Priscilla McKinney:
Companies are dying faster than ever before. Back in the 1950s, the average S&P 500 company could expect to last about 60 years. Today, that lifespan is 20 years, and analysts project that as many as three quarters of today’s largest US firms will be gone by 2027, either replaced, acquired, or bankrupt. That’s not a slow decline. That’s a free fall.
And the pace of business mortality has accelerated now to a point where survival itself requires constant reinvention. Every day I see leaders drowning in digital initiatives that stall or fail. Digital transformation should not be this hard. Today I want to talk about the real drivers, challenges, approaches, and keys to success because transforming isn’t about software, it’s about people.
Most organizations are approaching this wrong, to be frank. Treating transformation as a technology problem when it’s actually a human problem. The companies that succeed aren’t the ones with the biggest tech budgets or the fanciest tools. They’re the ones that understand this is fundamentally about changing how people work, think, and create value, and how they approach that reality with both empathy and strategic clarity.
So let me start by addressing the question that’s probably on your mind. Why is everyone suddenly obsessed with digital transformation? Well, it’s not all of a sudden, and it’s not because some consultant made up a fancy new term to sell on you. It’s because the world changed and it’s not changing back.
Companies are now prioritizing digital transformation for a few clear reasons. Innovation, because if you’re not evolving, you’re dying. Customer experience, because your customers now expect seamless digital interactions, whether you’re selling light bulbs or enterprise software. Revenue generation and growth, because that’s what frankly keeps the lights on.
They’re confronting outdated manual processes that were really made sense even in 1995, realizing they are actively draining their resources. They’re also looking at legacy systems and finally recognizing that urgent modernization is no longer optional. The uncomfortable truth is that digital transformation isn’t optional. It’s what stands between staying relevant in five years or becoming a cautionary tale that people talk about at a conference.
The companies that are treating this as a future consideration rather than a present imperative are the ones you are going to read about in business failure magazine. Waiting for the perfect moment or the exactly right conditions is just another form of denial. So if digital transformation is so important, why are so many companies failing at it right now? Let’s talk about the real challenges, not the sanitized version you read about in the McKinsey report.
This failure rate should concern every leader. Time is running out for those who don’t act decisively. First, let’s talk about organizational structure and digital talent. Most companies are structured for how work was done in 2005. They have siloed departments, people doing the same job for 20 years who aren’t really even excited about learning new things, and they have a massive shortage of people who understand both technology and business.
Finding someone who can code and talk to the CMO in a language she understands seems to be like finding a unicorn riding another unicorn. But secondly, change management is really imperative. You know what kills more digital transformation initiatives than bad technology? The wrong people choice. Not because the people are bad, but because change is hard and most organizations underestimate what it takes to get people to actually adopt new ways of working.
You can have the most beautiful new system in the world, but if Maria in accounting refuses to use it because she’s been using Excel for 15 years and it works just fine, thank you very much, you’ve got a problem. Thirdly, let’s talk about competing technical priorities. Every department wants something different. Sales wants a new CRM, marketing wants marketing automation, operations wants to streamline fulfillment, and IT is just trying to keep the servers from catching fire.
Somehow, somebody has to figure out what to do first without making everyone else feel like their needs don’t matter. What does digital transformation even mean? Is it putting your brochure on the website? Is it integrating AI? Is it being a part of the blockchain? Is it just buying a bunch of SaaS tools and hoping for the best?
The path to return on investment is often unclear with these products. Functional areas and priorities may be unclear, and everyone is operating under different assumptions about what success looks like. Here’s the real shift. Behavior is changing at all levels. Industry, society, individuals, your customers, your employees, and your competitors are all evolving.
Technology is not neutral. Every technology decision you make carries assumptions about how people should work, what data actually matters, and who has the power. This is why transformation is a people problem first, and ignoring that reality is why so many initiatives are failing.
Given all these challenges, the unclear definitions, the organizational resistance you feel, the competing priorities, how do you actually move forward? The good news is that you don’t have to figure it out in a vacuum. There are established approaches that work, and understanding which one fits your situation is half the battle. There are a few different approaches to change and none of them is automatically right or wrong.
It does depend on your situation, your industry, your established culture, and honestly, how much risk you can take. The first approach is full transformation. This is the blow it up and start over approach. It’s a radical change in how products and services are delivered, creating entirely new value.
