top of page

Why Digital Transformations Fail - Book Review

1 October 2022

Dr. Moria Levy

The book 'Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead' was written in 2021 by Tony Saldanha, the former director of information systems at Procter & Gamble. Drawing from his firsthand experience at P&G, Saldanha shares their strategies to navigate a fundamental shift towards digital transformation successfully.


The book addresses the sobering reality that 70% of digital transformations fail. It offers a systematic methodology proposed by Saldanha to help companies overcome this challenge and achieve a secure and prosperous transformation. At its core, the methodology emphasizes the importance of discipline, methodology, and driving cultural change within organizations.


Against the prevailing failure rate of digital transformations, Saldanha's book provides practical guidance on how companies can triumph in their transformation efforts. By presenting a comprehensive framework, it highlights the significance of methodology, discipline, and fostering a new culture.


Leveraging Saldanha's extensive knowledge and the lessons learned from P&G's successful transformation, the book offers valuable insights and strategies to help organizations overcome the hurdles associated with digital transformation. It serves as a guiding resource for companies striving to thrive in today's rapidly evolving digital landscape by embracing a disciplined approach and fostering a transformative culture.

The book delves into the following topics related to digital transformation:
  1. Infrastructure: Technology, Transportation, and Methodology during the pre-transformation phase.

  2. Disruptive Digital Empowerment: Exploring the initial stages of digital transformation.

  3. Advancement: Embracing variety and realizing the potential of digital transformation.

  4. Organizational Restructuring: Implementing new rules and structures within the organization.

  5. Cultural Shift: Nurturing a culture that prioritizes risk awareness and agility.


I highly recommend reading this book and applying its insights. As we navigate our way toward digital transformation, being among the leaders in this journey is advantageous.


Furthermore, knowledge managers must consider replacing "digital transformation" with "knowledge management." Many of the ideas presented in the book also apply to our field. I encourage you to explore and share these concepts within our knowledge management community.


The digital transformation

The fourth industrial revolution represents the current paradigm shift we are experiencing, characterized by the integration and replacement of physical, biological, and digital capabilities. For example, we observe the transformation of physical stores into digital platforms, made possible by advancements in computing power. Digital transformation emerges as a response to the fourth industrial revolution, serving as the means for the new generation to navigate this revolution. Companies have realized the necessity of undergoing this transformation; otherwise, their future becomes uncertain. Saldanha provides the following definitions:


  1. Disruptive digital: This refers to the impact of the fourth industrial revolution on organizations, where the availability and affordability of computing power lead to significant changes in industries, economies, and societies.

  2. Digital transformation: This entails the transition of organizations and companies from the era of the third industrial revolution to the fourth. This transition signifies that digital technology becomes the central foundation for new products and services, innovative operational methods, and novel business models.


Contrary to some arguments, digital transformation is more than merely adding more technologies. It is, in fact, a profound reconsideration of the value we provide to both customers and the organization. This reevaluation is rooted in three key elements:


  1. New business models, similar to the emergence of online stores, reshape how we engage with customers and deliver value.

  2. The development of technology-driven products that leverage digital advancements to meet evolving customer needs and preferences.

  3. The adoption of digital operations, encompassing innovative processes and systems that enhance efficiency and enable seamless integration across various organizational functions.


In essence, digital transformation entails a holistic approach beyond technological implementation, focusing instead on the fundamental reinvention of how we create value for customers and optimize internal operations.


Infrastructure: Technology, Transportation, and Methodology during the pre-transformation phase.

Before embarking on a digital transformation journey, laying the groundwork with the appropriate infrastructure is crucial. This infrastructure includes:


  1. Technology: Adopt innovative digital platforms such as cloud computing and artificial intelligence. It is important to note that implementing these technologies alone does not constitute a digital transformation but rather serves as a preliminary step toward it. Ensure that your organization is prepared to leverage at least two types of innovative technologies, embrace outcome-based models, and navigate the vast landscape of ecosystem environments. Gain a comprehensive understanding of these new technologies and their inherent possibilities.

  2. Process automation and digitization: Prepare your organization by automating or digitizing existing processes. This improves efficiency and lays a strong foundation for subsequent transformation stages. Streamlining operations and embracing digital workflows can enhance productivity and readiness for the upcoming transformation.


Investing in the necessary technology infrastructure and optimizing existing processes can equip your organization to work more efficiently and be well-prepared for the subsequent stages of digital transformation.



