Why do companies fail at their Digital Transformation initiatives

Success rate of Digital Transformation

Most Digital transformation initiatives don’t yield the benefits that leaders expect.Large companies are under pressure to digitize their business models and products.According to McKinsey, best performing digital companies earn 80% of digital revenues generated from their industries.
An average digital transformation engagement has a success rate of not more than 10% in surpassing profit expectations. For companies to increase their success rate in digital transformation initiatives, they need to adhere to a well defined set of transformation initiatives. These initiatives are provided below.

Setting clear priorities for digital transformation

  • Companies need to focus on fewer themes which are tied directly to measurable business outcomes.When these themes are able to achieve better outcomes, then better results are achieved.
  • The effectiveness of digital transformation increase when these themes are focused on critical initiatives important to the company.When these are achieved, then it dramatically benefits the company’s topline as well as the bottom line.

Talent Acquisition, Management and Retention

  • The success rates of digital transformations dramatically improves when companies puts emphasis on attracting and developing highly talented employees with strong digital and analytics capabilities.
  • As digital transformations require specialized skills, many companies have created positions like chief digital officer and chief analytical officers.The addition of these positions in the leadership cadre can play an important role in effective Digital transformations.
  • Firms who have created chief analytical officers positions have shown better performance in achieving their Digital transformation objectives.

Investing Time and Money in digital transformation

  • It is important that Digital transformation occupies the highest priority for the company’s board and C-Level executives.When there is a high priority, funds will obviously be allocated for such initiatives.
  • When companies allocate operating expenditures towards the Digital transformation initiatives, then they are more likely to surpass expectations.

Agile Methodology in digital transformation

  • In digital, agility is very important.Digital leaders scale at breakneck speed.Hence legacy companies need to revisit their priorities more than ever.
  • Digital leaders constantly update their Digital strategy more frequently than the others.They adhere to agile practices and this agility manifests itself throughout the business.
  • Digital leaders reward their employees for generating new ideas, taking risks and following test and learn practices as they pursue opportunities.

Empowering People in digital transformation

  • Companies who are successful in their Digital transformation empower people at all levels, not just their leaders.These companies are able to achieve success because they assign clear roles and responsibilities for all their people and then put an owner in charge of each Digital Transformation initiative.
  • Adopting this approach increases the chances of superior outcomes because companies hold people accountable for meeting their individual goals.When the individual performance expectations are aligned to the group expectations which inturn is aligned to the organizational expectations, then the probability of success further increases.


Firm can have little control over the strength of the digital disruption it faces or the extent to which its industry is being digitized. At the same time, it has considerable influence over the degree to which it can adhere to the best digital transformation practices which can reduce uncertainty and provide extraordinary outcomes.