Why Digital Transformations Fail

With new technologies and advancements in artificial intelligence on the rise, businesses are under pressure to keep pace. These innovations create opportunities for some organizations while exposing vulnerabilities in others. As internal changemakers confront this dilemma, they face a crucial question: Is digital transformation necessary? For many leaders, the answer is a blatant yes. However, executing this process is often easier said than done. In fact, Boston Consulting Group (2022) reports that only 30% of digital transformations achieve their initial objectives. This raises an important consideration: What issues are emerging during these transformations, and what internal obstacles must be addressed before the expected results can be realized?

Resistance to Change

New digital tools and systems mean little when employees—and, most importantly, managers—resist using them. Leaders who either contribute to or fail to address the source of resistance create friction that hampers digital adoption. Internal change is as much about organizational emotion, attitude, and culture as it is about technology. Individuals who embrace change are more likely to remain committed to the organization and adapt as it evolves through new applications and systems. Decision-makers responsible for these transformations should carefully consider how change will affect employee commitment. Digital transformations are most effective when they strengthen the overall organizational commitment of the firm (Qiao et al., 2024).

Low Employee Engagement

Even when resistance to change is minimal, transformation efforts can falter when engagement lags. Key drivers of low engagement during digital change include unmanageable workloads, lack of directive leadership, and poor delegation or empowerment. As engagement declines, the ROI of new digital investments also diminishes—particularly for time-sensitive initiatives. Each year, this can translate into productivity losses of over $228 million for a median-sized S&P 500 company (McKinsey & Company, 2023). To preserve the value of these investments, organizations must maintain an agile culture throughout the transition and ensure that employee engagement remains consistent. Achieving this requires both a clearly defined transformation vision and a leadership team that is prepared and equipped to guide the process.

Poor Project Execution

As enterprises begin to roll out different transformative projects, there are often underlying factors that are not initially accounted for even by the best managers within the company. The large organizations, complex reporting lines and competing priorities can make it difficult for project teams to maintain focus. Without clear milestones, measurable KPIs, and a disciplined approach to project management, even well-planned initiatives can spiral into budget overruns, missed deadlines, and incomplete implementations. Digital transformations cannot be seen as simply another IT project, especially considering the large investments that they are associated with. Bain mentions that only 13% of company executives achieve the value expected from tech investments (Bain & Company, 2023). To mitigate faults in the investment vision, it is crucial to properly prepare managers and if necessary, find a temporary replacement that has a skillset more tailored to the overall project roll out.

The Role of Project Managers: Enhancing Project Success

The role of the project manager is often misunderstood, particularly in the context of large-scale transformations. Many assume that project managers merely offer general assistance with leadership and organizational tasks. In reality, however, they provide vital, specialized leadership that streamlines internal transformations and ensures initiatives stay on course. Specifically, project managers play a critical role in overcoming the obstacles outlined above:

• Overcoming Resistance to Change: Project managers build trust through transparent communication, aligning stakeholders early in the process and creating clear roadmaps that reduce uncertainty. By framing change as an opportunity rather than a threat, they lower resistance and foster buy-in.

• Addressing Low Employee Engagement: Project managers keep employees engaged by involving them in decision-making, setting achievable milestones, and celebrating quick wins. Their ability to connect day-to-day tasks with the larger strategic vision ensures that employees feel valued and motivated throughout the transformation.

• Preventing Poor Execution: Through structured methodologies, risk management, and continuous monitoring, project managers ensure that strategies translate into action. They coordinate across teams, eliminate bottlenecks, and adapt plans when obstacles arise—turning potential failures into measurable results.

Contact New Normal Business to find an expert project manager for your next transformation!