Received: 12 June 2023 Accepted: 14 June 2023

DOI: 10.1002/joom.1271

GUEST EDITORIAL

Digital transformation in operations management:

Fundamental change through agency reversal

1 | INTRODUCTION digital technologies have the potential to affect OM processes

and decision-making with regard to finance, design, produc-
The emergence of digital technologies across all aspects of tion, and the delivery of products, services, or combinations
operations management (OM) has enabled shifts in deci- of them.
sion making, shaping new operational dynamics and busi- The broader OM literature has already set the stage
ness opportunities. The associated scholarly discussions in for the consideration of new business models and innova-
information systems (IS) and OM span digital manufactur- tion tournaments that have been extensively influenced
ing (e.g., Roscoe et al., 2019), the digitalization of OM and by DT endeavors, such as platform services, omnichannel
supply chain management (e.g., Holmström et al., 2019), retail, supply chain information exchange, and Internet
platform outcomes (e.g., Friesike et al., 2019), and econo- of Things (IoT)-enabled operations. This line of research
mies of collaboration (e.g., Hedenstierna et al., 2019). For can contribute to contemporary and ongoing discussions
such changes to be successful, however, there is a need for within the broader field (e.g., Holmström et al., 2019),
organizations to go beyond the mere adoption of digital including the opportunities for organizations to leverage
technologies. Instead, successful changes are transforma- presence in one market into other areas; the emergence
tional, delving into digital transformation (DT) endeavors of ecosystems that take into consideration all players in
(Vial, 2019), which in turn can enable operational the value chain; the appeal of multi-sided platform busi-
improvements in organizational performance (Davies ness models that bring together disparate actors; the
et al., 2017), lead to structural changes in operations pro- value of new data sources when serving new customers;
cesses, and may result in new business models being and the importance of artificial intelligence (AI) in the
deployed. form of advanced algorithmic solutions as a competitive
Appropriately, DT endeavors are increasingly treated advantage for organizations. Such scholarly discussions
in both the IS and OM literature as an ongoing process can further consider failures caused by the complexity
rather than an isolated project with a clear start and finish and comprehensiveness of actions that organizations
(e.g., Struijk et al., 2022). Here, we adopt this line of attempt to undertake during DT endeavors (Struijk
reasoning and specifically treat DT endeavors as: “the use et al., 2020, 2023).
of digital technologies to evolve operational activities by Empirical research as well as theoretical insights into
creating new or transforming existing processes, cultures, DT endeavors, therefore, can challenge our established
and customer experiences to meet changing business and understanding of OM theory and practice, and highlight
market requirements.” Such a perspective is somewhat the importance of organizational dynamics as inter-
distinct from widely adopted definitions of DT in IS and twined with higher levels (Struijk et al., 2022). Our aim
OM (e.g., Vial, 2019), as well as from the strict consider- here, thus, is to provide an epistemic platform to advance
ation of radical operational innovation (cf. Hammer, 2004). our understanding of how DT endeavors, including the
Specifically, our perspective is neither predicated on “dis- adoption of digital technologies, business model innova-
ruption” per se, nor limited by such transformations being tions, and innovations in collaboration mechanisms and
fundamentally strategic ones for the focal organization. methods of operations improvement, can affect various
In other words, DT endeavors can (i) extend into the crea- aspects of OM. In the discussion that follows, we delin-
tion of new organizational processes, (ii) transform exist- eate a review and conceptualization of DT in OM, taking
ing processes either incrementally or more substantially, stock of the topic within the field and exploring pathways
(iii) shift decision making with regard to those processes, for moving forward beyond the hype. In doing so, we
(iv) enable the consideration of new business models, and draw attention to a change in the relationship between
(v) largely serve as a source of facilitation and synergy in humans and technology, where the roles of an agent and
existing ones. In this special issue, we characterize the spe- a principal are being reversed for the first time in the evo-
cific role of DT in OM as follows: through DT endeavors, lution of the broader IS theory and practice. Specifically,

876 © 2023 Association for Supply Chain Management, Inc.. wileyonlinelibrary.com/journal/joom J Oper Manag. 2023;69:876–889.
GUEST EDITORIAL 877

