The Cold Truth

The generalized consensus both from consultancy companies and academic research [1][2][3] is that ultimately, 70% of the Digital Transformation (DX) initiatives fail. These numbers may seem spectacular, or even exagerated, especially considering that there are many organizations putting DX on top of their priorities and capital expenditures. However, the remnants of this failure can be seen everywhere. Once dominant organizations have left markets they had previously led - Blockbuster and Nokia are well known examples - others had to radically change approach after millions spent - The New York Times and General Electric[4]. 

Most organizations understand, if they are going to survive, they need to steup up their digital efforts. Reality shows that, for the organization aiming to launch a Digital Transformation initiative, the odds are not in their favor. 

Why DX Initiatives Fail

We know it: all DX initiatives have good intentions and noble aspirations. Many organizations set it as their strategic priority, top management makes a great internal fanfare about it as a way of mobilizing people, the reality is that they they failed to translate into real value creation. Some of the initiatives even fail to start.

 

1. Misunderstandment of DX

The first problem with Digital Transformation is the generalized wrong idea about it. This issue may stem from the words themselves, as they convey the implicit meaning that DX is to "digitally transform" an organization, i.e., by the means of digital technologies, change the way an organization operates. And so, they base their approach on technology, sometimes hoping that the last buzzword technology will be the silver bullet for addressing all the organizations problems.

Organizations often pursue technology upgrades without a clear understanding of how these changes will drive value. A BCG study found that companies with strong strategic alignment were 2.5 times more likely to succeed in their transformations.

 

2. Inadequacy of Traditional Planning

Traditional planning - yearly plans, budgets and tactical directions, in conjunction with top-down management styles - aren't able to cope with the speed requirements of proper digital transformation practices. Budgets often get traped under yearly plans, and an inability to cope with uncertainty and risk, slow down the innovation required by digital transformation. What should be quick tests of new approaches get stuck in organization rigidity. Management starts to question the lack of results, why digital transformation isn't quickly solving the issues it should. The stage is set to shutdown the initiative.

 

3. Not putting your heart where your mouth is

Top management is the greatest driver of any organizational change. And i am not saying that mid-management and staff are not important - on the contrary - when they realize top management is just talking about it but not enthusiastically pushing it, then innovation becomes just a fancy word with no real implementation. Nobody prioritizes it - staff knows it is not a priority, mid-management operational decisions relegate it to the bottom of their priorities. Nothing gets done. There should be a continuous, relentless and enthusiastic top-down support for innovation practices if they are to succeed.

 

4. Cultural Resistance and Change Fatigue

Culture is the organizational asset that is harder to change. Especially in long established organizations, with a long successful history, culture has become entrenched through the minds and practices of the people. Changing it requires a tremendous amount of energy, long term top-down support, bottom-up involvement. The implementation of innovation practices in such organizations is certainly going to be, at least, a humongous task. Embracing risk, becoming agile, redesigning processes, empowering workers and teams to become more autonomous are tasks that will likely hit the established practices. Resistance to change is a natural human reaction - and will likely happen everywhere, blocking the implementation of a new culture.

The bright side is that people evolve, and culture evolves throught time too. Brace yourself for a long journey, find a continuous source of energy.

 

5. Inadequate Technology Infrastructure

Legacy systems, poor data governance, and fragmented IT architectures can derail transformation efforts. According to Gartner, 45% of CIOs cite outdated infrastructure as a major barrier to digital progress. Modernization must be approached holistically, with scalable platforms and secure data ecosystems. But you know what we think - technology should support business, not the other way around. So make sure you have set a clear business strategy prior to devise your technology infrastructure.

 

6. People, often forgotten as the center piece of the puzzle 

Digital transformation demands new processes, new products, new capabilities. All of them involve people. Whether their daily work will be changed, the required competences will change - you need to involve people since the beginning. Involving them in devising objectives, process implementation and competence acquisition is fundamental. Increasing knowledge in areas such as Data science, AI, cybersecurity, agile methodologies requires time and personal commitment. New processes take time to be assimilated as part of daily routines. Change may require improving their well-being to make sure it is embraced and accepted. Make people your priority, and every problem along the Digital Transformation path will naturally be solved.

 

Conclusion

Digital transformation is a complex, multi-dimensional journey. The 70% failure rate is not inevitable - it reflects systemic gaps that can be addressed with strategic foresight, cultural agility, leadership commitment and - the last but not the least - putting people in the center of Digital transformation.

Contact Us to work with you to design and implement a successful Digital Transformation journey.

 

References 

[1] Garcia, Jon. Common Pitfalls in Transformations: A Conversation With Jon Garcia. Mckinsey, 9 Mar. 2022.

[2] Forth, Patrick, et al. Flipping the Odds of Digital Transformation Success. Boston Consulting Group, 29 Oct. 2020.

[3] Mohan, Surendra, and Devaraj Good. “Cloud, AI, and Digital Transformation: A Winning Combination.” Article in INTERNATIONAL JOURNAL of COMPUTER ENGINEERING & TECHNOLOGY, 2024,

‌[4] Moazed, A.: Why GE Digital Failed, https://www.applicoinc.com/blog/ge-digital-failed/, last accessed 2025/07/24.‌