“Digital transformation”. There aren’t many phrases that have become as commonly used in boardrooms around the world over the past two decades.
Businesses across all sectors have poured vast sums into modernising legacy systems, automating workflows, moving to the cloud, visualising data and embracing artificial intelligence. The goal? Typically, a combination of higher productivity, greater agility and better customer experiences.
Yet, paradoxically, many of these ambitious programmes have had the opposite effect. Instead of freeing teams up to work smarter and faster, digital transformation efforts often introduce new friction points, create layers of complexity and erode morale. The result: productivity takes a hit just when businesses need to be more efficient than ever.
The problem isn’t with the idea of digital transformation itself. Of course, adopting new technologies to improve operations, products, services and outputs is entirely the right thing to do in most instances. The problem, however, is in the way many companies approach it.
Thinking too big
Too many organisations still view digital transformation as a single, sweeping initiative. For mid- and enterprise-sized businesses, this can mean investing in a multimillion-pound project to replace old systems with new ones, all in one go.
This “big bang” approach – something I saw frequently in my 15 years working as a consultant – is often fuelled by good intentions but hampered by flawed execution.
In practice, it tends to produce long, expensive projects that are slow to deliver value. And the bigger issue is that, by the time a system finally launches, the business’s needs have evolved, leaving disgruntled employees, leadership teams and board members. In some cases, these projects are quietly abandoned halfway through, leaving behind little more than technical debt and scepticism toward future innovation.
Late last year, Gartner’s annual global survey of more than 3,100 CIOs and technology executives produced some stark findings about “digital initiatives”. It found that less than half (48%) of projects involving the implementation of new technologies meet or exceed their targets. A study by McKinsey back in 2022 created similar headlines – it had surveyed 600 firms that had recently undergone a digital transformation project, finding that only 20% achieved more than three-quarters of the revenue gains they had anticipated before embarking on their projects.
Amid the explosion of AI technologies and the rush to integrate them into workflows, strategic planning and customer-facing platforms, there are important lessons to learn from the digital transformation failings of the past.
The pattern I see time and time again is this: a company sets out to shift its customer-facing tech onto a new platform, unify its data or roll out a new ERP system. The project balloons in scope, with endless committees, vendors and sign-offs. The technology itself may be sound, but the transformation effort overwhelms the organisation. Teams have to learn new tools and processes all at once, often without the right training or buy-in. Productivity dips sharply and the promised efficiency gains never materialise – the Gartner and McKinsey studies shine a very bright light on that.
Removing the friction
The irony is that digital transformation is supposed to make work simpler. But too often, it ends up making it harder. From experience, this tends to stem from several key reasons: a lack of careful consideration about the people using the tech (the UX is over-looked in favour of technical capabilities); a lack of buy-in from all levels of an organisation (fatigue sets in quickly and productivity suffers); and a disconnect between the end goal and the practical delivery (there are not simple, actionable steps to get from A to B).
This is why there is always a case for taking a more iterative approach to digital transformation – one that favours steady progress over sweeping change. Instead of tearing everything down and starting again, organisations should focus on identifying and addressing the most painful friction points first.
Take the example of renovating a house. As owners, you can let the house get so tired and worn that, after 20 years, you need to completely gut and refurbish the entire property. That is going to be expensive and difficult to coordinate (you need to align different tradespeople and buy lots of materials). As well as increasing the chances of the project exceeding the original budget and timelines, the house itself might, at times, be in such a state as to be uninhabitable.
The alternative is, every year, pick just one room or part of the house and spruce it up. It is focused, minimises disruption and means the house is in a constant state of improvement or modernisation.
All the same applies in the creation, adoption or implementation of new digital solutions. An agile, iterative approach will often lower risk and cost – smaller projects are easier to control, test and refine. It is typically quicker to create value as the project ought to be completed in weeks or months, not years. And, crucially, it means that organisations are best placed to capitalise on the best and most exciting new technologies; something they can easily miss out on if they treat digital transformation as a major, once-in-a-decade project.
Modernisation made less daunting
Many of these challenges apply most pertinently to mid-size and large organisations – those that are often hamstrung by legacy IT. To return to the analogy above; for these firms, digital transformation projects can feel more like modernising a Tudor mansion than a 1960s bungalow.
As such, for mid-to-large firms, a smarter strategy of modernisation is required and modularity could be the answer. Gradually replacing or upgrading parts of a system as needed, while maintaining core functionality. For instance, integrating new APIs, digitising specific workflows, streamlining the customer journey or introducing cloud-based microservices can all yield significant gains without the disruption of a total rebuild.
Crucially, this approach allows for clear measurement of outcomes. Each iteration should deliver tangible improvements in performance, usability or customer satisfaction. That data can then inform the next step, ensuring resources are spent where they make the biggest impact.
Productivity as a marker of success
As noted at the start, when asked what the desired outcomes of a digital transformation project are, “boosting productivity” is a common answer. Set against the backdrop of the UK’s purported “productivity crisis”, not to mention the red-hot debate about how effective AI can be in enhancing productivity, this is a fitting point to end on.
Right now, the relationship between tech and productivity is not about piling huge amounts of time and money into revitalising entire IT systems. It’s about seamlessly integrating the most relevant technology into people’s daily work. The most successful transformations are those where the tools almost disappear into the background, enabling creativity and collaboration rather than constraining it.
The coming years will likely only amplify this pressure. AI and, by extension, automated, data-driven decision-making, offer immense potential, but only if they’re implemented thoughtfully. Businesses that continue to equate digital progress with large-scale investment will risk falling behind those that embrace agility and experimentation.
The phrase “digital transformation” has come to be misunderstood, often seen as a singular, once-in-a-decade action. In reality, progress is rarely delivered in one grand gesture. The organisations that view change as ongoing adaptation, rather than one-off transformations, are better positioned to respond to whatever comes next. Change doesn’t have to be dramatic to be meaningful. The real challenge for businesses now isn’t transforming overnight, but learning how to keep evolving – thoughtfully, continuously and with people at the centre.
Ritam Gandhi is the founder and director of Studio Graphene, a global digital product studio.
“Digital transformation”. There aren’t many phrases that have become as commonly used in boardrooms around the world over the past two decades.
Businesses across all sectors have poured vast sums into modernising legacy systems, automating workflows, moving to the cloud, visualising data and embracing artificial intelligence. The goal? Typically, a combination of higher productivity, greater agility and better customer experiences.
Yet, paradoxically, many of these ambitious programmes have had the opposite effect. Instead of freeing teams up to work smarter and faster, digital transformation efforts often introduce new friction points, create layers of complexity and erode morale. The result: productivity takes a hit just when businesses need to be more efficient than ever.