we argue that the transformative nature of DT lies in an days, while MRP systems facilitated the day-to-day plan-
agency reversal in many organizational processes that are ning of manufacturing activities, CAD tools were devel-
affected by it. oped to enable the design of complex components with an
unprecedented level of precision. To close the loop, CIM
systems emerged to facilitate the use and supervision of
2 | D I G I T A L TR A N S F O R M A T I O N automated production tools resulting from the evolution
ORIGINS: EVOLUTION OF of physical technologies. Although such IS combination
INF ORM ATION TEC HNOLOGIES provided support for the design, planning, and control
IN OPERATION S loop of OM, each one was function specific. As additional
IS got added into the picture, including sales support and
Technology evolution has been a central topic for the procurement systems, the inherent standalone nature of
broader management literature, due to the transforma- such tools created interface maintenance challenges and
tive effect of technological change on organizations, indi- quality problems due to redundant databases, incompati-
viduals, and society at large (Grodal et al., 2023). ble protocols, and data formats. Such challenges, in turn,
Technology is inherent in OM theory and practice, and created the need for the first fundamental change in the
its role in the value-adding processes of organizations is role of IS, as depicted in Table 1. Instead of providing
crucial to the extent that early management theorists function-specific support, digital tools would have to pro-
used the word “technology” in place of “process” when vide comprehensive process-wide support. Additional ben-
discussing what we now know as OM (Thompson, 2017). efits to such integration would ostensibly include
The evolution of OM, thus, has been tightly linked to the reductions in data and software incompatibilities as well
evolution of both physical technology as well as advanced as redundancies (Jacobs & Weston, 2007).
IS, from the invention of the spinning jenny in the early The challenges in such organizational and technology
18th century to modern advanced algorithmic solutions. silos were addressed by a new cohort of IS vendors. Aided
Our special issue focuses on the latter, within the context by the emergence of the client–server information architec-
of DT and the broader consumerization of digital tech- ture in the 1990s, companies like SAP embraced the chal-
nologies (Gregory et al., 2018; Struijk et al., 2022). lenge of combining the features of the previously function-
Although we use that term (DT) and argue that the con- specific tools into a single, companywide software suite and
temporary forms of such technologies bear an exceptional database. The implementation of these ERP systems turned
potential for fundamental change, it is still useful to view out to be fraught with challenges, resulting in many well-
contemporary technologies within the greater picture of publicized failures (Davenport, 1998), yet through their
the evolution of organizational IS. In doing so, we see three inherent support for business-wide integration (Gattiker &
distinct phases in that evolution as shown in Table 1. This Goodhue, 2005) and process standardization (Cotteleer &
view departs from the idea that the contemporary digital Bendoly, 2006), they ultimately proved their worth for
technologies are merely linear extensions of technological many organizations (Tenhiälä & Helkiö, 2015). Neverthe-
evolution, in the sense that they deliver similar benefits as less, it also became evident that a single ERP system was
all of the previous technologies such as reducing the costs not the optimal solution for everyone, and organizations
of data collection, storage, as well as processing, and enable with lesser needs for integration and standardization could
faster and better decision making. Instead, we view the his- perform well with standalone tools (Tenhiälä et al., 2018).
torical development in the role of digital technologies in To serve the needs of those organizations, a supplemental
OM as encompassing three major stages: stand-alone group of vendors, including Appian and Pegasystems,
tools, integrated tools, and, contemporaneously, increas- emerged to resolve the interface and redundancy problems
ingly autonomous tools that have the potential to deliver in organizational workflows with a new digital tool called
an unprecedented change in the human-technology rela- an iBPM system. As a natural extension to the broadening
tionship, where DT in OM resides. We further discuss these scope of the support of digital tools from individual
three stages through an elaboration on the leading technol- business functions to entire business processes, a variety
ogies of the time, providing a brief overview on how vari- of technologies also emerged to support processes that
ous digital technologies have contributed to OM practice. spanned organizational boundaries, including radio-
From the 1970s, when IBM developed the COPICS frequency identification for interorganizational product
software package for MRP, until the turn of the millen- tracking (Bendoly et al., 2007) and APS systems featuring
nium, when vendors like Manugistics and i2 marketed interorganizational supply network planning capabilities
advanced planning and scheduling (APS) systems for inte- (Stadtler, 2005).
grated supply chain optimization, the field of OM has By around 2015, the industry began to witness yet
experienced an explosion in the use of IS. In those early another critical development in the use of digital
878 GUEST EDITORIAL

TABLE 1 Digital evolution in operations management.

1970–1995 1995–2015 2015 onwards

Role of digital Digital tools provide functional Digital tools provide process-wide Humans provide support for digital
technology support for humans in OM support for humans in OM tools in OM
Typical • Material requirements • Enterprise resource • Artificial intelligence
technologies planning (MRP) planning (ERP) (AI)/advanced analytics
• Computer-aided design (CAD) • Intelligent business process • Internet of Things (IoT) and
• Computer-integrated management (iBPM) Big Data
manufacturing (CIM) • Radio-frequency • Advanced self-guided robotics
identification (RFID)
Genre of Standalone tools to aid in Integrated tools for OM across Autonomous tools to automate
technology function-specific information business functions and supply OM decision making
access chain entities

technologies. The decades-long trajectory in physical be viewed through various lenses and perspectives (Grodal
technologies that had led to ever-increasing industrial et al., 2023), here we emphasize the changing roles in the
automation started to find ways to connect directly to human-technology relationship (see Table 1) to better
digital technologies without a need for a human media- understand DT in OM as far more than a simple extrapola-
tor. Equipped with sensors and algorithmic solutions, tion of prior advancements.
advanced robotics reached a new level of autonomy, lead-
ing to breakthroughs in a variety of operational settings
from warehouse automation to robotic surgeries 3 | SHIFTING DECISION MAKING
(Mukherjee & Sinha, 2020) and increasingly in the domain AND POWER
of knowledge-intensive professional services (Spring
et al., 2022). Contemporary robotic solutions can relieve Concurrent with the emergence of digital technologies,
human operators from the physical burden of work or and the rise of DT in OM, has been the appearance of
enable doing it beyond humanly achievable precision and critical questions related to how decision making can be
consistency. In combination with AI, such solutions could informed or automated, as well as to how the pervasive
assume an increasing proportion of the cognitive burden, use of digital technologies and DT impacts individual
as well. To resolve cognitive challenges, AI needs large responsibilities and shifts power among producers, and
datasets for training, which are increasingly drawn from consumers. Critically, decision support is increasingly
constellations of sensors and communication tools known provided by both human-driven analysis of such data,
as IoT. While earlier sensor technologies enabled remote and advanced algorithmic solutions. In the extreme, this
monitoring and predictive maintenance of industrial equip- can represent a significant role reversal in decision-
ment (Persona et al., 2007) as well as real-time sharing of making, positioning non-human actors as decision
inventory data (Bendoly et al., 2007), current AI-enabled makers and directing operational moves carried out by
technologies are increasingly capable of proactively con- humans (Mims, 2021; Schechner, 2017). To best leverage
trolling and adjusting equipment to optimize maintenance the potential of both actors in advanced decision-making,
and the timing and quantities of inventory replenishment. human-machine interaction needs to be carefully
Advances in data analytics and in-memory computing designed (Gante & Angelopoulos, 2022, 2023; Hoberg &
(IMC) have critically improved the performance of these Imdahl, 2022). The spectrum from human driven, technol-
digital technologies, kicking off a trend where humans are ogy supported to technology driven, human-supported
no longer so much the users of the technology as they are dynamics—with various degrees of concentration along
its mere supervisors. In fact, even such a supervisory role this spectrum (i.e., a distribution of use)—increasingly
could be already questioned, as recent research shows that characterizes and distinguishes contemporary organiza-
human interventions and adjustments to the automated tions. This applies to both the case of administrative pro-
decisions of digital tools are more often counterproductive cesses as well as to processes such as order-picking in
than they are beneficial (e.g., Caro & de Tejada warehouses (e.g., Sun et al., 2022). Less clear are the costs
Cuenca, 2023; Ibanez et al., 2018; Kesavan & and benefits of specific levels of agency reversal for orga-
Kushwaha, 2020). Although the evolution of IS in OM can nizations, for example, when technology usurps the
GUEST EDITORIAL 879