Ensure that a senior manager, ideally at the highest levels, such as the CEO, takes ownership of the entire digital transformation initiative. This process demands significant managerial attention from senior officials. The senior manager should be responsible for creating the necessary conditions to facilitate the transition, leading by personal example, aligning organizational goals with those related to digital transformation, and overcoming obstacles along the way. It is crucial to have a senior manager who actively leads the transformation effort.


Define a clear goal for the transformation—where do you aim to be? Strive for innovative development and adding value to the customer, aligning with one of the configurations above. Additionally, it is essential to establish a separate budget for the digital transformation, ideally independent of the computing budget, to ensure adequate resources are allocated.


Method (to increase chances and reduce risks):

While vision and hope are essential, they alone do not constitute a strategy. A systematic methodology, as defined below, is necessary for success.


  1. Identify a significant business opportunity and derive projects and tasks accordingly. Start slowly initially, gradually increasing the pace as you progress.

  2. Implement a portfolio of projects simultaneously, each with varying levels of risk and potential. This diversified approach helps mitigate risks and increases the chances of success.

  3. Embrace iterative planning and implementation, delivering value in small increments. If something isn't working, identify and address the issue promptly.

  4. Celebrate milestones and achievements along the way, fostering a positive and motivating environment. Communication and recognition are vital.


Following this methodology and embracing an iterative approach can increase the likelihood of success while reducing risks. Remember to celebrate achievements and maintain open communication throughout the transformation process.

Disruptive Digital Empowerment: Exploring the initial stages of digital transformation.

Saldanha suggests initiating the digital transformation process with Silos, which refers to a focused collection of projects. However, it is essential to note that although this approach provides focus, it only guarantees a smooth process.


One crucial step is defining the mission, which represents the core purpose of the transformation, also known as the Massive Transformation Purpose (MTP). For instance, Google described its mission as organizing the world's information. This mission is an essential guiding principle to connect people and rally them toward transformation.


Establishing a support network is vital to create an enabling environment for taking risks and acknowledging that not all endeavors will be successful. This can be achieved through administrative infrastructure and practices prioritizing speed and encouraging collaboration between management, stakeholders, and others. It also entails fostering a culture that promotes open feedback, constructive criticism, and reduced sensitivity to failure.


By implementing these steps, organizations can lay the foundation for a successful digital transformation while fostering a supportive and innovative culture.


To identify areas of significant potential, consider the following approaches:

  1.  Assess business strengths, opportunities, and pain points: Evaluate the organization's current strengths, identify growth opportunities, and address existing challenges or pain points.

  2. Seek input from consultants and experts: Collaborate with consultants and experts to gain insights into innovative options that align with the organization's goals. This includes understanding the following:

    a. Technologies: Assess the capabilities and limitations of different technologies to determine their potential uses and benefits.

    b. Process improvements: Identity processes within the organization that can be revamped or optimized to enhance efficiency and effectiveness.

   c. Collaborations and innovative ecosystems: Explore opportunities for partnerships and collaborations within an innovative ecosystem to leverage collective resources and expertise.


Connect the findings from steps a and b to generate ideas that leverage innovative digital capabilities and offer value in the following areas:


  • New business models: Explore and develop innovative approaches, such as online platforms or subscription services, that capitalize on digital capabilities to create new revenue streams and enhance customer experiences.

  • New technology-based products: Create and introduce new products or services that leverage emerging technologies, such as artificial intelligence or the Internet of Things, to meet evolving customer needs and preferences.

  • Digital operations: Optimize internal processes and adopt digital tools and systems to improve operational efficiency, streamline workflows, and enhance collaboration within the organization.


A central tool recommended for conducting this analysis is Design Thinking, which promotes a human-centered and iterative approach to problem-solving.


To promote progress, consider conducting at least ten experiments or initiatives in the chosen area of focus. Embrace a mindset that views failures as learning opportunities, allowing experimentation and tolerance for unsuccessful attempts.


Speed is a critical element in creating momentum and driving progress. Emphasize the need to act quickly and decisively to capitalize on opportunities and build momentum for digital transformation.


Advancement: Embracing variety and realizing the potential of digital transformation.

To ensure successful progression to the next stage of transformation, it is essential to incorporate the following elements into the strategy:


1. Idea generation: Establish a mechanism to generate many ideas and encourage creativity and participation from various stakeholders, fostering a culture of innovation and ideation.


