Do All Companies Have the Same Assets for Transformation?

Nokia and Netflix: Crossed Destinies

What are the stakes of digital transformation? They are enormous. And they are not the same for all companies.

In 2007, Apple launches the iPhone. This changes the mobile industry. Nokia, then world leader with 40% market share, observes this launch. The company has money, engineers, a powerful brand. Yet seven years later, Nokia sells its mobile division to Microsoft for a fraction of its former value.

At the same time, Netflix still sends DVDs by mail. The company makes a bold digital pivot. And it becomes the streaming giant we know.

These two stories pose a simple question: why do some companies succeed in their digital transformation while others, even larger and richer, fail?

Strengths That Become Handicaps

At first glance, large established companies seem to have everything: money, customers, known brands, solid expertise. But these strengths can transform into handicaps.

Physical assets pose problems. A company that has massively invested in factories, warehouses, and stores has what economists call sunk costs. Moving to a digital model means destroying value in the short term. Managers therefore hesitate. This is what Blockbuster faced against Netflix: closing thousands of profitable stores to bet on streaming was difficult, both financially and psychologically.

Established competencies can also slow change. A company excellent in hardware is not automatically good at software, data, or user experience. And its experts may resist, because transformation threatens their expertise and status.

Organizational culture is perhaps the strongest obstacle. Large companies are optimized for their current model. Processes, indicators, and incentives all support the traditional business. A disruptive digital model creates internal conflict. Digital teams demand speed and risk-taking. The rest of the organization lives by planning and risk control.

Success Factors

If historical assets can become handicaps, what helps a company succeed? Several factors make the difference.

Vision and leadership: digital transformation cannot be delegated to the IT department. It requires clear commitment from the top. Satya Nadella at Microsoft is a good example. When he became CEO in 2014, he shifted the culture from “Windows first” to “cloud first, mobile first.” Without this push, Microsoft would have lost ground to Amazon and Google.

Capacity to experiment: successful companies create protected spaces to test new models. Amazon did this with AWS, which began as an internal project to solve their own problems, then became the global leader in cloud computing.

Access to digital talent: in the digital economy, rare skills are data science, AI, and user experience design. A company in a tech hub like Silicon Valley, Berlin, or Tel Aviv can recruit these profiles more easily than a firm in an isolated area. Geography matters.

Organizational agility: startups have a structural advantage. They are small, fast, and light on bureaucracy. They can pivot in weeks. A large company with complex processes and many levels finds this much more difficult. Teece (2007) calls the ability to rapidly reconfigure a key strategic asset in a changing world.

Sectors and Differentiated Constraints

Beyond individual cases, not all sectors face the same constraints.

Pure information sectors—media, music, finance, education—are easier to transform. They mainly handle data and information flows. Spotify could disrupt music without owning recording studios. Digital neo-banks can offer services without physical branches.

In contrast, sectors with a strong physical component—manufacturing, logistics, healthcare—face material limits. A package cannot be delivered without real logistics. A patient cannot be treated only with an app. Digital tools can optimize and improve, but they do not completely replace physical infrastructure.

Regulated sectors—banking, healthcare, energy—face strict rules that slow transformation. A fintech must obtain licenses. A medical device must pass heavy approvals. These rules protect existing actors and slow new entrants.

Asymmetries and the Innovator’s Dilemma

No, not all companies have the same assets to succeed in their digital transformation.

Digital-native startups have speed, agility, and no legacy. They have nothing to unlearn, no old assets to defend. But they lack resources, customers, and credibility.

Large established companies have money, brands, and large customer bases. But they are handicapped by their historical assets, culture, and complexity. As Christensen (1997) showed with the innovator’s dilemma, failures often come from good managers doing exactly what they are supposed to do: protect currently profitable activities.

Digital transformation thus creates a profound asymmetry. It favors those who can move quickly and experiment—not necessarily those with the most resources. It rewards culture and vision at least as much as technology.