovative, mobile-
centric customer solution that would serve
as the go-to destination for both prospective
home buyers and real estate agents. However,
as Domain gained a better understanding of its
customer base (i.e., consumers and agents) it
focused on creating a broader ecosystem for the
entire property journey—from first dreaming of a
house to settlement and post-move-in. To achieve
this, Domain replatformed its technology onto
lighter, purpose-built technologies that leveraged
microservices. This lighter approach not only
lowered the unit’s cost base but also offered more
flexibility, enabled ecosystem partners to plug
and play onto Domain’s platform, and provided a
huge motivational boost for development teams
to experiment with partners and customers
to create new solutions. Domain has now fully
acquired some ecosystem partners and partly
owns others, and is always on the lookout for
new ecosystem partners. Over the course of five
years, Domain’s digital business transformation
had taken it from an estimated A$350 million
(US$229 million) subsidiary to a A$2.2 billion
(US$1.4 billion) success story for Fairfax Media.
Summary of How the Four Case
Companies Handled the Organizational
Explosions
Table 2 provides an overview of how Tetra
Pak, CEMEX, KPN and Domain Group approached
and managed the Decision Rights, New Ways of
Working, Organization Surgery and Platform
Mindset organizational explosions.
Recommendations for
Designing and Managing
Organizational Explosions
IT vendors and market intelligence firms
estimate that over 70% of digital business
transformation efforts will fail to deliver
sustainable performance improvements.23
We believe the four organizational explosions
account for much of the difficulty in realizing
performance improvements. The companies in
our survey that still had to address challenges
related to three or all four of the explosions
reported (industry-adjusted) net profit margins
that were, on average, 7 percentage points
lower than those of companies that had no
significant explosion challenges to contend with.
Figuring out how to design these explosions—
and which to address first—is key. Based on
our four case studies, survey and workshops
for senior executives (see the Appendix), we
learned that there is no fixed order in which the
four explosions are typically addressed along
each pathway. Each company experiences the
explosions slightly differently, depending on its
23 See, for instance: 1) Maor, D., Reich, A. and Yocarini, L. The
People Power of Transformations, McKinsey & Company, February
10, 2017, available at https://www.mckinsey.com/business-functions/
organization/our-insights/the-people-power-of-transformations;
and 2) Findling, S., Rosen, M., Pucciarelli, J. C., Martin, S. and
Ng, S. IDC FutureScape: Worldwide CIO Agenda 2016 Preditions,
IDC, 2015, available at https://cio.event.idg.se/wp-content/uploads/
sites/13/2016/02/IDC-Futurescape-Worldwide-CIO-Agenda-
2016-Predictions.pdf.
September (19:3) MIS Quarterly Executive 177
Managing Organizational Explosions During Digital Business Transformations
capabilities, competitive landscape, industry
regulations, strategic goals and other company
characteristics. What we did find were patterns
and good practices on how to address the
explosions. Based on these findings, we provide
the following five recommendations for those
leading digital business transformation efforts.
Recommendation 1: Hold Off on
Organizational Surgery
Digital disruption is a threat to nearly every
company in every industry. Respondents to
our survey indicated that, within the next five
years, an average of 33% of company revenues
will be under threat. The response to this
threat, however, is not to immediately shake up
organizational practices and silos through major
restructuring and reorganization. While radical
organizational surgery can help companies
reach stated objectives in stable and predictable
markets, it is too slow and exhausting for the
start of a digital business transformation.
Restructuring solidifies practices and processes
and therefore detracts from a company’s ability
to experiment with new customer offerings and
respond to opportunities in agile ways. That
is why—for all pathways except the fourth—
organizational surgery is best left as the final
explosion.
Our case studies show that once the Decision
Rights, New Ways of Working and Platform
Mindset organizational explosions have been
successfully managed, companies are better able
to define the structure that is required to solve
lingering complexity and derive further business
and customer value. For Tetra Pak and KPN, that
meant integration to remove internal silos; for
CEMEX, it meant splitting the IT unit into two
separate entities and together with creating local
customer experience offices.
