The rapid and pervasive digitalization of businesses has spawned value creation by changing the nature and structure of products and services. At the same time, organizations have been challenged to cope with dynamic business landscapes as they apply digital technologies to renew their competitive positions. In this context, we aim to explore how organizations develop digital innovation initiatives to transform a traditional product-dominant business towards a service-dominant one and how the initiatives are constituted and entangled within and across the initiative stages. Based on close collaboration with Georgia-Pacific Consumer Products Professional Division (GP PRO), we explore the path trajectory of the organization’s strategic connected restroom initiative through four stages: (idea-focus) initiation, (technology-focus) experimentation, (customer-focus) commercialization, and (process-focus) organization. Drawing on a clinical inquiry approach, we investigate the digital innovation initiative as combinations of strategic moves (co-evolution, reconfiguration, and renewal) and architectural moves (sensing usage, analyzing traces, and co-creating services). As a result, the dissertation contributes to the literature by adding new knowledge about the role of digital innovation in transforming incumbent product-oriented organizations towards a service-dominant focus as well as to practitioners by providing insights into the key challenges and opportunities they encounter in such initiatives.