What, exactly, are we transforming?

And while we’re at it, let’s be honest about what “digital transformation” actually means in 2026. It’s not what it used to be. A decade ago, the phrase usually meant a platform rebuild: replacing a legacy system with something newer, migrating to the cloud, standing up a new website. That framing led to a lot of expensive projects that delivered a shiny new front end on top of exactly the same organisational dysfunction.

Today, the organisations getting it right understand digital transformation as something broader and more fundamental: the shift to modern ways of working, modern infrastructure, and modern operating models, as a sustainable business investment, not a one-off IT project. It’s the difference between buying a new tool and genuinely rethinking how your organisation operates, makes decisions, and creates value.

In my years working with both private and public sector organisations, I’ve seen this pattern repeatedly. The organisations that cracked the code weren’t the ones that threw the most money at infrastructure. They were the ones that understood that digital tools only work if the people using them actually believe in why they exist, have the skills and autonomy to use them, and work in an environment where trying new things is rewarded rather than punished.

That’s not soft stuff. That’s the difference between wasting millions and building genuine competitive advantage. And yes, it can absolutely be done. Here are three ways to reframe your digital transformation as the cultural change it actually is, and how to make it work.

1. Make culture change your primary outcome, not a side effect

Most organisations get this backwards. They build their transformation plan with technology at the centre, then slot “change management” in as an afterthought. Some budget gets assigned, usually between 5 and 10 percent of the total, and everyone hopes staff will just figure out how to work differently.

It doesn’t work that way.

Companies that see culture as the primary deliverable approach this completely differently. They start by asking: What behaviours, mindsets, and ways of working do we need to shift? The technology becomes the enabler of that shift, not the destination.

Research from Boston Consulting Group shows the impact of getting this priority right. Companies that explicitly focus on culture and organisation factors see 5.3 times higher success rates than those that don’t. When organisations get six specific cultural factors right, the odds flip from a 30 percent success rate to 80 percent. Yet only 18 percent of organisations have a culture that genuinely promotes innovation. (An old article but a goodie!)

Modern digital transformation means moving to genuinely different operating models, decision-making structures, and ways of working, and that requires cultural change as the primary outcome, not a hopeful side effect.

How to make this work:

Start your transformation with a clarity conversation, not a tech demo. Ask your leadership team and frontline staff: What would actually change for customers if this transformation succeeded? What would need to be different about how we work, decide, and prioritise? Map those shifts as your primary outcomes. Then identify which technologies enable those shifts. Invest the majority of your budget and attention into building the culture, capability and business processes, then figure out the software.

2. Close the gap between what you say and what you actually reward

There’s a brutal gap in most organisations between the behaviours leaders say they want and the behaviours they actually reward. You’ll see transformation initiatives that call for “agility” and “innovation,” but then managers hit staff for missing deadlines when they take time to experiment. You’ll hear “collaboration” is critical, but the performance evaluation system still rewards individual achievement. You’ll say “we’re digital-first now,” but legacy processes and decision-making structures stay exactly the same.

Staff spot these contradictions immediately. And once they do, engagement in the transformation tanks.

But formal reward systems are only part of the story.

Every organisation also runs on invisible currencies: the unspoken drivers of status, respect, and influence that have nothing to do with salary bands or org charts. If you don’t understand those currencies, your transformation will stall no matter how well-designed your change plan is.

We saw this first-hand working with an organisation whose work rested on the back of scientific research. On the surface, the conversation about positioning change-makers was about salary banding and hierarchy, offering roles at an adequate level to introduce new ways of working. But what we eventually recognised was that it wasn’t just money or titles that drove people in that organisation. It was proximity to the research.

That’s what people respected. That’s what gave you social capital. If you had “executive” in your title but you weren’t working directly with research, you had less influence than someone one level below you who was on the ground working with fieldwork.

Once we understood that currency, everything shifted. All change communications and positioning eventually revolved around what the transformation was going to support for the science, because that was the language the organisation actually listened to.

When the rewards and reinforcements, both the formal ones and the invisible ones, actually align with the transformation story, people believe it. When they don’t, you get compliance at best and resistance at worst.

