Digital Transformation in the FMCG and Automotive Industries – Emergence of Digital Innovation Capabilities

Technological developments are disrupting the business environment, introducing new and more innovative, digitally-born competitors. Simultaneously, customer engagement with digital technologies, such as social media platforms, has altered behaviour and expectations. Established firms are under siege from these radical and disruptive changes and are responding by engaging in digital transformation using digital resources, including big data, to deliver product as well as process innovation. Such transformation requires new innovation capabilities, but the nature of these capabilities is not well understood. This study addresses the question ‘What are the innovation capabilities that firms require for digital transformation?’. This paper explores innovation capabilities development in four companies, in two industries that are facing significant technology-driven market and operational turbulence. We have collected data from the automotive industry and the fast moving consumer goods (FMCG) industries. Both sectors are experiencing industrial restructuring with new, data-driven competitors, digitalised business models, unconventional alliances, distribution challenges and changing customer expectations. For firms in these industries digital transformation includes process innovation through the introduction of digital technologies and new ways of working to leverage value from big data. It also involves innovation through increasingly personalised customer engagement and the commercialisation of data systems. Using a multiple case study design based on elite interviews, we compare the four firms’ approaches to digital transformation. Our study provides new insights into the digital innovative capabilities (DIC) that firms apply to develop new knowledge within their digital transformation. From our findings we develop five specific propositions for the development of digital innovation capabilities theory.