Navigating Digital Transformation in Asset-Intensive Companies: A Process Model Informed by Design Science

Companies in asset-intensive industries, such as aviation and railways, face unique digital transformation challenges due to the misalignment between the rapid evolution of digital technologies and decades-long asset lifecycles. Existing innovation frameworks are inadequate for managing this complexity, which in turn creates tensions between innovation requirements and operational reliability demands. This paper therefore investigates how asset-intensive companies can systematically integrate digital technologies, while fully complying with regulatory constraints and safety requirements. We employ a design science approach in a study of Nederlandse Spoorwegen (NS), the Dutch national railway operator, focusing specifically on the implementation of AI-driven CCTV systems within the operations of NS. Drawing on a literature review and participant-observer as well as interview data, we develop six design propositions that address the key digital transformation challenges of asset-intensive companies in the area of market readiness assessment, modular architecture, regulatory compliance, temporal coordination, ecosystem governance, and organizational capability development. Using these design propositions, we develop the Iterative Development & Adoption Model (IDAM) that operationalizes market maturity assessment through market readiness levels to guide make-or-buy transitions across four iterative phases: ideate, assess, realise, and review. This model includes a Development Reference Architecture for emerging technologies and an Integration Reference Architecture for more mature technologies, enabling concurrent sourcing strategies based on technological maturity. IDAM provides actionable guidance for decisions about technology adoption in asset-intensive contexts, thereby offering a systematic approach to innovation management in industries with very long asset lifecycles and huge regulatory constraints.