One reason that digital transformations fail. What to do, instead

By Sunil Bhargava

What’s the best way to scale a mountain? We all know the answer: One stage at a time.

Digital transformation and modernization are mountain-size endeavors. Yet too often, the default approach, even for technologically savvy organizations, is to take on the entire mountain all at once.

A study by McKinsey found that few organizations are able to sustain transformation goals over the long term.¹ Why do digital transformations fail? In my experience, digital transformations fail because organizations take on too much at once. The sheer scale of the proposed changes becomes unmanageable.

Think about it this way: If 10% of your employees need to learn a new skill, it’s a management and leadership challenge. If everyone in the organization has to learn a new skill, the challenge is an order of magnitude greater.

There is an alternative, and a strategy to set yourself up for a successful digital transformation, rather than a digital transformation failure: Concentrate on meeting your business requirements without changing more than is necessary.  Stay focused on your defined scope until it’s been achieved. Then move on to the next business requirement.

In other words: run and transform simultaneously.

Treat each milestone as a discrete project

You can still have—and reach—big goals with this iterative approach. But the way that you get there, and your planning process, will be different.

The key lies in defining a pragmatic scope with clear milestones. With an iterative approach, each milestone is a discrete project that gets finished in its entirety. Your larger goal gets divided into a series of smaller accomplishments, each of which has real meaning and real ROI.

These are more than just waystations along the road to a bigger goal—they’re destinations in themselves, and they bring real benefits to the organization.

Why iteration improves odds of success

An iterative strategy, in which business-as-usual can continue even as transformation is underway, has multiple benefits.

Perhaps most importantly, the odds of success increase. Addressing the technical, people and process challenges involves adapting something that already exists rather than making dramatic changes that bring adoption risks.

ROI from one project can significantly contribute to funding the next. So rather than waiting years for a return that might not come, organizations reap benefits of transformation as they complete each step.

With a well-structured iterative approach, you also can first engage the people who are ready for change, rather than trying to convince or enable the entire organization at the same time. Leadership can focus on helping the pilot groups through the process. Once the change proves effective, other groups can follow, and they can learn from the first movers’ experiences.

First-hand experience

Years ago, I helped eight business units move to a new unified version of their database. If every business unit had attempted to move at once, everyone would have had to start paying for the software from Day 1, even though some teams would begin using the new technology much later than others.  

By onboarding each business unit as a separate project, we were able to align the  onboarding schedule—and payments—with the business units’ readiness. The upgrade was a success, and collaboration between the business units improved during onboarding. That was an unexpected and welcome ROI in itself.

Reduce requirements to predict the future

Engaging in a three-year transformation project is a huge roll of the dice. You may be in the same business as you are today, selling similar products or services, but the way in which you do business may be dramatically different.

Look at how abruptly the COVID-19 pandemic impacted the business landscape in 2019. Companies that settled on a three-year outlook in 2023 already have had to adjust to advances in generative AI.

By working on smaller projects with shorter time horizons, you gain much more certainty about what your business will look like when those projects are completed. And your approach can remain nimble as your business evolves.

Distinguish short-term and long-term goals

The key is to understand your business and technology problems at a deep level, as well as the standalone objectives that will help you meet both short-term and long-term goals. Then use that knowledge to transform iteratively and continuously. For example, I have worked with many customers who have been able to meet meaningful business requirements by working at the infrastructure level and then transforming applications as follow-on projects.

It takes some up-front analysis to see that a whole-mountain-at-once strategy likely won’t be the best answer to your modernization challenges. But the process can yield an alternative, iterative journey that produces both short-term ROI and a long-term evolution that matches your unique business needs.

Sunil Bhargava is Senior Vice President, Global Cloud Services, for Kyndryl

¹  "How to implement transformations for long-term impact,” McKinsey, May 2023