traditional principal role held by humans, or the pres- There are analogies in how learning occurs across a
sures that these place on the stewardship of the datasets range of digital technologies. Critical to appreciating such
needed to train algorithmic solutions (Angelopoulos learning is a consideration of how digital technologies
et al., 2021). can leverage what they learn. When customers are con-
sidered as co-producers, they are seldom given the oppor-
tunity to make impactful changes to operating processes.
3.1 | Implications for customers and In a product customization context, for instance, this
organizations relates to the use of combinatoric configurations to cus-
tomize shoes (e.g., model, materials, and colors) without
The broader management literature has long debated options to add free-form features that alter predefined
agency. Insights from the early work of Chase (1978), for designs (Randall et al., 2005). Such insights might be
instance, inspired a wealth of subsequent discussions gleaned through product and service feedback, but spe-
regarding the varying importance of customers as co- cific and actionable solutions are unlikely to emerge from
producers, critical to the success of service operations customers no matter how embedded they are as co-
(e.g., Cho et al., 2022; Damali et al., 2022; Dellaert, 2019; producers. Customers as co-producers, thus, are unlikely
Yalley, 2022). Certainly not all service processes benefit to appear beyond the level of agent in a relationship with
from a high degree of customer contact, and thus not all organizations. Digital technologies pose a striking distinc-
service outcomes are highly reliant on customer (inter) tion in this regard, which we depict in Table 2, relative to
actions; however, some service processes are. As organi- the potential for customers as co-producers.
zations maintain a range of service processes, the degree There are both upsides and downsides implied by
of customer reliance becomes a distribution bound by these shifting roles. From an OM perspective, DT clearly
various levels of reliance. Further, many service opera- has the potential to empower both customers and organi-
tions that involve customers have a certain level of dis- zations, however, it can also take some of the decision-
cretion regarding the quality of service and customer making power out of their hands. From a customer
experience provided (Hopp et al., 2007). Organizations are empowerment perspective, DT can be operationalized in
accustomed to understanding—and strategizing around— ways that increase transparency and help customers
the customer co-producer role, and they increasingly real- rationalize benefits and costs/risks associated with a
ize the need of customers to be viewed, in some instances, wider array of options (e.g., Clemons et al., 2006). Shift-
as partners rather than arms-length entities—not unlike ing cognitive burdens onto automated decision support
often-referenced close ties between some supplier and systems can also allow customers to focus on critical
buyer organizations. aspects of goods and services they might otherwise over-
What organizations have only recently begun to look. That is, digital technologies as an increasingly deci-
consider, however, is a similar reliance on digital technol- sive co-producer can prove a valuable companion to
ogies, acting either as advanced agents or as quasi- customers in the broader decision-making context of
principals. Such co-production has received limited product, and process selection.
scholarly attention. Xue et al. (2005) noted a paucity of This is the case, for example, when it comes to con-
discussion almost two decades ago, and a contemporary sumer feedback. In the early stages of expansion of digital
review of the management literature indicates that not technologies, the facilitation of IT-supported consumer
much has changed in this regard. Their work discusses feedback represented an unprecedented expansion of
the critical, mediating role that particular digital technol- insight into real-time market performance and emerging
ogies provide to customers positioned in co-producer trends. Organizations, however, were still reliant on that
roles. At this point, digital technologies were already feedback being voluntarily provided. The increased
starting to play a role in co-production, albeit still pre- power of digital technologies, however, can also be used
dominantly relegated to a static, or at best responsive, by organizations in place of insights otherwise gained
resource status. Currently, many advanced digital tech- through coordination with customers. With the increas-
nologies can follow rules as well as make their own rules ing volume, velocity, and variety of data, advanced algo-
based on their exposure to datasets. In other words, many rithmic solutions can now discern shifting interests of
digital technologies have a capacity to learn, act upon customers before they voice their preferences (Zuo
such learning, and give rise to new dynamics. A contem- et al., 2022, 2023). Currently, every action that a con-
porary example that has taken both academia and indus- sumer makes, from shopping cart placement to returns,
try by storm is ChatGPT, which—according to itself—is a from questions asked of search engines to social media
large language model trained to assist in generating chatter, from click streams to even biometric data, can
human-like text based on provided input. flow regularly, and be collected, stored, and analyzed.
880 GUEST EDITORIAL

TABLE 2 Shifting role of digital technology in relation to customers.