When this works, it leads to very high impact performance improvements, increased revenues, reduced costs, improved productivity, and genuinely enhanced customer experiences. Not just the kind where you stick a chat bot on your website and call it innovation. Think about Netflix. They didn’t just digitize their DVD catalog. They reinvented the entire company from physical media rental to digital streaming, then transformed again and again into original content production, phasing out their DVD service completely in 2023.
Or look at Domino’s. They repositioned themselves not as just a pizza maker, but as a technology driven platform. A huge portion of their sales now come through digital channels, with ordering available through other apps, social platforms, and smart devices. But honestly, this approach is also terrifying. It’s expensive, it’s risky, and if you get it wrong, you could fail your entire business.
The stakes are incredibly high, and there’s often no easy path back if transformation fails to deliver. The second approach you might consider is incremental optimization. This is refinement, not reinvention. You’re taking what you have and making it better step by step.
The benefits still include improved revenue, reduced costs, greater productivity, and better customer experience, but you also get enhanced collaboration, and these things can appear gradually. It’s lower risk, easier to manage, and most organizations feel like it’s a sensible starting point, but it’s slower. And in a fast and disrupted industry, time may not be on your side.
Target is a great example of this. They didn’t overhaul everything overnight. They gradually built buy online and pick up in store capabilities, then same day delivery, then integrated their inventory systems, and each improvement built on the last without disrupting core operations. Starbucks did something similar with their mobile app. They added mobile ordering, then loyalty program integration, then new payment features, and each enhancement built on existing infrastructure.
John Deere also steadily added sensors and connectivity over years, moving from basic GPS to precision agricultural tools. Each generation added capabilities without requiring farmers to replace everything. Sometimes gradual improvement isn’t fast enough to outpace the competition or meet rapidly shifting market demands, but it can be good for you internally and may be the right choice.
Then there’s the hybrid approach, phased optimization that leads to full transformation. You start very, very small, prove the concept, build the confidence, and then go bigger. Disney is a perfect example of this. They started with experiments in digital distribution, streaming some content on other platforms, then launched Disney+, and that phased release was even phased in different markets.
They proved the model worked and eventually went all in. Walmart also took a similar path. They piloted digital initiatives like grocery pickup, acquired jet.com, learned e-commerce, scaled what worked, and eventually transformed into a legitimate Amazon competitor. Adobe also didn’t reinvent overnight. They tested subscription models with a few products, learned from customer behavior, and then gradually shifted their entire creative suite portfolio from perpetual licenses to Creative Cloud.
To me, this is probably the smartest approach for most organizations because it balances risk with progress. You’re building momentum and learning as you go instead of betting the entire farm in one day. It’s also a great way to bring your existing team along in the process.
So whichever approach you choose, full transformation, incremental optimization, or a hybrid, you still need to decide where to start. There are several distinct areas you can think of as levers or strategic pillars that drive transformation. Each lever is a specific point of intervention. You pull this lever and you improve efficiency. You pull that one and you expand reach.
They’re starting points and different organizations will prioritize different levers based on where they are and what they need. Efficiency is the first lever, and this is where most organizations start. You’re automating manual processes, streamlining workflows, and reducing operational costs through digital tools. It gives clear, measurable returns, it’s relatively low risk, and it builds internal confidence for bigger transformation efforts later on. People see the wins and I think that matters.
Customer experience is the second lever. Improving digital touch points is usually a close second priority for most organizations. Customer expectations have shifted dramatically, so delivering seamless, personalized experience isn’t a differentiator anymore. It’s table stakes. If your customer experience feels clunky or outdated, you are already losing.
Data is the third lever. Treating data as a strategic asset has become mainstream, though maturity levels are all over the place. Most organizations are at least investing in analytics, dashboards, and data infrastructure, even if they haven’t reached advanced capabilities like predictive modeling or AI. But data powers all digital tools and processes, and if you get this wrong, everything else starts getting harder.
Agility is the fourth lever. Cloud migration, DevOps adoption, and iterative development practices have really become common as organizations realize they need to move faster. The shift from monolithic systems to flexible modular architectures is well underway in most sectors. But agility is not just about technology. It’s about how quickly you can respond to change, which means it’s also about culture and decision making.
Governance is the fifth lever. As digital initiatives multiply and data regulations tighten, governance gets more attention and it needs more attention. However, and this is an important however, it often is reactive. It’s established after problems emerge rather than proactively designed from the start. Don’t make this mistake. Build governance into your transformation from day one or you are going to regret it later.
