Table Of ContentOUP CORRECTED AUTOPAGE PROOFS – FINAL, 26/09/20, SPi
The Data Imperative
OUP CORRECTED AUTOPAGE PROOFS – FINAL, 26/09/20, SPi
OUP CORRECTED AUTOPAGE PROOFS – FINAL, 26/09/20, SPi
The Data Imperative
How Digitalization is Reshaping
Management, Organizing, and Work
Henri Schildt
1
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1
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Acknowledgements
I am indebted to numerous individuals who have helped and supported me
throughout the writing of this book. Foremost, I would like to thank my
colleagues, friends, and family who have read the draft chapters and pro-
vided insightful in-depth comments: Farah Kodeih, Katharina Cepa, Matti
Rossi, Joosef Valli, Sini Jämsén, Miikka Konttinen, Veera Luoma-Aho,
Tuomas Tuunanen, Karoliina Pulkkinen, and Stella Lönnholm. I am thank-
ful to the dozens of executives and consultants who allowed me to inter-
view them for this book and my other related research projects. While I am
not able to name all of my informants for reasons of confidentiality, I can
acknowledge a few: Mika Stirkkinen and Antti Toivanen (Finnair), Teemu
Hurmeranta (Epic foods), Mari Piirainen and Olof Hoverfält (Reaktor),
Tuomas Syrjänen (Futurice), and Juha Äkräs (Hintsa and Aalto University).
I am also grateful to the students on my various courses, who have pro-
vided comments on the early drafts that I assigned as course readings.
This book wouldn’t have been possible without the help from my editor
at Oxford University Press, Adam Swallow, and the readability would have
been worse without my copy-editor, Keith Povey (Povey editorial). I would
also like to acknowledge the support from various institutions that have
been highly conducive for writing this book. Aalto University, my employer,
has been a great and inspiring place to conduct research and teaching. The
Academy of Finland has been a central impetus for this book by granting
funding for my project, Big data and strategy work. The project helped in
part fund my research visit to Judge Business School at Cambridge
University in 2016, where the inspiring environment helped me get my
book project started. Aalto University’s unique focus on combining tech-
nology and business with arts and design inspired me to commission pro-
fessional visual designs for my book. I want to acknowledge and thank
Milja Komulainen for her inspiring work done on figures in Chapters 2 and
6, as well as the cover art (this might vary depending on your edition).
Finally, I want to thank my children, Aaro and Eevert, for being
simply amazing and always providing me with emotional energy and
encouragement.
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OUP CORRECTED AUTOPAGE PROOFS – FINAL, 26/09/20, SPi
Contents
List of Figures ix
List of Tables xi
List of Boxes xiii
1. Digital Transformation 1
From Business Computing to the Digital Transformation 2
Ubiquity and the Value of Digital Data in Business 5
From Human Routines to Algorithmic Processing 7
Digitalization as a Change in the Mindset and Norms
of Management 9
Data as a Management Priority 10
Outline of the Chapters 13
Digital Transformation and the Future of Work 16
2. The Data Imperative 19
Reinventing Business with Digitalized Processes 21
Omniscience: Perceiving the World Through Data 25
Omnipotence: Control Through Data 32
Using Data to Reimagine Transactions at Google 39
The New Mindset of Digitalization 41
3 Strategic Priorities in the Digital Era 44
The Three Strategic Priorities of Data-driven Companies 45
Strategies Reach Beyond Firm Boundaries 58
The Promise of Digital Strategy 61
4. Complexity and Modularity 67
Three Kinds of Modularity 70
The Commercial Triumph of Modularity 75
Open Modularity 80
Layered Modularity and the New Logic of Digital Innovation 84
Designed to Fail: the Surprising Robustness of Modularity 89
Twilio Flex 91
The Costs of Modularity 92
Organization Follows Technology 94
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viii Contents
5. Organizing Data-driven Companies 97
How Software and Adaptability Motivate Changes in
Organizational Design 100
Approaches to Organizing in the Digital Era: Efficiency,
Adaptability, and Coordination 103
The Culture and Processes in Digital Corporations 114
Mechanisms of Control From Predictability to Ethos 115
Sources of Authority From Position and Expertise to
Situated Performance 122
Organizing Beyond the Firm: Ecosystems and Platforms 124
Summary: How the Data Imperative is Reshaping Organizations 130
6. Artificial Intelligence and Human Expertise 132
Artificial Intelligence 133
Core Challenges in Combining Human Intuition and Algorithms 135
Four Approaches for Combining Algorithms and Human Tasks 141
Organizational Learning in Human–Algorithm Hybrids 150
The Core Question: to Simplify or Not to Simplify? 158
Better Together, But With Some Serious Design Challenges 160
7. Algorithmic Management of Humans 162
Working for an Algorithm 164
The Data Imperative and Algorithmic Management 168
The Nefarious Dynamics of Job Impoverishment 170
The Upwards Creep of Algorithmic Management: the Future
of Software-controlled Professionals? 172
Building Better Algorithmic Management 174
The Future of Work Needs to be Designed 177
8. The Promises and Pitfalls of the Data Imperative 179
Towards the ‘Artificially Intelligent Organization’ 180
The Optimization Traps 185
How to Remain Relevant and Survive the Data Imperative 189
Conclusion 198
References 201
Index 211
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List of Figures
2.1 The data imperative: the managerial pursuit of omniscience and
omnipotence 23
2.2 The landscape of the data imperative: sources and applications
of digital data 29
5.1 Key objectives of organizing and the generic organizational forms 104
5.2 Digital ecosystems break traditional supply chains 127
6.1 Combinations of smart algorithms and human expertise 144
6.2 The Cycle of Choice model 151
6.3 Learning dysfunctions in human–algorithm collaboration 153
6.4 Idealized approaches to combining humans and algorithms 159