Co-producer
Arms-length
Resource Agent Principal
Customers Traditional Conditionally Typical Highly Atypical
Product purchase or limited High service-contact settings where Extreme MtO/DtO settings where
engagement service settings success relies on customer customers fully direct value-
involvement added processes
Digital Traditional Pervasive Increasingly Typical
technology Information support settings Settings where sufficient detail is Settings where advanced learning
constrained by interactivity limits; available to yield responsive, and autonomy permit AI-derived
largely pre-scripted automated support towards actions orders/placement/staffing

Insights extracted from such large collections of micro- such as local events or income-dependent plant closures
signals, analyzed through advanced algorithmic solu- may be less structured and are only available to demand
tions, are now far more insightful for retailers than the planners with “an ear to the ground.” As a result, demand
often biased and sporadic nature of volunteered commen- planners, who are also ultimately responsible for forecast-
tary that online retailers have been accustomed to. The ing performance, often have the opportunity to adjust
co-producer role has very much shifted from the con- ostensibly powerful forecasts generated by algorithmic
sumer to the system in this case, giving rise to timely and solutions (Perera et al., 2019).
topical questions: What does this mean for the value of Prior research shows that the extent to which humans
customer engagement? What does it imply for the value of add value in forecasting varies greatly (Katsagounos
investments oriented towards customer care? et al., 2021; Khosrowabadi et al., 2022). A critical ques-
If the value of “partnership” shifts away from cus- tion, thus, arises as to how to best manage and use the
tomers in their limited co-producer capacity and towards human input in such processes. Rather than risk losses
that of digital technologies in their exponentially growing due to well-meaning but potentially biased human judg-
capability, then one might anticipate at least some losses ment, such additional insight might be viewed simply as
in benefits to certain customer sectors (e.g., perhaps those an additional data stream, feeding into the prediction
more likely to physically patronize but of less economic process as generated by algorithmic solutions, weighing
value and purchase frequency). We cannot, of course, that insight in accordance with its perceived value. Given
simply presume that organizations will harness all bene- its variable contribution, as more information becomes
fits and opportunities provided by DT, abandoning efforts available for training and testing algorithmic solutions,
to foster customer relationships they have long sup- the weight given to contextual insights is increasingly
ported, in place of more-lucrative data-intense or data- constrained (Angelopoulos et al., 2021; Kar et al., 2023).
convenient ones. There are also clear arguments to be The co-producer role of planners in the production func-
made for the value of increased agility that can provide tion is, consequently, also diminishing. This, however,
benefits for all the involved parties. also gives rise to an important question for the broader
field: What implications does this hold for the standing of
traditional planners in the apparatus of the organization?
3.2 | Implications for the voice One might expect the responsibilities of such agents, or
of planners and process managers next-generation planners, to transition towards more
nuanced organizational considerations that are not posi-
A related discussion can be had around human-machine tioned for absorption through automation. These might
interaction in the domain of forecasting. Many organiza- include greater involvement in relationship develop-
tions apply advanced algorithmic solutions along with a ment internally (e.g., with design teams) or externally
variety of data sources to create highly granular forecasts, (e.g., with strategic partners).
such as those for daily demand per product. A great deal While such value-adding shifts for planners and pro-
of relevant information including sales history, promo- cess managers may seem ideal, they are not forgone con-
tions, transportation costs and condition, weather fore- clusions of the DT expansion. As we depict in Table 3, a
casts, and a host of macro- and micro-economic conditions consideration similar to that regarding customers can be
(borrowing rates, changes in tax policy, etc.) are now read- made with regard to the shifting role of operations per-
ily available in highly structured formats and can be used sonnel and digital technologies. Here we can think of the
as inputs for algorithmic solutions. Other information potential for both personnel and technology to emerge
GUEST EDITORIAL 881

from traditional, tactical roles into more strategically rel- solutions is not yet fully clear. Especially for complex,
evant positions in the value chain of an organization. For multi-period, supply-chain planning decisions under
example, algorithmic solutions are becoming increasingly uncertainty, algorithmic solutions still lack the ability to
accessible to organizations interested in leveraging IoT take on principal roles. In such cases, with the human
for predictive, condition-based maintenance. The use of still acting as the principal, overcoming algorithm aver-
algorithmic solutions can create a complex criteria struc- sion is critical, where research suggests that humans need
ture, such that real-time signals from sensors embedded a certain level of autonomy to function well (Dietvorst
within equipment can be quickly interpreted to reveal et al., 2015, 2018). Finally, one important matter to real-
cost-effective cases for preventative maintenance, avoid- ize is that in operations and supply chains, much of the
ing impending failures, and corrective maintenance inci- produced or collected data are proprietary, have strategic
dents. The mining of process data (e.g., Van der Aalst value, and are often either generated or—purposefully—
et al., 2004) can similarly rely on algorithmic solutions to manipulated by humans. Many digital technologies rely
identify opportunities for eliminating unnecessary touch- on such data being reliable, of high quality, and readily
points and redundancy loops, some of which may have available (Struijk et al., 2023). Despite the increasing
gone unnoticed for years. In these ways, digital technolo- presence of IoT sensors, current industrial practice shows
gies are solidly positioned as an agent capable of “getting that such data inputs (in particular so-called master data)
things done,” on par with operations personnel. Increas- require extensive human labor. All of these points come
ingly there are even discussions of algorithmic solutions into play as individuals rationalize the trust they place in
working far more proactively (i.e., as principals), taking the digital technologies as a part of decision processes
adjustment of scheduling and processing flow into its own (Little, 1970). Just like humans, digital technologies that
hands, unprompted by a human actor (e.g., Homayouni have been designed to automate—or at least support—
et al., 2023; Sun et al., 2022), further shifting the balance of decision making are fallible, as well as subject to manipu-
agency towards the principal functions in decision making, lation and occasionally the source of security concerns
as we illustrate in Table 3. (Ou et al., 2022). As isolated sources of decisions, this can
A very similar transformation is taking place in the prove catastrophic. More virtuously, the combination of
shop-floor. For instance, warehouse workers may be fol- human decision makers and digital technologies through
lowing autonomous robots equipped with algorithmic a human-in-the-loop approach could provide critical
solutions on their picking route. Such workers may be checks and balances in highly impactful activities and
conducting relatively simple, post-processing operations achieve collaboratively what neither humans nor digital
following robotic ones, such as etching or polishing after technologies can achieve on their own.
fully automated rotation molding and welding. The
organizational-behavior implications of these changes in
“process leadership,” requires attention. The broader OM 3.3 | Implications for business models
discipline should be wary of treating human workers as and supply chains
a-emotional agents, like Taylor did more than a century
ago, given these shifting co-dependencies. Building on the aforementioned arguments, it is also
A challenge in this respect is to manage DT through likely that more overarching changes in business models
the involvement of current decision makers, especially are likely to emerge through DT as digital technologies
since in many planning decisions the value of algorithmic and algorithmic solutions open up new strategic