2. Project portfolio diversity: Ensure sufficient coverage of projects of different types within the portfolio. Examples of portfolio distribution include:

  •  Google's 70-20-10 approach: Allocate 70% of employee activity to core projects, 20% to side projects, and 10% to unrelated initiatives.

  • P&G's 5-2-2-1 approach: For each topic, generate ten ideas and test them. Prioritize five feasible options, 2 reasonable ones, 2 good ones, and 1 "wow" project. The "wow" projects demonstrate potential for significant leverage, such as achieving a tenfold impact.


 It is important to note that embracing a culture where failures are expected, and learning opportunities are valued is necessary for driving innovation and growth.


3. Method, language, and culture: Establish a methodological framework, a common language, and a supportive culture that allow for a situation where failure is inherent in the process. This includes:

  •  Metrics for accurate project identification: Define metrics that help determine the viability and potential of each project, enabling the selection of suitable projects to pursue further.

  • Rapid feedback loops: Implement a system that facilitates quick evaluation and decision-making. Rapidly identify projects that are not progressing as desired and take necessary actions to address or discontinue challenges.

  • Easy recovery: Create an environment that supports easy recovery from setbacks. Encourage iterative approaches where failures are viewed as stepping stones toward success, enabling swift adjustments and course corrections.


By incorporating these elements into the strategy, organizations can foster a dynamic and resilient ecosystem that encourages experimentation, innovation, and continuous improvement.


Managing change is crucial for the successful completion of various projects. Here are some key highlights of the change management process:


1. Understanding the current situation and its risks: Gain a comprehensive understanding of the existing environment, including potential risks and challenges associated with the proposed changes.


2. Choosing a change model: Determine whether an organic or inorganic change model is more suitable, considering factors such as urgency and level of agreement among stakeholders.


3. Creating motivational plans for those affected by the change, which includes:

  •  Establishing a tangible sense of purpose and meaning for the entire organization, clearly communicating the objectives and benefits of the change.

  • Encouraging personal commitment to leading the change from managers and key stakeholders, as their active involvement is vital for successful implementation.

  • Developing structured and visible performance measurement systems that enable progress tracking and accountability.

  • Generating momentum by promoting a positive and forward-thinking mindset throughout the organization, inspiring enthusiasm and support for the change initiative.


Here are some additional tips that can aid in the change management process:


  • Selecting a dedicated and capable team to lead the change effort, ensuring they possess the necessary skills and expertise to guide the organization through the transformation.

  • Preparing contingency plans to address potential challenges and objections during the change process. This includes developing strategies to overcome resistance and creating an immunization system to minimize negative impacts.

  • Designing reward systems, particularly for middle managers, to recognize and reinforce their contributions to the change initiative. Rewards can motivate and incentivize them to support and champion the transformation actively.


By implementing these change management strategies and tips, organizations can navigate the transformation process more effectively, enhance stakeholder engagement, and increase the likelihood of successful outcomes.

Organizational Restructuring: Implementing new rules and structures within the organization.

When existing activities and projects have proven successful, ensuring alignment between individuals and the organization in the new digital environment becomes crucial. While digital-native companies like startups and Airbnb naturally exhibit this alignment, traditional organizations must transition from technology management to technology-based leadership. This transition will manifest in several aspects within the organization:


  1. Embrace more flexible digital platforms, such as Cloud computing.

  2. Foster agility and flexibility in performance to adapt to changing circumstances.

  3. Develop the necessary skills and abilities to operate effectively with new technologies.

  4. Cultivate new capabilities for leading digital transformation.

  5. Establish governance in the digital environment, including policies, ethical considerations, permissions, and more.

  6. Update the organizational environment and relationships (ecosystem) with suppliers, adjusting the nature of relationships and contracts accordingly.

  7. Build new human skills for leadership, computing, and the organization, harnessing analytical and creative capabilities.


These aspects form the foundation for organizations to navigate the new digital landscape and remain relevant. To stay on top of emerging trends and enhance digital readiness, the following recommendations are provided:


  1. Create continuous learning opportunities for management to enhance their knowledge and skills.

  2. Engage with investment groups and start-up companies to leverage their expertise and stay informed about emerging trends.

  3. Foster connectivity with the external world by opening up the organization's products with APIs (Application Programming Interfaces).

  4. Utilize digital ambassadors and enthusiastic technology users from across the organization to promote digital adoption and understanding.

