Digital transformation in the economics of complexity: the role of predictive models in strategic management

Abstract

Purpose

This paper aims to investigate the role of predictive models in the learning and decision-making processes of strategic management. The rapid advancement of digitalisation has contributed to increasing the complexity of the worldwide economy and led to various new competitive dynamics.

Design/methodology/approach

To achieve this purpose, a literature review has been carried out and a predictive model based on Watson, an IBM supercomputer, is presented as a qualitative process model.

Findings

Specific insights derived from a review of the literature highlight organisations' need to modify their decision- and strategy-making processes, which are increasing in speed and frequency, thus also leading to the formulation of emergent and trigger event strategies based on the identification of conditions that require the revision of all or part of the firm's strategy. Predictive models, acting as filters, transform data into informative knowledge that decision-makers can interpret based on individual domain knowledge.

Originality/value

From a theoretical point of view, this paper contributes to the field of digital transformation by proposing the economics of complexity as a paradigm through which to observe and study the issue of predictive models in strategic management. Additionally, the authors analyse the phenomenon from a cognitive perspective, defining the new learning dynamics of digital transformation and the social learning cycle triggered by big data and predictive models. From a managerial and policy-making point of view, this suggests the need to re-shape traditional education contents and dynamics and foster skills that are multi-disciplinary, multi-domain, multi-empathic, multi-interaction and multi-communication between people and things.

Citation

Iscaro, V., Castaldi, L., Maresca, P. and Mazzoni, C. (2022), "Digital transformation in the economics of complexity: the role of predictive models in strategic management", Journal of Strategy and Management, Vol. 15 No. 3, pp. 450-467. https://doi.org/10.1108/JSMA-02-2021-0059