Digital transformation is different from traditional business transformation, which are typically driven by a specific goal.
Such goals could include restructuring operations, expanding into new markets, or adopting leaner business models. Once the changes are implemented and new behaviors take root, the transformation is considered complete.
For example, a company might undergo a leadership change, streamline supply chains, or revamp its product line. Once the objectives are met, the transformation ends, and the business continues operating under the new model.
Digital transformation, on the other hand, is a continuous journey because today’s business and technology landscapes never stop shifting. It is an ongoing process of adaptation.
Technology evolves at an exponential pace, customer expectations shift constantly, and competitors are always innovating. This means businesses must relentlessly reinvent themselves to stay ahead.
The shift to digital-first
For decades, traditional business models have been the foundation of industries worldwide.
They are built on stability and rely on physical stores, established supply chains, as well as hierarchical structures with clear decision-making processes. Examples are companies like General Electric and Ford – which thrived on gradual evolution, prioritising long-term sustainability over rapid change.
But the rules of the game have changed.
Enter digital disruptors: Companies like Airbnb, Uber, and Netflix, which have leveraged technology to reshape entire industries. They did it by rethinking how value is created and delivered.
In contrast, traditional companies that fail to evolve risk being left behind, struggling to meet the expectations of modern customers who demand seamless, personalised, and instant experiences.
The reality is this: Every business is now a digital business. To survive and thrive in the business landscape of today, they need to adopt a digital-first strategy.
But for organisations poised to digitally transform, the road ahead is riddled with challenges. McKinsey research reveals that 70 per cent of all digital transformation efforts fail. This shows that success remains the exception, not the rule.
Here are some areas where most businesses go wrong:
- Setting the bar too low
Many organisations aim for incremental improvements rather than bold reinvention. Instead of leveraging data to set ambitious goals, the leaders settle for conservative targets that don’t push the organisation toward real transformation.
- Failing to define a compelling “why”
Contrary to popular belief, transformation isn’t just a top-down initiative. It needs buy-in from employees at every level. Yet, many companies fail to articulate a clear and inspiring reason for change.
Cost-cutting and efficiency alone won’t motivate teams. Employees need to understand how digital transformation benefits them, the company, and customers alike.
- Poor execution and slow decision-making
Too often, businesses get bogged down in process rather than focusing on outcomes. Managers hesitate to make difficult decisions, and transformation efforts lose momentum. Without speed, agility, and accountability, digital initiatives come to a halt before they even gain traction.
- Failing to sustain progress
Digital transformation isn’t a one-time project but an ongoing effort. Yet, many organisations treat it as a temporary initiative.
This means that incentives, budgets, and performance metrics aren’t aligned with new digital goals. When that happens, progress will start to fade, and businesses slip back into old habits.
How a successful digital transformation looks like
Digital transformation isn’t a one-size-fits-all journey. It will look different for every organisation, depending on its industry, customers and goals.
But at its core, digital transformation is about more than just using new technology. It’s a process that fundamentally reshapes how a business operates and delivers value to customers.
Here are two examples of companies that successfully navigated this transformation:
Adobe’s bold reinvention
Founded in 1982, Adobe was a traditional software company known for flagship products like Photoshop, Illustrator, and Acrobat Reader. For decades, it sold boxed software licenses. It was a stable, profitable model.
When the 2008 financial crisis came, Adobe took a bold leap. It abandoned its license-based model and transitioned to a cloud-based, subscription service. This shift gave rise to Creative Cloud, Document Cloud, and Experience Cloud.
Adobe’s transformation didn’t stop at cloud adoption.
It strategically acquired digital-first businesses like Magento (e-commerce) and Omniture (web analytics) to expand its capabilities. It also fostered an employee-centric culture, ensuring it could attract and retain top talent to drive innovation. The company adopted data-driven decision-making, using analytics to continuously optimise operations and enhance customer experiences.
Two key takeaways from Adobe’s journey:
- It’s not just about technology. Successful transformation requires rethinking the entire business model.
- True digital transformation is holistic. It is a company-wide shift, encompassing everything from strategy and operations to talent and culture.
IKEA blends tradition with innovation
IKEA is known worldwide for its flat-pack furniture, Scandinavian design, and budget-friendly home solutions. It’s a household name, built on physical retail and DIY assembly, but even an iconic brand must evolve.
When Barbara Martin Coppola was appointed the Chief Digital Officer, she brought a tech-first mindset into the company’s culture.
Her challenge? Preserving IKEA’s core identity – affordable, stylish, DIY furniture – while integrating digital solutions across sourcing, supply chain, e-commerce, fulfillment, and customer experience.
IKEA’s digital transformation roadmap was built on three key pillars. First, the company streamlined its IT architecture, adopting a modular approach. This enabled smoother system integration and faster digital rollouts, allowing IKEA to implement innovations seamlessly and scale new digital solutions with greater speed and efficiency.
Next, IKEA reimagined its customer touchpoints, blending digital and physical experiences to enhance the shopping journey. Augmented reality (AR) and virtual reality (VR) tools allowed customers to visualise how furniture would look in their homes before purchasing.
IKEA also strengthened its e-commerce capabilities to enable a seamless transition between online browsing and in-store experiences. This makes the shopping experience more intuitive and convenient across multiple platforms.
Finally, IKEA digitised its operations, using artificial intelligence-driven supply chain forecasting to anticipate demand and optimise inventory management. Its physical stores also evolved, doubling as mini-fulfillment centers to create a more agile and responsive retail ecosystem.
Here’s what IKEA’s digital transformation achieved:
- 80 per cent of customer journeys now start online.
- A seamless hybrid shopping experience. Customers can browse online, try in-store, and buy from anywhere.
- AI-powered supply chain forecasting to predict and meet consumer demand.
- On-demand, value-added services. Customers can now hire temporary workers to deliver and assemble furniture right at home.
Innovate, innovate, innovate
At the heart of digital transformation lies innovation – the driving force behind new and enhanced value for customers.
Innovation is what keeps businesses ahead of the curve, and in today’s fast-paced, tech-driven world, it’s essential for gaining a competitive advantage.
Take Uber, for example. Before its launch, taxis were the traditional way to get around in cities worldwide. But Uber innovated the entire transportation model by turning everyone’s smartphone into a ride-hailing app.
By embracing technology to simplify and personalise the experience, Uber transformed how people thought about urban mobility. Today, Uber is synonymous with on-demand rides and continues to evolve with food delivery (Uber Eats), autonomous vehicles, and more.
Disrupt or be disrupted
In today’s digital economy, standing still is not an option.
For traditional businesses, the key to avoiding digital disruption is adaptability. Companies that consistently innovate, leverage new technologies, and refine their business models will be the ones driving change in their industries.
But at the end of the day, digital transformation isn’t about abandoning what made traditional businesses successful. Rather, it’s about integrating the best of both worlds to find their own niche in today’s business landscape.
Those that adapt will thrive.
And the harsh reality for those that resist? They risk becoming the next cautionary tale.
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