Digital transformation is seemingly one of the most talked-about priorities in business today—and also one of the most misunderstood. Companies claim they’re undergoing it. Consultants sell expensive blueprints to achieve it. Entire industries are said to be digitally transforming. Yet, a growing chorus of scholars warn the main point is getting missed.
A recent paper by Walton College’s Varun Grover, Louisiana State University’s Gabriele Piccoli, and Grenoble Ecole de Management’s Joaquin Rodriguez gets to the heart of what many companies are currently overlooking. In “Digital transformation requires digital resource primacy: Clarification and future research directions,” the authors argue that digital transformation isn’t simply about adopting the latest tools or shifting to the cloud—it’s a fundamental shift in how a company is built and how it delivers value. The authors refer to this concept as digital resource primacy, aiming to shift the way both researchers and business leaders perceive the true meaning of digital transformation.
Moving Beyond Buzzwords
Since the 1990s, companies have invested heavily in information technology (IT) to enhance their operational efficiency. One major step was the installation of enterprise resource planning (ERP) systems—large software platforms that help manage and connect key business functions, such as finance, inventory, human resources, and supply chain operations. Businesses also began using data analytics and moving more of their work online. These efforts are what the authors refer to as IT-enabled transformation. That means using IT tools, usually in the form of “boxes” of hardware and software to improve performance. While these improvements often make organizations faster and more streamlined, they usually don’t lead to big changes in how the business is run.
That’s where the confusion lies. The term digital transformation has increasingly been used to describe what are, in reality, IT upgrades. But according to the authors, true digital transformation is not about adding technology. It’s about becoming digital in a structural, strategic sense. They define digital transformation as a company making a significant shift from simply using technology to one that’s built around it, with digital resources at the heart of its strategy. It’s a fundamental overhaul of the firm's architecture and identity.
What Are Digital Resources?
Central to the paper is the distinction between IT systems and digital resources. Digital resources are not merely software applications. They are modular, reusable, and accessible programmatically—meaning they can be orchestrated through code, not just managed by people. Cloud-based services—like Amazon Web Services (AWS) storage buckets, which let companies store and access data online, or Stripe’s payment application programming interfaces (APIs), which allow websites and apps to handle payments securely, aren’t just tools that support business processes. In many cases, they are the process. The same goes for Netflix’s streaming system—the entire service depends on cloud infrastructure to deliver content directly to users.
Digital resources can be internal or external. They may be created by a company, purchased from a provider, or sourced from an ecosystem. What matters is how they’re integrated into the firm’s framework—and whether the firm’s strategy is built around their use. In a digital organization, these resources form the backbone of operations, product development, customer interaction, and innovation. The organization no longer builds fixed systems to serve static processes. Instead, it assembles, reuses, and rearranges digital building blocks to adapt to changing needs continually.
Amazon's Digital Metamorphosis
To illustrate this shift, the authors revisit Amazon’s transformation in the early 2000s. At the time, Amazon was struggling with a sluggish and tangled IT infrastructure. In response, CEO Jeff Bezos issued a bold directive: all internal services had to communicate via APIs. No new development would be approved unless it was built as a standalone, reusable digital component.
This was more than a technical fix. It was a complete redesign of Amazon’s internal systems—and a strategic choice to embrace digital resource primacy. That decision ultimately laid the foundation for AWS, which now powers everything from small startups to Fortune 100 companies. What changed wasn’t just the technology; it was Amazon’s entire identity. It became a digital organization—one in which innovation and growth were fueled by orchestrating digital resources, not just building new applications.
Digital vs. IT-Enabled: Why the Difference Matters
Instead of focusing on just one company or example, the researchers take a step back and ask: what really defines digital transformation? They use what's called first-principles reasoning, a method that breaks things down to their most basic truths, to build a clear definition from the ground up. They also conduct something called ontological analysis, which essentially involves examining what distinguishes a truly digital organization from one that merely utilizes technology. It might sound academic, but it’s actually very practical. This approach provides both researchers and business leaders with a clearer understanding of what real transformation entails.
The authors also lay out a research agenda grounded in this distinction. Instead of lumping all technology-driven change together, they urge researchers to ask more specific, strategic questions. For example:
- What are the risks and benefits of prioritizing digital resources?
- How do digital organizations manage their resource architecture over time?
- In what industries is digital transformation a competitive necessity?
By clearly explaining both how digital transformation works and what a fully digital organization looks like, the paper gives other researchers a strong starting point for future work.
Digital Organizations Think Differently
So, what does a digital organization really look like? The team highlights a few key features. These companies rely on cloud-native infrastructure, which means their technology is built to run smoothly on the internet rather than on physical servers. They focus on composable systems, where technology is made up of flexible, reusable parts that can be easily combined and rearranged. A true digital organization also treats digital tools and capabilities like products that can be used again and again.
In these companies, teams comprise individuals with diverse skills who collaborate to develop digital solutions. These cross-functional teams may include roles such as a digital resource orchestrator (someone who manages the company’s digital tools) or an API product owner (someone who oversees the connections between different software systems). They also work differently from traditional companies. Instead of slow, drawn-out IT projects, they utilize agile development—a faster, more flexible approach that enables them to test new ideas quickly and learn as they progress. Rather than locking into one perfect process, they build systems designed to adapt and evolve.
One of the most important shifts is their mindset about orchestration versus ownership. For example, a company like Instacart doesn’t try to create every digital tool itself. Instead, they bring in top-notch external services, such as Stripe for payments or Twilio for sending notifications, and focus their energy more on what makes their service special. This approach of combining the best external tools with internal strengths is a calling card of modern digital organizations.
The Hard Truth About Going Digital
The research is clear: digital transformation is not for everyone, and it’s not easy. It demands changes in strategy, structure, technology, culture, and talent. For companies that choose to embrace it, the potential gains are enormous—faster execution, more flexible innovation, and the ability to scale in ways that traditional firms cannot.
At a time when many businesses are investing heavily in artificial intelligence, automation, and platform tools, this paper offers a needed reality check. No amount of new technology will lead to transformation unless the underlying architecture (and strategic intent) are designed to support it. The research cautions against surface-level transformation efforts that merely rebrand IT improvements as digital. Instead, it challenges leaders to make a more involved commitment: to rethink how their organization is structured, how value is created, and how resources are designed and deployed.
Making Digital the Engine, Not the Add-On
This research presents a fresh perspective on digital transformation—one that extends beyond tools and technology to focus on how a company is structured and what it aims to achieve. At its core, digital transformation isn’t just a “tech upgrade.” It’s a significant shift in how a business works, what it values, and how it competes. And the shift doesn’t start with the latest app or platform—it begins with a clear choice to build the company around digital tools and resources. Companies that understand this won’t just follow trends, they’ll lead with purpose. For other researchers, this paper provides a well-lit path forward: instead of lumping all technology changes together, future studies should examine more closely how organizations utilize digital resources, how they manage digital systems over time, and what truly distinguishes digital businesses from those that are merely tech-enabled.
