Why Digital Transformations Fail

Tony Saldanha spent 27 years at Procter & Gamble, ran part of a 10-year, 8 billion dollar outsourcing deal, and built P&G's own version of Google X before writing Why Digital Transformations Fail, now a number one Amazon bestseller in change management. In this Inspire Series conversation with Colin Iles, Tony argues transformation fails for two reasons that have nothing to do with technology: nobody agrees on what the word means, and the execution methodology companies use is incomplete. His fix is a venture capital style portfolio approach, backed by a stage-gate cadence he calls 1-2-4-8-16.

Language, not technology: what digital transformation actually means

Tony's starting point is that digital transformation fails as a concept before it fails as a project, because the term itself is undefined. He frames it against the fourth industrial revolution: companies that survived the third industrial revolution have to keep surviving as digital disruption reshapes their industries, and transformation is the antidote, the rewiring of people, processes, business models, and products. He is explicit it is not a technology purchase: "digital transformation is not technology, it is not a project, it is basically, how do you do a Netflix over and over again, how do you disrupt yourself." He reduces it to three moves for any company: change the business model (physical retail adding omnichannel), change the product (a regular toothbrush becoming a smart toothbrush), or dramatically improve internal operations, benchmarked against startups' roughly 2x cost efficiency and 10x speed advantage over incumbents.

Shock therapy first: how Tony got boards to believe the threat was real

Getting a board to act starts with proof, not persuasion. Tony describes physically taking leadership teams to Silicon Valley pre-Covid to see disruption firsthand, using unglamorous examples like travel expense reporting: companies such as Google and Adobe no longer make employees file expense reports because the system already knows the travel budget and reconciles itself. He also recounts discovering that "Amy," the assistant handling a CEO's email scheduling, was in fact software, not a person. Once leaders see the alternative exists, Tony says roughly 80 percent of the time the next question becomes practical: how do we do this without wasting time and money. That question turns belief into a request for an execution plan.

The 70-20-10 portfolio: running innovation like a venture capitalist

Tony's execution model treats innovation spend as a venture portfolio rather than a single high-stakes bet. Borrowing the logic of Google's 70-20-10 resourcing split (his own version at P&G was closer to 80-19.5-0.5), the idea is to fund around ten big ideas at once, each potentially worth hundreds of millions of dollars, on the explicit assumption nine will fail and one will change the company. The discipline sits in the goals, not the ratios: leaders are judged on the overall portfolio return, not on whether any single pet project survives. Tony insists boards keep this funding visible and public rather than running it quietly, since transparency builds credibility for the people doing the disruptive work.

The 1-2-4-8-16 stage gate: why time, not money, is the real constraint

Tony's stage-gate framework exists because large companies, unlike startups, are not actually short of money, they are short of urgency. The cadence he built at P&G gives a team one month to turn a genuine business pain point into a defined big idea, two months to build a working prototype, four months to run a live pilot, and eight months to reach full deployment. Missing a gate, whether because the numbers do not work or the organization's "immune system" is rejecting the change, kills the project outright. He distinguishes this from waterfall: the milestones are non-negotiable, the way a venture capitalist is rigid about fund-level returns, but the day-to-day method used to hit each milestone stays flexible.

Who should run it: credible insiders, not young disruption specialists

Tony's clearest departure from typical innovation-team thinking is about staffing. He argues against parachuting in young, professional innovators, since the rest of the organization dismisses them as outsiders playing with someone else's money. Instead he recommends putting the company's most credible, respected operating leaders in charge, provided they are genuinely open to change, since a trusted leader saying the old way must change brings the organization with them. His filter: give these leaders six to nine months to adapt, and rotate out the ones who cannot make the shift.

Why can't companies just delegate digital transformation to a chief digital officer?

Tony calls this "innovation theater." Appointing a chief digital officer or a separate innovation team produces good pilot projects, but the day-to-day reward systems in the rest of the company are still built for continuity, so successful pilots get killed the moment they threaten existing profitability. He argues executives have to personally sponsor and stay hands-on with disruptive projects, putting their own legacy on the line, because 99 percent of disruptive innovation is organizational change management, not the invention of ideas.

Why do 70 percent of digital transformations fail?

Tony's figure, drawn from his research across hundreds of companies, is that roughly 70 percent of digital transformation efforts fail despite the field being a trillion dollar industry. He attributes this to the same two causes throughout the conversation: unclear language about what transformation actually requires, and an execution methodology, typically borrowed from traditional project management (PMI), that rewards completing a single project rather than managing a portfolio of bets designed to fail often and occasionally succeed big.

Is this a top-down or bottom-up change?

Tony is unambiguous that the portfolio and stage-gate approach only works top down. Pitching a portfolio management mindset to middle management inside an IT organization, he says, gets a consultant "thrown out on your ear," because only the exco and board can set the business strategy, change divisional reward systems, and give disruptive projects real funding and cover to fail.