Digital Transformation: How to Beat the 90% Failure Rate?

Abstract

Firms every year spend $1.3 trillion on digital transformation programs to improve efficiency because digital leaders outperform their peers in nearly every industry. However, digital transformations that are intended to improve efficiency have a high failure rate of up to 90%, resulting in adverse impact to firms' operations and intent to further innovate. While extant research talks about the importance of vision, management, and culture as critical success factors, even digital transformations within the same firm often fail to achieve similar results. Based on Diffusion of Innovation theory and data from three digital transformation programs within a firm that achieved vastly different results, we posit five factors as key influencers of digital transformation success: a) innovation attributes, b) opinion leaders, c) diffusion approach, d) timing, and e) duration. In addition to contributing to theory, this research will help practitioners increase the success rate of future digital transformations.