Regardless of the nature of the structural
changes required, however, we found it pays
to hold off on Organizational Surgery. Carrying
out multiple rounds of restructuring is a sure
sign of not being clear about what is needed,
and companies in our survey that attempted
Organizational Surgery without first addressing
the other explosions performed worse on all
of our industry-adjusted performance metrics
than companies that waited until the end to
restructure. Their net profit margins were an
178 MIS Quarterly Executive | September 2020 (19:3)
average of 12 percentage points lower, revenue
growth was 17 percentage points lower, and
revenue from products and services introduced in
the last three years (a measure of innovation) was
16 percentage points lower.
Recommendation 2: Start by
Addressing Decision Rights
When companies hold off on restructuring,
they remain tied to silos and hierarchical
structures in which typically only senior
managers—far removed from customers—
accumulate enough information to make
decisions. However, companies undergoing a
digital business transformation cannot afford
such drawn-out decision-making processes; they
need to identify and act on new opportunities
to solve customer and organizational problems
quickly. Therefore, the best starting point for a
transformation journey is to address the Decision
Rights explosion. The executive committee, for
instance, has to collectively decide on the long-
term vision for the company, define the scope and
priorities of digital transformation efforts (see
Recommendation 5), and give operational teams
greater autonomy to achieve the company vision
through innovation (within the boundaries set at
the executive level).
Such autonomy may seem counterintuitive
for companies on Pathway 1, which focuses on
standardization as a foundation for delivering
customer experience improvements later, but
Tetra Pak’s journey shows that greater autonomy
and standardization are not necessarily mutually
exclusive. By separating back-office from front-
office decision rights, Tetra Pak’s executive
committee ensured operational efficiencies
through shared standards while simultaneously
providing its Key Account teams with the freedom
to improve the customer experience locally.
Changes to budgets, incentives, (performance)
metrics and other related governance
mechanisms made by the executive committee
served as additional guardrails to further guide
coherent action of operational teams throughout
the company.
In our survey, approximately half of the
companies actively addressed decision rights at
the start of Pathways 1, 3 and 4, compared with
only a third at the start of Pathway 2 (creating
integrated customer experiences). Executives
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
of Pathway 2 companies are more likely to seek
customer experience improvements primarily
with the aid of outside support. By working with
external vendors or newly acquired companies to
gather great customer information and create a
multiproduct, multichannel customer experience,
these companies may perceive there is less
urgency for changing decision rights to empower
internal teams. It is not until they encounter
reduced returns on their investments (and a
greater cost to serve the customer) that they
“turn right” (as indicated in Figure 1) to focus on
their operations and decision rights.
However, the CEMEX case shows the value of
addressing decision rights upfront—especially
when focusing on customer experience
improvements. In particular, this case shows
the value of combining greater team autonomy
with new ways of working. The investment in
training and support for new ways of working
doesn’t just alleviate executive concerns that
greater autonomy inevitably ends in chaos,
it leads to greater perceived effectiveness of
digital business transformations. We found that
when both the Decision Rights and New Ways of
Working organizational explosions are addressed
upfront, transformations are twice as likely to be
perceived as “effective” or “very effective.”
Recommendation 3: Invest in the
Development of New Work Habits
The biggest challenge to digital business
transformation is that while technology changes
quickly, ways of working do not. Digital business
leaders in our survey estimated that their
transformation efforts will significantly affect
67% of their employees, who will have to become
accustomed to new systems, data and processes,
and—most importantly—will need to adopt new
work habits to ensure the transformation delivers
the expected performance improvements.
Adopting new work habits is not trivial, which
is why we argue that the New Ways of Working
explosion is best addressed early on—in
conjunction with the Decision Rights explosion.
We encourage companies to consider
employee work habits because they are an
actionable aspect of the elusive concept of
corporate culture. It takes time to develop new
work habits; significant investments are needed
to embed them in the organization. Moreover,
these habits can’t be “bought.”24 Instead, new
habits have to be nurtured and supported
through training and the development of an
adaptive work environment. Leaders at KPN,
for example, didn’t instruct employees to adhere
to the agile methodology or minimum viable
product approaches. On the contrary, employees
became more agile and experimental because
leaders and peers empowered and encouraged
them to continuously improve their skills and
regularly adjust their physical, virtual and
organizational environment to their changing
work needs. Working in time-boxed sprints, for
instance, does little good if teams don’t have
the tools they need to collaborate effectively or
if they continuously struggle to find the right
information at the right time. The employee
experience must enable employees to sustain the
development of new work habits.