  5. Continuously monitor innovative technologies, particularly in artificial intelligence, intelligent process automation, blockchain, robotics, drones, and dedicated technologies like 3D printing and nanotechnology. It is advisable to invest in proven innovations rather than speculative ones.


Here are some additional tips to consider:


  1. Don't wait for the next version to improve; seize existing opportunities, even if they may seem slightly slower initially, as long as they deliver results.

  2. Embrace temporary solutions that may be discarded eventually but provide quick returns on investment.


By following these recommendations and tips, organizations can adapt to the digital landscape, remain competitive, and seize opportunities for growth and innovation.


Cultural Shift: Nurturing a culture that prioritizes risk awareness and agility.

In an industry characterized by constant disruptive changes, it is crucial for organizations to cultivate a culture that encompasses the following elements:


  1. A culture of risk sensitivity involves educating employees to recognize potential risks and understand when the organization is at risk, prompting the need for change. It emphasizes the importance of proactively addressing challenges and adapting to new circumstances.

  2. Agile culture: This culture promotes a mindset and practices that enable organizations to navigate and embrace continuous renewal effectively. It encourages flexibility, adaptability, and the ability to respond swiftly to changing market dynamics and customer demands.


By fostering these cultural attributes, organizations can enhance their ability to navigate disruptive changes, seize opportunities, and remain competitive in an ever-evolving business landscape.


A culture of risk sensitivity is a crucial aspect that contributes to the sustained success of an organization. Saldanha highlights the well-known parable of the frog slowly heating up in a pot, which serves as a metaphor for the importance of being alert to risks and taking timely action. In the age of the fourth industrial revolution, Saldanha asserts that numerous warning signs are available to us. The key lies in our ability to recognize and respond to them.


Saldanha suggests incorporating a measurement related to the need for digital transformation as part of the organization's strategic metrics. This measurement should be based on valuable information obtained from various sources, including:


  1. Industry insights: Gathering information on emerging trends in digitizing core processes, disruptive start-ups, and industry growth. Learning from investors can also provide valuable insights.

  2. Customer feedback: Evaluating the potential to enhance the customer experience, identifying areas of improvement in customer service, and leveraging social networks to gain valuable customer insights.

  3. Business model analysis: Assessing the development of channels, identifying shifts in value propositions, and exploring opportunities for strategic partnerships and engagement with start-up solutions.

  4. Performance evaluation and feedback: Analyzing the organization's level of investment in technology development, assessing investments in the technological workforce, measuring the percentage of digital processes within the organization, and gauging the extent of customer-focused assets.


By incorporating these informational sources into the strategic measurement framework, organizations can comprehensively understand their digital transformation needs and make informed decisions to drive their future success.


Why do many organizations choose to ignore the abundant signs flooding the market? There are several reasons behind this phenomenon. Some organizations fear the cost and potential failure associated with change. Others succumb to inertia, finding it difficult to break from established routines. Additionally, misjudging the significance of these signs is not uncommon, especially when the changes are nonlinear. However, implementing regular measurements can help address some of these challenges.


An agile culture is a vital component of successful digital transformation. It is a culture that embraces new ideas, even if some enthusiasm may be misplaced. Saldanha recognizes that many organizations neglect to actively cultivate their culture, viewing it as a passive outcome rather than an ongoing effort. Through his research on organizations that have failed in digital transformation, Saldanha concludes that three distinct circles must be maintained to foster a culture that drives success:


  1. Customer focus: Cultivating a culture that prioritizes the customer's needs above the interests of shareholders. An organization that places the customer at the forefront will consistently adapt to the changes necessary to deliver optimal customer service.

  2. Creating an adaptive environment: Nurturing an environment that can repeatedly adjust and adapt to changes. While many initiatives to promote adaptability may arise during later stages, it is crucial to lay the foundation for this activity much earlier.

  3. Institutionalizing an ordinary shared meaning: Establishing a unified purpose that injects passion and motivates individuals to exert the tremendous effort required for success.


Organizations can foster a culture by actively engaging in activities that promote these three circles.


In the new digital age, becoming a leader in digital transformation is the key to success. Ensuring that your digital transformation is meaningful and impactful is essential. Maintaining discipline and approaching the process with a positive mindset is crucial to achieving this success. Embrace the numerous possibilities that lie ahead, even though it may not be easy. Remember that digital transformation is achievable, and you should strive for it.

bottom of page