What is the Effects of Digitization on Redesigning Business Model and Performance Management?

Problem Background and Statement

In the contemporariness of the business world today, digitalization has not only become common but a necessity for every organization that needs to attain competitiveness, sustainability, and long-run success. Technological development and disruption is an aspect that affects almost every industry, and the energy sector is not an exception. With the ever-changing aspects of business digitalization due to globalization and technology advancement, business models, macroeconomic developments, digital disruption in business and performance management have emerged to be some of the most critical subjects with respect to Human Resource function (Priem, Wenzel & Koch, 2018). While digitalization of business activities has forced most companies to redesign their overall strategy towards business and measuring employee’s performance, most are at the moment engaged in strategic thinking following industrial developments while others are forced to retain their present approaches based on the complexities of remodeling. 

Unarguably, technological innovation has desirably transformed the energy sector. In that business digitalization in the industry has proven to be a major blessing based on its ability to drive efficiency, increased production and quality performance (Nambisan, Lyytinen, Majchrzak, & Song, 2017). However, for some companies, the digitalization trend has not come without its effects on the ability to redesign business model and performance management. Unarguably, performance management and business models serve as the foundation for any successful business in general, and they must, therefore, be aligned with the set organizational structure, culture and goals (Veit et al., 2014). As a company that is committed to enhancing an individual’s lives through technology digitalization has played a key role in its success. While the company is focused on eradicating the existing deficit in the generation of power, it is rather evident that it needs to redesign its business model and performance management to align with this approach.

Remodeling of business models and performance management in the business world today is not a new concept. More than 79 percent of firm’s executives have expressed the redesigning process of both aspects as a major priority for their business (Degryse, 2017). Some major change initiatives have been developed, but several shortcomings are being observed with regard to the redesigning operations. With respect to all business systems that are accountable for this change, they must reorganize on how performance management serves the enterprises while prioritizing behavioral change as the driver of new business models. Based on the complexity of the digital world, it has become rather challenging for HR professions to align digitalization with the focus of their existing models for measuring and managing performance (Nambisan, Lyytinen, Majchrzak & Song, 2017).

The digitalization of the workplace, changing demographics of employees, globalization of business and rapid innovation are fueling organizations to remodel their business structure, change their business models and create employees focused experience and culture. Based on the growing demand to respond to this disruptive transformation in the era of digital technology and changing workforce diversity and business models most businesses and Human Resource leaders have acknowledged the need to remodel their companies to meet the intensifying demands for their businesses. However, despite this growing trend and its benefits to the businesses, it is only about 14 percent of all executives that are confident that their companies are well equipped and willing to remodel their organization effectively. Most companies are highly focused on expanding employee’s retention and participation as well as creating an inclusive culture as a way of increasing production and efficiency while lowering the cost of operation. While this approach has been successful in attaining competitive advantage, it is rather clear that it does not take account of digitalization and its demands of creating innovative companies. Companies need to increase their ability to embrace changes and meet the rising demands more rapidly. This is only achievable based on the ability of the firms to empower the team, create a more effective model and developing effective performance management that fosters innovation, competitiveness and business success (Amit & Han, 2017). Digitalization is disrupting business and fueling the need to create rather new organizations with the ability to meet all the set needs. Research illustrates that more and more firms are renovating their business structure as well as shifting from the functional and hierarchical models of business thus adopting cross-functional systems to ensure that they become more flexible, cooperative and customer-centered. Even with the great necessity to redesign their businesses, it is only a small percent of the companies and HR leaders that hold the expertise to transform their companies successfully. Also, due to the challenges that exist this normally leads to workplace disruptions since most of them are unable to motivate their employees to work together.

Given that business digitalization is inevitable in the business world today, companies are experiencing challenges in their attempt to renovate their organizations to meet the increasing demands without losing competitiveness. Most companies are hesitant to remodel their business structures and approaches since the process can be expensive as it requires expertise involvement. Also, the uncertainty of the process also drives away their willingness to participate. However, since redesigning of the business is the only approach for achieving sustainability then it is clear that companies need to renovate fully as a way of embracing the rapid changes as well as global business demands.