We learned that embedding new work
habits is particularly difficult for companies
following Pathway 2, where developing
customer-focused capabilities is prioritized
over operational capabilities. Just half of the
Pathway 2 companies we studied considered
employee training and improving the employee
experience as “important” or “very important”
to their future success. The work complexity
resulting from a lack of investments in these
areas means that employees have to make heroic
efforts to deliver a great customer experience—
which is not sustainable. A dedicated employee
experience officer (as in the Domain case)
could help by raising employees’ concerns
at the leadership level, while simultaneously
improving transformational and organizational
outcomes. Leaders of companies that supported
the development of new work habits through a
better employee experience were three times as
likely to perceive their transformation efforts as
“very effective.” 80% of these leaders reported
that their corporate agility (significantly)
outperformed other firms in their industry.
24 We found that those companies that “bought” new habits by
using the digital talent of freelancers, contractors and gig workers
for the majority of the IT workforce performed significantly worse 
than those that primarily relied on the development of internal (FTE)
talent. Their (industry-adjusted) net profit margins were 5 percentage 
points lower; (industry-adjusted) revenue growth was 6 percentage
points lower; and revenue from products and services introduced in
the previous three years was 12 percentage points lower.
September (19:3) MIS Quarterly Executive 179
Managing Organizational Explosions During Digital Business Transformations
Recommendation 4: Build Platforms
Incrementally and Holistically
Successful digital business transformations
leverage platforms that advance operational
efficiencies and reinvent customer experiences.
But unlike the four cases described in this
article, only 21% of the companies in our survey
were effectively offering certain core business
capabilities as (componentized) digital services.
Interestingly, over half of these companies had
followed Pathway 4 and created a new business
unencumbered by legacy systems and data and
typically with a clear vision of an ecosystem
business model that requires sharing digital
services externally.
We recommend that companies following
the other pathways—struggling to develop
the underlying capability to support their
transformation—build platforms incrementally,
underpinning the entire process with their
learnings from the Decision Rights, New
Ways of Working and Organizational Surgery
organizational explosions. For example, the
CEMEX Go platform started out small, focusing
first on enabling real-time tracking of delivery
trucks via an app. But once employees had
adopted customer-centric work habits that
transcended silos and hierarchies, CEMEX could
better identify customer needs and develop new
components. The result was a “one-stop shop”
platform for the building materials industry,
which gradually evolved to serve internal
employees and business partners as well.
The good news is that there is no need to go
through this platform evolution process alone:
each of our four case companies relied on a few
strategic business partners that understood the
business and were willing to engage in mutual
learning. What is important is that companies
do not lose sight of the need to create reusable
components rather than (one-off) point solutions
for products and services.
Recommendation 5: Involve the Entire
Executive Committee
The breadth of impact of the four
organizational explosions means that digitally
enabled business transformation shouldn’t
just be the IT department’s job. We found that
successfully addressing the explosions and
making good progress on the transformation
180 MIS Quarterly Executive | September 2020 (19:3)
journey (regardless of the chosen pathway)
requires the involvement of the company’s entire
leadership team. In our survey, transformation
efforts led by CIOs or CDOs (chief digital officers)
were, on average, 27% complete; efforts led
by the entire executive committee were 38%
complete and with the board involved this
number rose to 44%.
Leaders in our case study companies
intuitively recognized the importance of business
leadership. CEMEX’s executive committee shared
responsibility for the company’s digital business
transformation, Tetra Pak worked to become “one
company, three businesses,” and leaders from
KPN’s Simplification and Innovation unit worked
with their peers in the commercial consumer
unit to dismantle internal silos and increase
KPN’s customer focus. Each of these companies
found that if the scope of transformation efforts
is limited to the IT or digital unit, or efforts
are led by these units, then transformation
progress will be limited. The role of the CIO,
CDO and other technology leaders is to ensure
the transformation involves the entire company,
and to create a technology strategy that fits with
the company’s future vision. Technology leaders
must also help to shift the mental models of the
executive committee and board to become more
digitally savvy and guide the company toward
more agile ways of working.
Concluding Comments
Companies are struggling to sustain
performance improvements from their digital
business transformation efforts. That is because
successful progress along the four transformation
pathways depends on how companies handle
the Decision Rights, New Ways of Working,
Organizational Surgery and Platform Mindset
organizational explosions they will encounter.
The changes brought about by these explosions
need to be designed and their impacts anticipated
and managed.