How to make this work:

Audit your reward systems explicitly, but go deeper than the formal ones. Look at who gets promoted, whose work gets celebrated, what gets funded, what gets killed.

Then look at the invisible currencies: what actually gives people status and influence in your organisation? Is it technical expertise? Client proximity? Crisis response? Time served? If those signals don’t match your transformation narrative, you’re sending your people mixed messages.

Make concrete changes to your performance management, promotion criteria, or investment approval processes that visibly reward the behaviours you’re trying to build.

And critically, frame the transformation in the language your organisation actually responds to. Do it early, and do it publicly. People need to see that the organisation actually means it.

3. Build capability alongside ambition: don’t assume new titles equal new mindsets

This one catches organisations off guard because it sounds basic, but it’s where a huge amount of transformation energy gets wasted. You’ve probably seen it: the organisation restructures around “agile teams” or “digital-first squads.” New titles appear. Reporting lines shift. And then… not much changes, because the people in those roles don’t actually have the skills, mindset, or autonomy to work differently.

You can’t innovate your way out of a box if the people in the box don’t know how to think differently.

ING Netherlands faced this when they decided to undergo a radical agile transformation. They didn’t just shuffle org charts. They adopted a whole model (squads, tribes, chapters, inspired by Spotify) but crucially, they invested heavily in building the capabilities that model required. People needed to learn how to work in cross-functional teams, how to make decisions with limited information, how to push back on leadership without fear. That meant training, coaching, safe spaces to fail, and leadership models that actually supported those behaviours.

This resonates deeply with our own experience. In one transformation engagement, we spent three months working with teams on being more customer-centric before we changed any processes, org structures, or technologies. That sequencing was deliberate. Until people genuinely understood what customer-centric ways of working looked and felt like in practice, until they’d tried it, been coached through it, and built some muscle memory, any structural or technical changes would have been cosmetic. We would have been fiddling around the edges of tech delivery, not transforming anything.

The data on this is clear. Only 12 percent of organisations sustain transformation gains for more than three years. One major reason? They shifted the structure but didn’t shift the capability or the mindset. According to KPMG’s digital transformation research, workforce issues remain the top hurdle, with a lack of skills cited as a leading transformation barrier. When asked why transformations stall, executives consistently point to workforce mindset and culture as the primary barrier.

The missing piece is almost always capability. You can’t ask people to innovate in a learn-it-all culture if nobody’s taught them how. You can’t expect agile decision-making if people have spent twenty years in command-and-control hierarchies with no training in new models. You can’t shift to customer-centric thinking if nobody’s actually shown teams what that looks like in practice.

How to make this work:

Build a serious capability and learning strategy alongside your transformation roadmap. Identify the three to five capabilities that are non-negotiable for the new ways of working you’re building, whether that’s systems thinking, design collaboration, data literacy, or something else.

Invest in training, coaching, and peer learning, but more importantly, build time into the week for people to learn and practise. Fund communities of practice where people can figure out how to apply new skills in your specific context.

And crucially, give new teams and structures at least six months (ideally twelve!) of runway before you judge whether they’re “working.” People need time to build muscle memory in a new way of working.

Digital transformation looks like a technology challenge.

It’s not.

The organisations that crack it, the ones that actually stick with the transformation, sustain the gains, and build real competitive advantage, are the ones that treat it as a cultural and organisational redesign programme with technology as a critical enabler.

This is the shift in thinking that matters most. We’ve moved past the era where “digital transformation” meant rebuilding a platform and hoping the rest would follow. It’s now understood, by the organisations that succeed, at least, as the deliberate, sustained investment in modern ways of working and modern infrastructure that keeps an organisation fit for purpose over the long term. Technology is a part of that. But it’s only a part.

It’s less glamorous than a new platform launch. It’s harder to measure in the first quarter. And it requires leaders to get genuinely curious about how their people experience the organisation, rather than just announcing from the top what’s going to change.

But it works. And in a landscape where seven out of ten transformations are failing, working is the competitive advantage.