Research Objective

This research will seek to fulfill the following objective:

1. To determine the effects of digitization on redesigning business model and performance management.

Research Framework

The research will begin with an introductory chapter. This will involve a detailed discussion of the existing state with regard to redesigning organizations in the era of digitalization and its effects on business. The next section will incorporate a problem statement which entails a description of the problem based on research. Next will be a review of the literature to establish what has been concluded with respect to the identified issue as well as ongoing trends as a whole. The findings will develop the foundation for the methodology. Under the methodology section, the research will offer a detailed analysis of the research method, strategy, tools, and measures to be followed in the acquisition of primary data. Finally, a conclusion and recommendation section will be incorporated to summarize the findings and proposal feasible measures for HR professionals to adapt while simultaneously mitigating the challenges and embracing rapid responses to the emerging changes in the business world.

Research Questions

1. What are the effects of digitization on redesigning business model and performance management?
2. What are the challenges presented on change management by digitalization of business?
3. How does digitalization affect Human Resource Management?
4. Does business digitalization fuel the redesigning of business model and performance management systems?
5. How can companies mitigate digitalization challenges while trying to remodel their business structure?

Critical Literature Review

Ismail, Khater & Zaki, (2017) notes that Digital transformation has become prevalent in the global enterprise sector over the last few years as an approach to increasing business efficiency. Even though technology has widely been embraced in business digitalization is a terminology that has generated high levels of confusion due to the challenges that it presents alongside certain benefits. For most individuals even though they have fully understood this concept the struggle to understand how it is connected with real innovation is still missing. In general, digitalization mainly entails the process of improving customer’s experience. According to Amit & Han (2017) today, customers are in need of instant services and products access thus desirable customer experience is a necessity. In other words, while quality and affordability are the values that every customer desires to get convenience is also as important. Digitalization offers all these values at once which therefore highlights its essence in upgrading business. However, with digitalization comes disruption as the services have to be available anywhere when needed by the consumers. In this case, companies are forced to adapt to the new structures and procedures that offer smooth transactions with the consumers in the absence of any form of delays or disappointments (Schmidt et al., 2015).

Digital transformation affects the manner in which Human resource management operates. While HR professions must strive to improve the experience of the customers the needs of their employees must be addressed respectively (Degryse, 2017). This calls for the remodeling of the performance management rather than focusing on traditional appraisals and reviews. Performance management entails the general procedure of developing a work setting where employees are empowered to perform to their best capabilities. Thus during the renovation process, the process must be aligned with the goals of the companies, employees competencies, skills, and organizational culture. In other words, this is about creating an environment that values enhancement, learning, and development as the means of attaining the set approach while increasing the performance of the employees (Amit & Han, 2017). The engagement of employees is connected with the actual encounter that designs behaviors and perception of the employees. It is not surprising that the more the employees are inspired and committed, then the higher the potential of setting more effort and time to meeting the rising demand for efficient services. In this context, for the companies to be successful, they are required to remodel their business models alongside performance management while accounting for the needs of the business.

For companies that are in need of embracing digital transformation, their focus needs to be based on change management while ensuring that all the other procedures such as recruitment, training, and development concede with the anticipation of their workforce (Rai, Patnayakuni & Seth, 2006). In return, this means that the employees are accountable for shaping the general experience of their customers. In other words, digitalization mainly entails acknowledging the need to change in rather different stages while adhering to innovation thus triggering widespread disruption throughout the company’s structure (Ismail, Khater & Zaki, 2017). The engagement of employees is a necessity in the management of change. Most companies are forced to abort the development due to resistance. However, with proper alignment of goals then it becomes rather easy to overcome resistance while empowering high levels of commitment. Unarguably, the absence of commitment and intensification of resistance can harshly affect the transformation process. HR serves a critical role in business digitalization and the successful redesigning of the company since it controls the engagement of employees thus enhancing quality since operations become effective. In other words, the success of the process is dependent on the collaboration between management and employees.

Research Methodology

Introduction

This section will provide an in-depth analysis of the research methodology. The researcher will outline the research method, sample population, data analysis, ethical considerations and limitations of the research.

