We (Sort Of) Missed the Mark with Digital Transformation

Digital transformation often ended up as digitising old processes rather than fundamentally reinventing them.,Research from KPMG shows 51% of companies haven’t seen performance gains from digital investments, and Gartner notes only 19% of boards are making real digital progress.,AI-first transformation means using AI to connect all departments, data sources, and workflows into a single intelligent enterprise.,Siloed thinking is no longer viable. AI thrives on cross-functional data and collaboration.,AI-first companies have the chance to become the new Amazons and Ubers of the world, delivering exponential—rather than incremental—value.A truly AI-first system is more than a tool; it’s an enterprise-wide OS that learns, automates, and augments tasks and decisions in real time.,The potential for Large Action Models (LAMs) suggests that AI could soon be doing far more than assisting with tasks—it could be acting on your behalf across the enterprise.

AI-first Business Transformation—Wht You Need to Know

Let’s have a little chat about something that’s been on the minds of everyone from the boardroom to the breakroom: transformation. But I’m not talking about the usual “digital transformation” we’ve all been hearing about for yonks. I’m talking about the next big wave that’s crashing onto our shores: AI-first business transformation. You might be thinking: “Haven’t we done this dance already? We’ve invested in digital, we’ve got shiny new software packages, we’re in the cloud… we’re modern, right?” Well, not exactly.

In truth, many of us may have got “digital transformation” a bit muddled. Rather than truly transforming our organisations, we seemed to simply digitalise them, upgrading existing processes instead of tearing them down and reimagining them from the ground up. Luckily, the rise of artificial intelligence is giving us that second shot at greatness—an opportunity to do more than just make existing models faster or better. Instead, AI lets us tackle an entirely new way of doing business, fundamentally rethinking how our enterprises operate, how our people collaborate, and how we measure success in a rapidly changing world.

Now, let’s roll up our sleeves and explore what it truly means to move from your “digital transformation” checklists to an AI-first mindset—and why this time around, we’ll actually transform.

We (Sort Of) Missed the Mark with Digital Transformation

Think about the promises made in the early days of digital transformation. We were told that new technologies would help us reinvent how businesses run. There’d be synergy, new models, dynamic reinvention of processes, cross-functional collaboration, you name it. Yet, if you look closely at what happened, we mostly digitised what we already did:

Traditional processes got a digital facelift.,Departments introduced new software, but largely worked the same way as before.,Legacy mindsets remained intact, albeit with new jargon.,Data continued to live in siloed systems designed for each function.

The result? We invested loads of money in “digital transformation” without always seeing the returns we were promised. Here’s a tidbit to put this in perspective: KPMG research reveals that 51% of companies have not seen an increase in performance or profitability from digital investments. That’s a majority who haven’t reaped the anticipated rewards. Equally sobering, Gartner found that only 19% of boards reported making progress toward achieving digital transformation goals. That’s not exactly the stuff of glowing quarterly reports, is it?

If you’re nodding in agreement (or maybe sighing in relief that you’re not the only one in this boat), you’re in good company. It seems many of us got stuck on the “digital” bit—throwing systems at old ways of working—rather than delivering true “transformation.” We reformed our businesses with technology. What we didn’t do was fundamentally reimagine them for a truly digital-first (and now AI-first) world.

Digital-First Companies Showed Us Another Way

While the majority of organisations were busy digitally updating and reformatting, a few outliers emerged, totally rethinking how their businesses should operate. Enter your classic “born-digital” or “digital-first” players:

Amazon: Didn’t just sell books online; they transformed the entire commerce landscape to put digital at the heart of the retail experience.,Netflix: Moved from DVD mail-outs to streaming, rethinking the very notion of consuming entertainment.,Uber: Turned the transportation industry on its head with an on-demand, digital-first model.,Airbnb: Revolutionised the hospitality sector without owning a single hotel.,Twitch: Reinvented gaming by pairing it with social interactivity and live streaming.,DoorDash: Did for delivery what Amazon did for retail, creating convenience and instant fulfilment that simply wasn’t possible in the old models.

These digital-first businesses didn’t just lob a piece of software at existing structures; they fundamentally re-engineered how those industries operated. The lesson here? If you’re going to embrace new tech, you have to also challenge conventional ways of thinking. Amazon didn’t just add a website to a bookstore; Netflix didn’t merely digitise DVDs. They scrapped legacy processes, mindsets, and assumptions—and came out on top because of it.

Now, with artificial intelligence (AI) shaking up the playing field in ways we’ve never seen before, we have a new chance to become “AI-first” enterprises—if we learn from the mistakes of the digital transformation era.

Digital Transformation Was the “How,” AI Is the “Why”

Digital transformation improved the way we do things, but often stayed stuck in departmental silos:

HR had Workday.,Sales had Salesforce.,Marketing had HubSpot or Adobe solutions.,Finance and supply chain had SAP.

But rarely did we ask: Should these processes continue to exist as they are, or could we re-engineer them completely? Instead, each group plugged in its digital solution, rarely integrating them into an overarching business framework. That, in turn, left data and workflows further fragmented, and sometimes it even added complexity.

Then along comes AI. AI doesn’t just give us a new tool; it promises a new paradigm. If used correctly, it compels us to connect the dots—across data, across workflows, across human resources, and ultimately across business units.

No more slicing and dicing by department. No more “We’ll just do the same old thing, only with AI to speed us up.” Instead, with an AI-first approach, we need to ask ourselves: How can AI help us see across the entire organisation to reimagine what’s possible? AI is the “why” we need to engage in a fundamental rethink of our operating model. Why keep HR, finance, marketing, and logistics so thoroughly compartmentalised? Why assume that the best way to manage your people, customers, and suppliers is with software that was effectively modelled after 20th-century workflows?

Here’s the rub with silos: work doesn’t stay in silos. Tasks and data typically move from one department to another. If you isolate improvements within a single department, you’re leaving enormous amounts of potential synergy untapped. Picture an ultra-optimised marketing CRM that can handle leads like a dream—but the supply chain can’t keep pace, the sales team has no cross-function visibility, and customer service is clueless about the marketing pipeline. You can guess how well that serves the customer or the bottom line.

We can’t just let each department run off and build its own AI tool. That might create pockets of brilliance, but it stops short of true transformation. Instead, it’s time for us to start imagining a connected enterprise that uses AI to flow insights and decisions throughout the entire organisation in real time. If your AI in customer service identifies a new product usage trend, that insight should feed into marketing, product design, logistics, you name it. Think of AI as an enterprise-wide OS that learns, automates, and augments tasks and decisions in real time. This isn't just about efficiency; it's about creating a truly intelligent enterprise that can adapt and innovate at speed. The World Economic Forum's report on "The Future of Jobs" highlights how AI is reshaping skill demands across industries, emphasizing the need for cross-functional competencies and integrated systems to leverage AI effectively.^ https://www.weforum.org/publications/the-future-of-jobs-report-2023/