TABLE 3 Shifting role of digital technology in relation to internal decision makers.

Strategic
Tactical
Resource Agent Principal
Planners and process Traditional Conditionally Typical Highly Atypical
managers Largely monitoring and formulaic Providing contextual insight into, Extremely integrated functional
execution; business continuation and operational solutions settings, where operations
focus aligned with, strategic planning experts drive strategic decisions
Digital technology Traditional Pervasive Increasingly Typical
Information support settings, Settings where data and Settings where advanced AI
constrained by interactivity technology yield predictive learning and autonomy
limits; reporting/flagging policies and prescriptive insights preemptively pose and enact
when needed process adjustments
882 GUEST EDITORIAL

opportunities. These developments may be accompanied Beyond enhancements to the core of the existing
by natural tensions between competitive priorities such operations of organizations, DT endeavors can also create
as cost, flexibility, and speed (Olsen & Tomlin, 2020), opportunities to build entirely new offerings and sell
though intelligence emerging through DT may also products that customers would not have earlier associ-
make possible heretofore unrealized synergies among ated with these organizations. IoT connectivity of house-
these priorities. Associated are implications for internal hold devices is an area poised to inspire shifts of this very
business models and inter-organizational structures kind. Specifically, rather than buying consumables such
(supply chains and vertical partnerships) as we visually as washing powder, dishwasher pods, or coffee powder in
depict in Table 4. the supermarket, manufacturers can now analyze con-
Access to data of high volume, velocity, and variety sumption patterns and consider the automated anticipa-
enables organizations to build closer relationships with tory sales offering of these consumables directly. Whilst
their customers as they can now better monitor and opti- this would disintermediate retailers and organizations
mize the use of their assets (Porter & Heppelmann, 2014). within the fast-moving consumer goods sector (Hoberg &
Data provided by IoT sensors such as production equip- Herdmann, 2018), such an expansion of offerings is not
ment, cargo containers, or aircraft turbines can enable trivial. To enable such smart-replenishment concepts,
suppliers to better understand operating conditions, organizations need to create new supply-chain architec-
observe use patterns, and identify failures. As a result, tures as well as last-mile delivery processes, moving
organizations can optimize and extend their product offer- beyond middlemen and adding partnerships with new
ings in line with the needs of current and new customers. stakeholders to enable economies of scale. Many other
Critically, organizations can also build on the insights examples show the value of data access when building
gained through enhanced, real-time data and algorithmic new business models (cf. Uppari et al., 2019).
solutions to offer value-added services (e.g., preventive
maintenance, expansions, upgrades, etc.). Such services
can either be monetized directly or offered as free contrac- 4 | RELATED CONTRIBUTIONS I N
tual add-ons to improve competitive positioning in the O U R SP E C I A L I S S U E
market. Consequently, DT holds the potential to permit
facile vertical and horizontal expansion of the interests of The papers in this special issue exemplify the impact that
organizations. This gives rise to an important question for DT is currently having in OM and the strategic consider-
the broader OM discipline: What are the implications for ations that are rapidly emerging. For instance, Stark et al.
smaller supply-chain partners (e.g., contracted maintenance (2022) provide a rich discussion of how comprehensive dig-
providers)? Simply because an organization has a greater italization can be leveraged to replace traditional proce-
handle on equipment conditions, it may not be in its best dural control. The authors highlight, through example, the
interest to attempt absorbing the work that these smaller potential shift in decision making and power attributable
entities provide; tighter communication with such pro- to DT in operational process settings, as well as related
viders may be preferable. However, it is possible that this impacts across the supply chain. They argue that a key to
shift in data-enabled decision-making and power could comprehensive impact is a shift from what they refer to as
result in a reduction in the variety of external service part- “procedural syntax” to “object-interactive syntax.” In short,
ners in an “approved/authorized” network. the claim is that the manner in which manufacturing

TABLE 4 Business model implications of digital transformation in OM.

