The most digitally aware managers are realizing that cultural and organizational transformation will dominate their agenda for years to come. Emerging business models will not function based on old organizational structures, traditional innovation approaches, and outdated management techniques.

In the late 1990s, many traditional businesses mentally leapfrogged by adding a “dotcom” to their name. Those old enough to remember those days, know that many businesses failed miserably in their efforts and still have not fully adjusted to IP realities.

Today we see a similar trend, with every business claiming to be a "digital" business. To me, this is a clear sign that we have crossed the zenith of digital hype. This period is a risky one. Just as the once mighty telcos were blown out of the water by the much more agile and flexible social media and big data players in the 2000s, I believe a majority of traditional businesses will succumb to the forces of successful digital businesses. Declarations of digital intentions, the creation of chief digital officers, or the allocation of digital budgets alone will not translate into digital success.

Most grand digital visions and strategic ambitions that have become the staple diet of corporate presentations mostly fall short of concrete plans for management innovation. It is not conceivable how traditional management techniques can deliver on promises of ongoing and inside-out-driven innovation as well as responding instantaneously to fast-changing customer demand. The creation of a work environment that stimulates employees’ self-initiative and creativity as well as passion for one's work must be the central building block for an agile, flexible, and experimental digital business.

The tasks ahead for leading CIOs and CTOs is clear: Once they have decided on the right digital technologies for their organization, the real work of their digital transformation initiative should focus on the execution and implementation of new silo-less operational structures and a collaborative working culture. CIOs and CTOs must work hand in hand with business lines on adjusting business processes and on developing new business models.

Most traditional businesses are still at the beginning of this process. And while the design of a digital strategy and its technological roll out are obviously challenges and will take time, the cultural, organizational, and business model adjustments will take much longer to address and will throw up many unexpected challenges. Most importantly, to succeed in this endeavor, businesses must tackle the tasks of management innovation, boost their ability to think laterally, and start to work with interdisciplinary teams.

The case study of Bosch Software Innovation and a report discussing Frugal Innovation highlight lessons learned regarding management innovation and how they boost their ability to think laterally and start to work with interdisciplinary teams in order to boost customer experiences.