From physical assets to data assets: How digitization redefines enterprise value in the new era

In the industrial age, value was measured in tons of steel, oil, and coal. Today, value is measured in terabytes of data, user behavior patterns, and algorithmic precision. This article explores the digitalization of physical and virtual assets, which is not just an IT transformation but a reconfiguration of how we define, create, and deliver value.

We draw on economic theory, enterprise architecture, and real - world business disruptions from Tesla's software - defined cars to Amazon's algorithmic supply chains to explore why digitalization brings volatility, novelty, and disruption, and what measures leaders must take to govern in this fluid environment.

The Shift from Tangible to Intangible Value

In the early 20th century, a company's strength was measured at the physical level, such as the size of its factories, the number of locomotives in its fleet, or the tons of raw materials it could process. Balance sheets were concrete. Tangibility was trust.

But today, the world's most valuable companies have no factories, no oil rigs, and no physical fleets. Instead, they possess data pipelines, digital ecosystems, and algorithmic control loops.

What has changed?

Intangible assets are the new capital.

The shift from asset - heavy to insight - heavy has disrupted the rules of economic value. In traditional industries, it takes years to build a steel mill, and decades for it to depreciate. Today, a startup with a SaaS platform can disrupt an entire industry in less than a year without owning any real estate.

Uber: No cars, yet dominates urban transportation.

Airbnb: Not a hotel, yet has transformed the hospitality industry.

Netflix: No DVD stores, yet has reshaped the global entertainment industry.

In each case, software becomes the factory and data becomes the supply chain.

The Rise of Digital Twin Thinking:

Today, the physical world is increasingly being mapped by digital replicas — from buildings to engines to entire business processes. These "digital twins" are not just simple diagrams but real - time models that can collect sensor data, simulate scenarios, and optimize results.

This evolution redefines our understanding of capabilities. In the analog era, capabilities meant a skilled workforce or production lines. In the digital era, they include:

Machine learning models trained on historical customer behavior.

Automation scripts that can configure infrastructure in seconds.

A platform that connects suppliers in real - time.

Why does this shift matter?

Today, intangible things are more valuable than tangible things. Boards no longer discuss "How many factories?" but "How scalable is your API architecture?" Strategy has shifted from ownership to coordination. From control to capabilities.

The True Meaning of Digitalization

At first glance, the term "digitalization" may conjure up images of scanning documents or adopting ERP software. But to understand its significance for the entire enterprise, we must deepen the discussion. At the core of digitalization is the embedding of perception, memory, and intelligence into every corner of the value chain.

Perceiving the Physical World

The first wave of digitalization was instrumentation. Today, machines, warehouses, and even retail shelves are embedded with sensors. These sensors are not just data collectors but the real - time eyes and ears of the enterprise.

Logistics: IoT devices track the movement of goods with geospatial precision.

Manufacturing: Predictive maintenance through vibration and temperature analysis.

Retail: Smart shelves that can detect product depletion.

The analog world is now "activated" through telemetry.

Automating Intelligence and Judgment

The second wave brings AI/ML into the decision - making loop. Traditional analytics tell us "what happened." Digitalization asks "what's next?" and takes action.

Dynamic pricing models that adapt to competitors' behavior.

AI - led healthcare diagnostics that provide decision - making support for doctors.

Chatbots that can not only respond but also learn, persuade, and sell.

Digitalization is not about making decisions faster but about enhancing the cognition of the entire enterprise.

Creating Feedback Loops and Digital Threads

Every action in a digital system generates a signal, a log, a metric, and an event. Digital enterprises weave these signals into feedback loops:

Customer interactions influence the product roadmap in real - time.

Operational anomalies that trigger automatic surveys or remedies.

Behavior patterns that shape marketing personalization.

These feedback loops together form a digital thread — a traceable end - to - end environment from concept to implementation. This is not just process integration but organizational intelligence.

Reshaping the Enterprise Nervous System

When every system, CRM, SCM, HR, Finance, is connected through APIs, microservices, and event hubs, the enterprise is no longer a machine but a living organism.