Business model impact

Current products Value-added services New business model

Current supply chain Traditional Increasingly Typical Increasingly Typical
architecture Product purchases only with New service offering based on New products or services to
limited services digital interaction with existing existing customer-supplier
supplier-customer networks networks leveraging digital
interaction
New supply chain Traditional Pervasive Increasingly Typical
architecture Product purchases only using new Service offering enhanced by Settings with new products or
channels and partners value-added services offered by services with new partners or
new partners integrated for disintermediation
current customers
GUEST EDITORIAL 883

activity is encoded for both managerial discussion pur- integration and delineation may appear to be at odds
poses, as well as in many associated legacy IS, is essentially with one another, they are all part of the same virtuous
as a confederation of separate concepts. Overlap exists only ideal: a comprehensive, systematic organization of data
to the degree that information can be transferred at a level and workflows. In OM, we have for long appreciated that
of minimal sufficiency between adjacent functions. For the extremes of specialization and generalization—depth
example, only certain details of the design process are and breadth—are neither points to which organizations
shared with manufacturing, sourcing, and delivery. Simi- should aspire, but that a healthy and appropriate mix of
larly, only minimally sufficient data flows from these func- the two is needed. Consequently, we can also argue that
tions back to design. This tactic, while meaningful in an modularization and integration both play critical roles.
era where data transmission and storage were highly lim- Indeed, it is hard to imagine one without the other, as
ited, is nevertheless baked into many approaches to OM “integration” implies deeper connection of elements that
and even pervades modern approaches to technical integra- have functionality unto themselves but which in combi-
tion, thus imposing constraints that do not actually repre- nation form a system, and “modularity” implies the abil-
sent the digital capabilities of contemporary organizations. ity to compartmentalize specific elements of a larger
With the advent of digital counterparts, through the system in a fashion that permits various forms of reinte-
addition of part functionality in the design models used gration. In the arguments posed by Kude et al. (2023),
in digital equipment contexts, a more interactive syntax such an architectural modularity is core to both the suc-
arises with pervasive touch points that permits far deeper cess of digital innovation and the wellbeing of those who
scopes of automation—automation that is self-correcting are tasked with it. Since the discussion of Kude et al.
in some instances and capable of making the kind of pro- (2023) focuses on the development of software, one might
cess changes only possible earlier through human diag- also ask: Are modularity and integration not only charac-
nosis and intervention. In short, Stark et al. (2022) teristics of effective DT artifacts, but also core DT imple-
describe one critical aspect of the conditions under which mentation processes? Further, what are the effects of other
shifts in digital technology from agent to principal roles key architectural patterns, such as cyclicality (cf. Sosa
become viable. However, the authors also discuss the et al., 2013)? If we are to take the insights from the papers
potential for hybrid, simultaneous use of both forms of in this special issue to heart, the answers would seem to
encoding, either as a transitional mechanism or as a be a resounding “yes” and “we need to find out!”
strategic steady-state. That is, they recognize that a “big- Lastly, and relating to our discussions of value that can
bang” shift from fully procedural to fully object- be generated through well designed and integrated
interactive syntax is likely not a reasonable option for approaches to human-technology interaction, Brau et al.
many existing organizations. Rather, they expect proce- (2023) investigate the fusion of human judgment with
dural and object-interactive syntax to co-exist, with DT algorithmic solutions in demand planning. They introduce
likely serving in both agent and distinctly principal roles the innovative approach of Human-Guided Learning.
for the foreseeable future. Their approach revolutionizes the training of algorithmic
A related discussion of encoding-for-integration is models by incorporating human judgment through an iter-
demonstrated in Sampson and Pires dos Santos (2023). ative, linear weighting process, resulting in significantly
While the contextual focus of the authors is distinct from improved accuracy compared to the established integra-
that of Stark et al. (2022) in that the concern is that of tion methods. By highlighting the impact of integration
professional services rather than manufacturing, a very techniques, the study establishes that the effectiveness of
similar message emerges: there are virtues to increased human judgment in demand planning hinges on the spe-
process automation with regards to offloading menial cific integration method employed, thereby paving the
work from employees, as well as reducing cost and way for further exploration and research in this area.
increasing speed and consistency. Demonstrated through Research such as this should prove instrumental as firms
empirical field data and applied simulation methods, the rationalize shifting co-producer and agent/principal roles
authors suggest that achieving these gains depends on in a manner that capitalizes on strengths and avoids side-
encoding and open communication. Delegation to auto- lining contextual intelligence.
mated agency, and in some respects de facto principal
decision-making, are described as playing a key role in
enabling hybrid DT solutions to these ends, with result- 5 | O P P O R T U N I T I ES FO R F U T U R E
ing shifts in control without loss of strategic advantage. RESEARCH
Kude et al. (2023) make an alternative argument, sug-
gesting that greater designation of separability in work As illustrated in the previous section, our special issue
can be influential in driving digital outcomes. While attempt to provide an epistemic platform for advancing
884 GUEST EDITORIAL