Talent and culture are the sixth lever, and this is really vital, but it’s often under-invested in. Companies talk about digital culture and up-skilling, but they usually underestimate the scale of change required, and they often don’t invest enough in individual people. This takes time, and people need to be bought in to this change and to see that it’s for them. This lever really separates successful transformations from the stalled ones. It’s more about the talent, the people, those humans, than about the technology. And if your people aren’t on board, your transformation is dead in the water.
Ecosystems and partnerships are the seventh lever. This is growing in importance but is still emerging for many organizations. Those in platform-based or highly networked industries really prioritize these, but others are just beginning to think about strategic external integrations. But in a world where no company can do everything alone, your ability to partner effectively is going to matter more and more. Collaboration is the new competition.
New business models are the eighth lever. This is the least common because honestly, it’s the hardest. It requires questioning fundamental assumptions about how the organization actually creates value. Many companies don’t pursue this or only pursue this after exhausting easier levers or when disruption forces their hand. But if you can crack this one, it’s transformational in the truest sense.
Thinking about these levers assumes three things. First, actionability. These aren’t just abstract concepts, but things you can actually do something about. Second, amplification. A relatively focused effort in these areas can produce outsized results. Third, choice. You can decide which levers to prioritize based on your situation, and not every organization needs to pull every lever equally.
But here’s the thing. You can choose the right approach, you can pull the right levers, and you can still fail if you don’t get the fundamentals right. Because no matter which path you take or which lever you prioritize, there are foundational areas that will make or break your transformation. People are the first key. This includes looking at roles and responsibilities, assessing skills, assessing leadership, understanding objectives, and looking at compensation.
Are people clear on what they’re supposed to do? Do they really have the skills to do it? Is leadership actually leading, or are they just showing up in meetings and nodding? I see that a lot in digital transformation initiatives. And critically, are you paying people in a way that aligns with the behavior you need?
Process is the second key. This is about looking at end-to-end processes, manual versus automated workflows, and replacing overly complicated processes with simpler ones. Big benefits happen when processes are digitized, but you can’t just slap technology on top of a broken process and expect magic. You have to fix the process and ask the tough questions about why we do this and why we do it this way.
The third key is technology. Yes, finally, technology. This does include the tools you choose, the integrations, and I am a believer in API first approaches, making sure things are usable and appropriate, and thinking about location and access. But notice that technology is third on this list, not first. That’s intentional.
Fourth is data. Quality, structure, consolidation, ownership, and governance of it. Do you know who owns the data? Do you know how to ensure that it’s accurate? How do you make sure people can actually find it and use it? If you don’t have this answered, you don’t know where to start, and if you haven’t looked at the quality of your data, don’t even get going on these kinds of transformations. Core data quality undermines every other investment you make.
Culture is the fifth key. This includes the commitment, the mindset shifts, the behavioral changes, and the emotional readiness your team has. Is your team and your organization actually committed to this change, or are people just going through the motions? Are you changing how people think? Are you inviting them into the transformation? Are you acknowledging the emotional reality of transformation? It is hard for people. Don’t just pretend it’s all logical and rational.
So what does this actually mean for you? We’ve covered different approaches, strategic levers you can pull, and foundational keys. But if I’m being honest, the real pattern here isn’t about choosing the right framework. It’s about recognizing that every single one of these approaches and levers only works when you address the human side of change first.
Remember at the beginning when I said that companies are dying faster than ever? The ones that survive aren’t the ones with the best technology roadmap. They’re the ones that figured out how to get their people to actually embrace working differently. That might be an uncomfortable truth that people don’t want to hear, because it means the hardest work isn’t making the purchase, buying the software, or implementing the system. The harder work is having honest conversations about whether your organization is truly ready to change.
And here’s what makes this even harder. Digital transformation is non-linear. You can have a very clear strategy, pick the perfect lever, and still hit unexpected obstacles, but your people make the difference. That messiness is normal. The difference between success and failure isn’t avoiding the setbacks. It’s taking them in stride. It’s having people who are committed and who are resilient enough to work through them.
So many digital initiatives fail because people never asked whether their people were willing to work differently, think differently, or let go of the way things used to be. So before you go pick a lever or choose an approach, ask yourself one question. Are you ready to have those hard conversations about how your organization operates? Because if you’re not, save your money on the technology. It won’t matter.
But if you are, then pick your lever, commit to the work, and actually transform how your people operate. That is where all the magic happens.
