Why do the majority of digital transformation projects fail?

The investment in people requires a change in mindset from a focus on the status quo-traditional beliefs and linear assumptions of the current business model and old ways of using technology

Some 90 per cent of executives consider digital transformation as a strategic priority but some 50 per cent do not feel they have the skills or team to execute and some 35 per cent feel unprepared for the task.

The outcome: 70 to 84 per cent of digital transformation efforts fail globally. Why?

Before answering this question, we need to challenge your understanding/ perception of:

What is digital?

What is a digital business model?

What is digital transformation?

What is digital?

Most often “digital” is seen as a noun seen through the lens of technology (hardware, software, AI, cloud). But reframing “digital” as an adjective, it forces us to see how digital affects our operations and organisational culture. Inspired by successful digital business models globally, we view “digital” being: connected, information rich, pervasive.

Digital is connected across networks locally and globally.

Digital generates information rich data, which is incorporated in strategies to develop meaningful, genuine relationships with targeted individuals in their network.

Digital is pervasive, transforming the entire organisation. It is not siloed on changing one department (IT) but pervades all the company functions: marketing, finance, HR, sales, customer service. It forces the organisation to change its mindset and operations.

When one of these characteristics is missing, the power of digital transformation cannot be realised.

What is a digital business model?

Again, it is critical to clearly determine your business model or how it answers customers’ needs, adds value and generates outcomes. The digital business model must incorporate the above three characteristics as it develops its content, designs the customer experience and delivers its content across platforms.

Uber transformed the traditional taxi service business model by looking at the business through the lens of a network instead of a car. Uber saw two untapped networks that were latent, unconnected – #1 people who had a driver’s license, a car, and free time and #2 people who needed a ride, wanted to be picked up at a location at a certain time, pay seamlessly, and know who their driver was. Uber digitised the business model- connecting drivers through a digital app; matching riders with available drivers with an interactive digital ordering, delivery and payment system; and incorporating digital feedback and rating system to monitor the customer experience.

Uber disrupted the taxi business and became a global model. But their failure to transform their leadership and company culture necessary in our transparent digital world caused some setbacks and required adjustments.

So, what is digital transformation?

Digital transformation is an organisational transformation propelled by digital concepts and means. Transformation is a comprehensive (both internal and external); it has different goals and speed of change. It manifests in change models ranging from continuous improvement, step-by-step change to exponential change. Continuous improvement focuses on one external aspect of the organisation; it can be gradual – addressing services, communications, policies, processes and technology. Changes can be reversed if necessary. While organisational transformation is an internal process of changing mindset and culture, it cannot be accomplished without total organisation commitment. It’s no more a wonder that most transformation projects fail.

Why do digital transformation
efforts fail?

Because most organisations live with a transactional (external) mindset. They see that digital transformation begins with an investment in technology- software, hardware, consultants to drive the change process. The progressive organisation operates within a transformative (internal) mindset investing in people – teams are challenged to integrate change and leverage these new technologies. The investment in people requires a change in mindset from a focus on the status quo – traditional beliefs and linear assumptions of the current business model and old ways of using technology. The mindset will be translated into an agile company culture, and the team’s approach to organisation change.

Furthermore, digital technologies require a different level of understanding and integration into the organisation ecosystem. Digital transforms leadership, organisation structure and old hierarchies of communications. It requires breaking down functional siloes and opening up lines of communication to propel engagement and collaboration of the executive and operational teams to foster open dialog and ongoing innovation.

What’s the opportunity in MENA/
Gulf region?

In MENA, most businesses and organisations are focused on the excitement of “digital” as a technology. Blockchain, Artificial Intelligence, Augmented Reality and Automation are the keys to differentiate themselves in the marketplace. Innovation drives external changes in operations and marketing.

Rather for sustainable success, the focus needs to be on transformation. The latter focusses on the internal processes necessary to sustain the innovation and change – values, mindset, culture leadership.


About the Authors

Why do the majority of digital transformation projects fail?
Prof. Ira Kaufman – Founder of the Transformation Academy
Why do the majority of digital transformation projects fail?
Eng. Adil Kassabi – Digital Transformation Advisor & Managing Partner at tadafur Consulting Services