our understanding of how DT endeavors, including the previous sections, we have observed several cases of agency
adoption of digital technologies, business model innova- reversal, which can take place at micro (individual), meso
tions, as well as innovations in collaboration mechanisms (group), and macro (industry) levels. Thus, we envision
and methods of operations improvement, can affect vari- that the concept of agency reversal can inspire scholarly
ous aspects of OM. In doing so, we emphasize the urgency dialogue and business practice around OM. We call for
of focusing on the implications of agency reversal in many future research on the conceptualization of agency reversal
organizational processes affected by the transformative at the micro, meso, and macro levels, operationalization of
nature of digital technologies. Specifically, we highlight a this concept in observable empirical contexts, and compari-
change in the relationship between humans and technol- sons and tests of the actual roles of algorithmic solutions
ogy, where the roles of an agent and a principal are being and customers in the co-production of decisions.
reversed for the first time in the history of IS. After having
delineated a review and conceptualization of DT in OM
and taken stock of the topic within the broader field, here 5.2 | Internal/external planning
we explore pathways for moving forward beyond the hype. and business models
Given the growing importance of DT in OM, we see fruit-
ful pathways for future research along the themes dis- A third research avenue focuses on the automation
cussed in the previous sections that can incorporate of decision making within organizations, and its impact
conceptual, modeling, and empirical approaches. on planners and process managers. Prior research has
highlighted the potential of algorithmic solutions for aug-
menting and even replacing humans in decision making.
5.1 | Customer role and agency reversal Here, it is important to investigate how human work can
be designed in a way that leverages the strengths of the
It is clear that one research stream should delve further various players to achieve an optimal result for organiza-
into the role of customers in digitally transformed opera- tions. By “optimal” here we refer to a multidimensional
tional processes. The future role of the customer needs to construct since it comprises much more than just the per-
be fully understood and defined, as critical questions formance outcome of a decision. Other aspects include
arise around if and where customers actually see the the efficiency of humans in decision making, in terms of
value of taking a more relevant role in co-creation pro- the decision rights given to them but also their motiva-
cesses. While DT endeavors can provide customers with tion to conduct their work. On one hand, prior research
more choices and degrees of freedom, the derived utility has discussed the automation paradox (e.g., Bessen, 2022;
needs to be quantified. Ideally it would exceed costs of Raisch & Krakowski, 2021) that highlights the challenges
involvement. Similar to the question of where a customer when automating decision-making: initially, simple deci-
would benefit from customization of car components sions can be automated, and the overall workload of
using 3D printing, the incremental utility of customer humans (and their head count) can be reduced. However,
involvement as a co-producer can be negligible, relative this leaves the remaining humans with the most complex
to incremental effort applied. Another challenge for orga- and challenging tasks that require more attention, peak
nizations is the increasing availability of—potentially cognitive performance, and continuous problem-solving
sensitive—data provided by the customer that needs to skills. On the other hand, humans could become less
be managed and analyzed, raising timely issues regarding motivated in their role and involvement by just oversee-
the stewardship of such datasets. While there is certainly ing systems where they perceive that they add limited
signal in the oceans of data noise, making these data value. Instead of making decisions at the moment of
actionable in OM processes might be hard. For example, truth, the role of humans shifts towards preparing algo-
after the acquisition of customer-experience software pro- rithmic solutions, ensuring availability of high-quality
vider Qualtrics, SAP has struggled to use customer data data, and reviewing performance which for many
as an input for decisions around improving operations. workers would mean a significant shift in their work con-
Research should address such challenges by investigating tent and could also undermine their motivation.
which operations can really benefit from the insights that A fourth research stream should revolve around the
can be extracted from customer data and how this can be implications of DT for Business Models, Supply Chains,
done with the aid of advanced algorithmic solutions. and broader implications at industry levels. Prior studies
A second related research stream, and fundamental to have highlighted how digital technologies can be used to
this guest editorial and special issue, orbits the concept of increase the reliability of information traceability in real
agency reversal. Algorithmic solutions and customers time for supply-chain management without human inter-
increasingly become involved in organizational decision vention (Cao et al., 2022). Whilst such technologies have
making, reversing the power structure. As illustrated in the the potential to give rise to novel business models, this
GUEST EDITORIAL 885

remains far from the de facto standard of supply-chain the concept of DT in OM, and more specifically those
management. There are, consequently, opportunities for implications relating to the use of advanced algorithmic
future research on the implementation and adoption of solutions within and around organizational settings. The
such architectures that incorporate digital technologies. increasing volume, velocity, and variety of data can enable
At the industry level, the advent of DT opportunities has the creation of value in organizations but also raises the
brought about constant change and competition. While need for decision makers to re-examine their own values.
leaders in technology-intensive industries may face chal- The availability of sensitive data can certainly give rise to
lenges in advancing new systems due to their associated concerns related to their stewardship (Angelopoulos
legacy infrastructures, they are more likely to win the et al., 2021) and the possibility for organizations to become
market and gain long-term competitive advantages com- honeypots for malicious entities, which could result in
pared to lagging organizations. On the other hand, orga- devastating outcomes (Ou et al., 2022). Concurrently, as
nizations that are slower to engage in DT endeavors may we have alluded to, the advances in performance and
find it easier to draw on best practices, but such gains accuracy of algorithmic solutions can result in the redun-
may be temporary and unsustainable (cf. McAfee & dancy of personnel at all organizational levels, creating
Brynjolfsson, 2007). It is important to note that DT is a overloads for the remaining personnel as well as the
complex process that involves interdependent clusters of urgent need for training on a new set of capabilities. Fur-
technologies; each technology development can affect ther to these, during a time when organizations, govern-
many others and change the macro-level of technological ments, and the society at large are increasingly becoming
revolutions as epochal, societal-scale phenomena more sensitive to environmental issues, we should not dis-
(Bodrožic & Adler, 2022). The recent developments in count the environmental footprint that the training of
advanced algorithmic solutions showcase how technol- advanced algorithmic solutions can have (e.g., Patterson
ogy can fundamentally change and shift competition in et al., 2022). Broadly speaking, when considering the nega-
industries that do not necessarily rely on complex opera- tive impacts of DT on individuals, society, and environ-
tions. However, if operations are complex, distributed, ment, ethics play a vital role by offering principles to guide
subject to (physical) processing times and lead times, and decision-making and behaviors, especially for addressing
subject to limited capacity to fulfill operations require- the potential harm or misuse of information and digital
ments, the success of DT is much more ambiguous. technologies.
In this sense, it is interesting to compare Amazon As an additional area of study, related to DT and
Web Services (AWS) with Amazon Retail. AWS has digi- ethics, crowd-sourcing and co-design platforms are also
tal processes at its core, supported by physical operations showing momentum within the broader OM literature,
in datacenters. Amazon Retail has physical processes at redefining both financing and operations. Crowdsourcing
their core—in particular in their fulfillment operations— platforms, like Kickstarter, can re-organize business and
with digital technologies supporting these processes. The project processes virtually, from start to finish. The phe-
sheer difference in profitability ratios of the two arms of nomenon of crowdsourcing and co-design platforms
the same company, with AWS much more profitable started in early 2010, but their penetration reached signifi-
than Amazon Retail, demonstrates that adopting digital cant scale in early 2020. Such platforms enable collective
technologies in organizations with extensive physical efforts by consumers, who collaboratively network and
operations is much more challenging than if the pro- pool labor, resources, and the corresponding ecosystems
cesses are administrative or were already augmented by together within the platform. Platform ecosystems, there-
new digital technologies. While DT can exacerbate com- fore, represent a further major step in the critical evolution
petitive effects on the industry level, it can also offer sig- of consumers' roles, shifting decision-making as well as
nificant innovations that enhance business operations power and reshaping dynamics in business operations.
and data-driven decision making. In line with these, Beyond crowdsourcing, digital platforms that have estab-
therefore, we encourage future research to further elabo- lished disruptive ecosystems are shaping new ways for
rate on the role of DT in changing the competitive land- matching supply and demand. In ridesharing, for instance,
scape in industries, with a nuanced perspective when platforms like Uber match riders with drivers. In meal
physical assets and physical operations come into play. delivery, platforms like JustEast match restaurants with
consumers. Similar platform ecosystems have emerged for
digital freight forwarding, such as Sennder, as well as for
5.3 | Ethical considerations digital wholesaling, such as Wasoko. Such platforms allow
for economies of scale to be realized without the demand
A fifth research direction, related to each of those already and supply sides gaining size themselves, giving rise to
outlined, confronts the ethical implications surrounding novel value chains. What are the ethical considerations
886 GUEST EDITORIAL