In this world:

Latency is risk.

Redundancy is resilience.

Data is capital.

Four Forces: Novelty, Volatility, Disruption, Scope

When enterprises embed intelligence into every process and platform, they become not only faster but also more transparent. Digitalization intensifies complexity and gives rise to four powerful forces that shape the modern business landscape:

Novelty: New Things Are Always Now

In traditional business, novelty occasionally emerged in a new product or a new market. In the digital age, novelty is systematic and self - generating.

A startup in Hangzhou developed a fintech application in three weeks and reached one million users in ten days.

Machine learning models start recommending previously unknown product categories and quickly gain attention.

Digital systems today can reveal insights that humans never anticipated. What is "emerging" today may become "expected" tomorrow.

Enterprises that do not anticipate new things always react to them.

Volatility: The Environment Changes Faster Than Capabilities

With the emergence of cloud - native platforms and on - demand infrastructure, the pace of change in the technological environment exceeds the rate at which organizational culture can adapt.

Consumer behavior can change in a matter of days (e.g., TikTok trends, ChatGPT adoption).

Supply chains can change within hours due to global events.

In such a situation, stability is an illusion unless the system architecture can adapt gracefully.

What's the lesson? Build for fluidity, not control.

Disruption: Legacy Is Now a Burden

The most dangerous thing in the digital age is not a lack of ideas but being excellent at something the market no longer needs.

Kodak had the patent for digital photography but stuck with film.

Blockbuster had the infrastructure, but Netflix rewrote the delivery model.

Disruption occurs not because new entrants are perfect but because they eliminate the frictions we have normalized.

Disruption is not a battle of products but a battle of models.

Scope: Change Is No Longer a Departmental Affair

Digitalization affects not just IT or marketing. It redefines:

How HR uses behavioral analytics to retain talent.

How Finance uses real - time forecasting for capital allocation.

How compliance achieves automated regulatory coordination through AI - driven audits.

This is not a transformation but a metamorphosis. Enterprises not only look different but also behave differently.

Digital transformation is no longer a horizontal process but a vertical change in culture, mindset, and economy.

Enterprise Response Governance in a Dynamic World

As digitalization accelerates innovation, volatility, disruption, and scope, the question for leadership is no longer "Can we transform?" but "Can we manage the transformation without being left behind?"

This section explores how forward - thinking enterprises respond — not with strict control but with adaptive architectures, capability - centric planning, and cognitive governance.

Strategic Architecture, Not Tactical Checklists

The era of isolated enterprise architecture documents is over. Today's architecture models must:

Be continuously updated in real - time and connected to runtime systems.

Be layered to bridge strategies, capabilities, processes, and technologies.

Be easy to communicate and understandable in both boardrooms and production floors.

In a digital enterprise, architecture is not a document but a feedback system.

Capability - Centric Portfolio Planning

Traditional IT governance usually revolves around projects. But projects are temporary, while capabilities are enduring.

By organizing around capabilities (e.g., customer insights, real - time logistics, adaptive compliance), leaders can:

Avoid duplication across business units.

Track maturity and investment over time.

Align strategy with execution beyond organizational silos.

Capabilities are the true units of resilience in a digital enterprise.

Guardrails, Not Roadblocks

Digital governance must evolve from command and control to support and observation.

This includes:

Policy - as - code to enforce security and compliance without slowing down deployment.

AI - based observability to detect deviations from architectural principles.

Federal governance that allows local innovation on a global scale.

In a fast - flowing river, you build riverbanks, not dams.

The Rise of the Digital Nervous System

Modern enterprises increasingly rely on real - time models of the organizational digital twin (DTO) that link intent to impact.

DTO can enable:

Scenario planning with traceability from idea to event.

Real - time visibility across people, processes, and platforms.

Decision rehearsals before actual execution.

In this context, governance is no longer a meeting but an intangible membrane through which every decision is filtered, verified, and adjusted.

This article is from the WeChat official account "Data - Driven Intelligence". Author: Xiaoxiao. Republished by 36Kr with permission.