3 Reasons Why Most Digital Transformation Initiatives Continue To Fail

3 Reasons Why Most Digital Transformation Initiatives Continue To Fail

In this digital age, the hottest topic of the business town is digital transformation.

Companies are constantly looking for novel ways to scale and add value to their customers. With technology evolving at a rapid pace, digital is the way businesses are creating value today, since it has become part and parcel of everyday life.

With a myriad of enterprises excited to build digital capabilities for their businesses in an effort to enhance efficiency and productivity, they are facing a lot of pitfalls on the road.

One common approach is by embracing artificial intelligence into their product lines and digital workflows. But often with not very much success.

Why do most digital transformation initiatives FAIL?

Successful digital transformation has been seen as a key driver in cutting costs and enhancing performance for many businesses.

However, a recent survey done for multiple enterprises by BCG showed that only 30% of digital transformation initiatives succeeded in attaining their objectives.

It begs the question: WHY?

In this article, I will take you through 3 reasons why digital transformation initiatives continue to fail for many enterprises and their remedies.

After you are done reading, rest assured that you will be well on your way to the 30%.

1. Insufficient Budget

Who wouldn’t enjoy a never-ending pool of financial resources?

I know I would.

Still, the reality is not as ideal.

Budgetary constraints are one of the many bottlenecks any given digital transformation journey faces. With a tight budget and several operations all in need of financing, you are between a rock and a hard place.

A report by CBInsights shows a summary of over 300 startup failure stories that attribute revenue model challenges to their failure or stagnancy.

There is a lot of noise out there about how fast and painless digitization is.

What you need to do is know what kinds of digital transformation initiatives your organization can handle as per its budget.

Create a plan that encompasses different phases of the initiative over a certain period of time with a certain amount of budget. The key is to build a strong foundation that will have a ripple effect on your organization, its customers, and its employees.

To paint a picture, say your first go-to strategy is to transform your websites to incorporate some of the latest web development trends to allow for data analytics. With this enhancement, you are in a position to acquire insights and information to make business decisions that guarantee more sales.

Given such a foundation, you can continually improve and innovate within the set budget. Before you know it, these initiatives will create an increased return on investment (ROI) and eventually eliminate the financial constraints.

Consequently, you will implement MORE digital transformation initiatives that you did not even think were possible.

2. Inflexible Organizational Structure

Change is inevitable, they say.

As much as this is true, by our very nature as humans, we find change uncomfortable. We would rather take solace in our comfort zones. I have said this before, and I’ll say it again: comfort zones and growth zones are mutually exclusive.

You need to let uncertainty and change into a business for it to grow.  

Digital transformation is an exact epitome of uncertainty, discomfort, and change. It may necessitate switching up departments, roles, an entire overhaul of your hierarchical structure to set up a more effective team.

Siloed organizational structures, for example, have always presented a stumbling block to organizations that need to collect data to feed their machine learning models, which is how artificial intelligence is being used in business today.

Picture this. Your sales department has always reported and analyzed reports a certain way for years. Shaking things up in that department means somewhat starting afresh; upskilling or multi-skilling.

There is no denying it, this endeavor will be challenging.

After all; no risk, no gain.

Humans may not know it, but sometimes, all they need is a change of perspectives to bring novel aspects into their roles.

What better way to bring this change than shaking up your organizational structure?

The people dimension is a very fundamental element in determining the success or failure of a digital transformation initiative. With a fluid hierarchical structure, embracing and implementing these initiatives stand more chances of success.

This is because digital transformation is by design very AGILE and flexible.

Take it from Microsoft which had problems with its organizational structure. The company experienced internal departmental wars that were a result of constant competition with each other.

With such a toxic environment, Microsoft was struggling to be at par with its competitors especially Google which was a big player in the search market.

It was not until a new CEO, Satya Nadella did a complete overhaul of the company’s organizational structure that it began to thrive. He gave the employees a new meaningful mission and a common goal.

The company has since scaled.

3. Lack of a Holistic Digital Transformation Strategy

38% of business leaders agree to have just a single unit spearheading digital transformation initiatives.

Well, I would understand why they would do that.

To enable other departments to focus on their core business.

Let’s be clear.

The digital transformation endeavor does NOT belong to a single department or to one individual. It is a company-wide initiative. Different departments may each play roles in implementing parts of the strategy but the entire company should be anchored towards a common goal.

The boat moves faster if everyone rows.

You need a clear-cut company strategy that gives your entire team purpose in order to reap the benefits of innovations caused by digital transformation.

How do you do this?

Establish what exactly ‘Digital’ means for your company. ‘Digital’ is a suitcase term; it means different things to different businesses. According to your industry, competition, and problem, you will be able to find your own meaning.

The challenges you encounter as a company and the digital solutions best suited for these problems will inform your digital transformation strategy.

For instance:

  • do your employees look unmotivated from answering repetitive customer requests?
  • do they sometimes go for long lunch breaks?
  • often make errors in their responses?

Now that you have established your challenge, you can implement a digital solution that is in line with this challenge.

For this problem, a chatbot could be the best possible digital solution because experts predict the rise of conversational intelligence tools, which will lead to smarter bots.

You can then create a strategy that would look into how to solve this problem. This strategy would require company-wide participation; from solution architects to communication experts.


Regardless of your current digital transformation status, there is a lot MORE you can do to ensure that your initiatives attain value.

After all, every limitation is an opportunity.

Altimeter Group asserts that organizations that have successfully undergone digital transformation can attest to an increased customer engagement, increased return on investment (ROI), and improved operational efficiency.

Rigid businesses that are giving a cold shoulder to digital transformation are slowly becoming bankrupt or being acquired by other companies.

Not to scare you, but this is an unfortunate reality.

I believe in the power of awareness and information, especially if you want to transform yourself into a successful intrapreneur. 

By ascertaining that the 3 reasons highlighted here are the factors hindering your digital transformation initiatives from attaining their intended value, you are already one step ahead.

Now, as per the insights, you can reinvent your models and continue your digital transformation journey with a set of fresh eyes.

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