when it comes to sharing value created from data used in architectures, as well as increased industry competition,
such matching? Future research endeavors, therefore, and vital ethical considerations. To carefully study such a
could further reflect on the notion of value co-creation novel phenomenon, we need to approach it with new
within the context of platform ecosystems and address perspectives. The advances in algorithmic solutions have
questions of how and to what extent the involved actors showcased that, when trained well, they can provide us
can create and capture value. Such future research with the right answers; going forward, it is more impera-
endeavors can expand to both digital-native and pre-digital tive than ever that we ask the right questions.
organizations, to support them in choosing the right DT
strategy (Mithas & Rust, 2021; Struijk et al., 2023). ACKNOWLEDGMENTS
Such future research into DT in OM also offers The authors would like to thank the associate editors and
opportunities for various methodological approaches. reviewers of the Special Issue for their great service, as
For instance, the OM field has recently opened up to well as the co-Editors-in-Chief, Suzanne de Treville and
intervention-based research (Chandrasekaran et al., 2020), Tyson Browning, for their valuable comments for this
an approach that has been forged and well adopted in guest editorial and their continuous support for the
the IS field. Therefore, the questions surrounding DT Special Issue.
endeavors can benefit from intervention-based approaches
such as action research (e.g., Struijk et al., 2023), action Spyros Angelopoulos 1
design research (Sein et al., 2011), and design science Elliot Bendoly 2
(e.g., Gregor & Hevner, 2013). Concurrently, as the IS field Jan Fransoo 3
increasingly recognizes the value of qualitative research as Kai Hoberg 4
well as historical and archival datasets (Monteiro Carol Ou 3
et al., 2022), we can also benefit from interpretivist Antti Tenhiälä 5
approaches when studying topics at the intersection of IS
1
and OM, such as the ways that DT endeavors unfold over Durham University, Durham, UK
2
time (e.g., Struijk et al., 2022). Finally, as the implementa- Ohio State University, Columbus, Ohio, USA
3
tion of advanced algorithmic solutions holds the potential Tilburg University, Tilburg, The Netherlands
4
of transforming OM (Mithas et al., 2022), future research Kühne Logistics University, Hamburg, Germany
5
should further explore questions related to their adoption IE University, Madrid, Spain
and retention. The topic provides opportunities for
experiment-based approaches that, in the context of OM, Correspondence
can further explore the trust of decision-makers in the sug- Spyros Angelopoulos, Durham University, Durham, UK.
gestions of algorithmic solutions (q.v., Little, 1970). Email: [email protected]

Handling Editors: Tyson Browning and Suzanne de

6 | C O N C L U D IN G R E M A R K S Treville

Our special issue showcases how OM is being trans-

ORCID
formed by the implementation and adoption of novel dig-
Spyros Angelopoulos https://orcid.org/0000-0002-8165-
ital technologies and how DT is increasingly becoming a
8204
key concept across the broader OM research and practice.
Elliot Bendoly https://orcid.org/0000-0002-0158-8403
The associated articles of the special issue address the
Jan Fransoo https://orcid.org/0000-0001-7220-0851
importance of the topic, while in this guest editorial we
Kai Hoberg https://orcid.org/0000-0003-2835-572X
bridge the IS and OM disciplines to further conceptualize
Antti Tenhiälä https://orcid.org/0000-0003-2890-0003
the shifting role of agency in decision making due to
the adoption of digital technologies. We do so both con-
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