Research Strategy

The research to be held with respect to the project will be an applied research strategy and now new. In that, there is vast of academic information that exists about the digitalization impacts on the remodeling of the business. Thus, the research will engage in verifying the findings of the research by collecting data directly from the participants.

Research Method

To satisfy the requirements of the study, a qualitative research method will be used. The main features of the method are that it is highly suitable for a small sample even though the outcomes might not be quantifiable. The main reason as to why this approach was selected is because unlike the quantitative approach it provides a detailed description of the issue without limiting the extent of the investigation or the responses of the participants.

Data Collection Strategy and Tools

For the objective of the study, in-depth interviews, as well as questionnaires, will be used in the collection of data. These instruments will be semi-structured to ensure that they are flexible enough to gather the opinions and feelings of the participants regarding the issue. Interviews are appropriate because they allow the interviewer to create personal relations with the respondents thus eliminating cases of resistance or the willingness to provide accurate details. Besides, the semi-structured format offers flexibility with regard to information flow thus permitting the researcher to gather more information. However, professionalism is required since there is a threat of deviating from the actual focus of the research. Open and closed-ended questions will be used to ensure that maximum information has been generated.

Sample Selection and Sample Size

Purposive sampling technique will be used in the section of the most appropriate sample. This is a non-probability sampling method where the participants are chosen on the ground of their knowledge, expertise, and relation with the subject under investigation. This, therefore, implies that the study will select employees as well as HR managers as the participants. However, only those with longer experience will be selected while eliminating those who experience is below five years. Questionnaires will be distributed via email to the participants a week before the interview to allow a comprehensive response. They will be returned to the research after completion. A sample size of 50 participants is targeted at the selected company which is Enerpac Power Generation Limited.

Data Analysis

In the analysis of data content analysis will be used. This is to summarize and analyze all the data acquired from interviews and questionnaires. This is a research approach where the collected data is classified into themes making it easy for comparison. The approach is also advantageous as it helps in simplifying and reducing content to ensure that the results are measurable. This will also help in eliminating human-related errors.

Ethical Considerations and Research Limitations

The participants will be required to fill a consent form to indicate that they have accepted to participate. The form will inform them that their participation is voluntary and they can, therefore, withdraw at any given time. Also, no personal information will be collected to safeguard their confidentiality. The small sample size might prove to be a limitation to the study since the ability to generate maximum data might be affected. 

Research Planning

Weeks	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
Comprehensive LR
Design, pilot and improve questionnaire
Ethical approval
Distribution and collection of questionnaire
Research methodology
Data analysis
Discussion and evaluation
Draft Development
References Compilation
Editing and Proofreading
Submission of the Final draft

 

 

 

 

 

 

 

 

 

 

References

Amit, R., & Han, X. (2017). Value creation through novel resource configurations in a digitally enabled world. Strategic Entrepreneurship Journal, 11(3), 228-242.

Degryse, C. (2017). Shaping the world of work in the digital economy.

Ismail, M. H., Khater, M., & Zaki, M. (2017). Digital Business Transformation and Strategy: What Do We Know So Far?

Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital Innovation Management: Reinventing innovation management research in a digital world. Mis Quarterly, 41(1).

Priem, R. L., Wenzel, M., & Koch, J. (2018). Demand-side strategy and business models: Putting value creation for consumer’s center stage. Long range planning, 51(1), 22-31.

Rai, A., Patnayakuni, R., & Seth, N. (2006). Firm performance impacts of digitally enabled supply chain integration capabilities. MIS quarterly, 225-246.

Schmidt, R., Zimmermann, A., Möhring, M., Nurcan, S., Keller, B., & Bär, F. (2015, September). Digitization–perspectives for conceptualization. In European Conference on Service-Oriented and Cloud Computing (pp. 263-275). Springer, Cham.

Veit, D., Clemons, E., Benlian, A., Buxmann, P., Hess, T., Kundisch, D., & Spann, M. (2014). Business models. Business & Information Systems Engineering, 6(1), 45-53.