In this article, we have described the
transformation pathways followed by four
companies—Tetra Pak, CEMEX, KPN and Domain
Group—and evaluated how they handled
the organizational explosions. Drawing on
the digital business transformation journeys
of these companies along distinct pathways
and on our other research, we have provided
misqe.org | © 2020 University of Minnesota
 Managing Organizational Explosions During Digital Business Transformations
five recommendations for digital leaders. We
believe these recommendations—along with the
explosions concept and pathways framework—
will inspire leaders in other companies to create
a vision and a common language to structure
conversations about their transformation
approach and thus speed up transformation
efforts that will result in sustainable performance
improvements. Without a common language and
thoughtful handling of the four organizational
explosions, digital transformations are at risk
of becoming yet another failed attempt to gain
competitive advantage.
Appendix: Research Methodology
This article is based on three studies
we conducted at the MIT Sloan Center for
Information Systems Research (CISR) between
2015 and 2018. The first study drew on survey
data (N=413) from a research project on digital
disruption to structure exploratory discussions
on digital business transformation with over 50
executives globally. During these discussions,
we inquired about the goals, challenges and
best practices of their transformation efforts.
Our analysis of the emerging themes from these
discussions resulted in the concept of the four
organizational explosions and the transformation
pathways framework depicted in Figure 1.
In the second study, conducted in 2017,
we surveyed 400 digital leaders from every
global region (31% of the companies were
headquartered in North America and 28% in
Europe). The survey was designed to quantify the
four explosions using the challenges and practices
that emerged from the earlier discussions.
We also asked respondents to evaluate their
operational and customer experience capabilities,
and included several questions about their
transformation approach and journey thus far.
The third study, conducted in 2018, involved
in-depth studies of the four case companies
described in this article to assess how our
explosions concept could be applied to the four
pathways framework. At each company, we
conducted semistructured interviews with one
or more members of the executive team (typically
the CIO or the company equivalent) and a direct
report, asking them to openly share their digital
business transformation experiences. Each
interview lasted between 60 and 90 minutes
and was recorded and transcribed to preserve
the richness and complexity of the data. We then
coded the data using the four explosions concept,
while simultaneously looking for emerging
(alternative) patterns in the data.
Finally, throughout 2018 and 2019 we
presented the results from our research at
executive workshops in six cities (Amsterdam,
Boston, Chicago, New York, Stockholm and
Sydney). We found that executives could readily
identify which transformation pathway they
were following (or wanted to follow) and could
see how the four organizational explosions were
required for progress on their transformation
journeys. In addition, we conducted over 40
workshops with senior management teams
or boards using the explosions concept and
pathways framework. These workshops enabled
us to understand what works and doesn’t work
at a particular company. The feedback from
workshop participants was used to refine the
recommendations included in this article.
About the Authors
Nick van der Meulen
Dr. Nick van der Meulen (nmeulen@mit.edu)
is a research scientist at the MIT Sloan Center
for Information Systems Research (CISR). He
conducts academic research that addresses
the challenges of senior-level executives, with
a specific interest in how companies need to
organize themselves differently in the face of
continuous technological change.
Peter Weill
Dr. Peter Weill (pweill@mit.edu) is an MIT
senior research scientist and chair of the MIT
Sloan Center for Information Systems Research
(CISR), which studies and works with companies
on how to transform for success in the digital
era. MIT CISR has approximately 90 corporate
members globally who use, debate, support and
participate in the research. Peter’s work centers
on the role, value and governance of digitization
in enterprises and their ecosystems. In 2008,
Peter was recognized by Ziff Davis as no. 24 on
the “The Top 100 Most Influential People in IT”
list and was the highest-ranked academic.
September (19:3) MIS Quarterly Executive 181
Managing Organizational Explosions During Digital Business Transformations

Stephanie L. Woerner
Dr. Stephanie Woerner (woerner@mit.edu) is
a research scientist at the MIT Sloan Center for
Information Systems Research (CISR). She studies
how companies use technology and data to create
more effective business models and how they
manage the associated organizational change. She
is the co-author, with Peter Weill, of What’s Your
Digital Business Model? Six Questions to Help You
Build the Next-Generation Enterprise (Harvard
Business Review Press, 2018).

182 MIS Quarterly Executive | September 2020 (19:3) misqe.org | © 2020 University of Minnesota