We (Sort Of) Missed the Mark with Digital Transformation

TL;DR – What You Need to Know in 30 Seconds

• 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 the ultimate traffic controller: it routes the right data to the right place at the right time, helping you make sharper decisions that serve the greater good.

But let’s be clear: achieving that level of interconnectedness isn’t as simple as flipping a switch. We need new ways of structuring our businesses, new forms of collaboration between different teams, and new ways of training our workforce to think beyond their departmental boundaries. That’s the kind of stuff that terrifies many leaders, but if we’re serious about AI-first business transformation, it’s precisely where we have to go.

Shifting to an AI-First Mindset

An AI-first mindset says that if you have an HR workflow, for example, you don’t just ask how to automate or expedite it. Instead, you step back and ask: Is there an entirely new way to handle HR in the age of AI? Rather than just letting HR live in its digital system, can we integrate HR processes with other workflows—like IT provisioning, project management, or performance reviews—so that employees and managers see a single, seamless interface for all their needs?

In reality, you’ll find that no one’s job is as isolated as it might appear on an org chart. An HR leader also sits on cross-functional committees. A marketing person may weigh in on product design. A finance person is also an internal user of the IT helpdesk. When we isolate everything, we wind up making these cross-functional tasks painfully convoluted. An AI-first approach can do more than connect the dots; it can predict the best route through the entire enterprise, bridging these work streams effortlessly.

Not to be overly dramatic, but if you can harness AI to link these processes end to end, your daily workflows become the launching pad for a whole new level of productivity. No more duplicative data entry, no more emailing spreadsheets or chasing sign-offs in multiple systems. Instead, you’ll have an enterprise-wide “plumbing” that’s constantly learning and optimising itself so that the next time a similar task arises, you can handle it in half the time with half the fuss.

The Augmented Enterprise: When Everything Connects

So what does an AI-first business transformation look like in action? Once you break down silos and let AI do its thing, you get what some call the augmented enterprise. Essentially, AI augments:

1. Your People: Employees are guided by AI insights, making them more efficient and creative in their roles. Repetitive tasks can be automated or partially handled by AI agents, freeing people to focus on innovation and strategic thinking.
2. Your Processes: Workflows are streamlined and connected across departments. AI not only speeds them up but also surfaces predictive insights, letting you solve issues before they snowball.
3. Your Data: No more data living in locked compartments. An AI-first approach unifies data so that it can be analysed holistically—ensuring you spot patterns that were previously invisible.

Eventually, we might even see Large Language Models (LLMs) morph into something like Large Action Models (LAMs)—where AI doesn’t just summarise text or produce content, but actually takes actions on your behalf, in line with the business’s strategic goals. That’s an entire shift to AI as agent rather than AI as tool.

Is it futuristic? Sure. But it’s closer than you think. The more we interconnect these systems, the more potential there is for AI to genuinely run certain processes autonomously, or at least semi-autonomously. And that’s where transformation stops being linear and becomes exponential.

AI-First Companies: The Next Generation

If you missed the boat on being “digital-first,” don’t fret. Right now, there’s an opportunity to be among the first wave of “AI-first” organisations. The possibilities are massive:

• Product Development: AI can shorten product lifecycles by analysing performance data, testing new features through simulation, and even generating prototypes.
• Customer Experience: AI can unify your CRM, chatbots, and call centre workflows, ensuring you respond to queries with instant knowledge of the customer’s history, preferences, and future needs.
• Supply Chain Management: AI can predict demand surges, optimise shipping routes, and even manage inventory in real time, preventing bottlenecks that cost you money and customers.
• Finance & Accounting: Automated processes for invoicing, expense management, and forecasting. Your finance team becomes data-driven analysts, leaving behind laborious manual tasks.
• Human Resources: AI can screen applicants, highlight training needs, and pinpoint cultural or engagement issues before they turn into full-blown crises.

In a few years, people might talk about the big AI-first successes the same way they talk about Amazon or Netflix today. If you seize the day, your company could be among them. As Sam Altman, CEO of OpenAI, quipped: “This is the most interesting year in human history, except for all future years.” That’s quite the statement—and it’s a reminder that we’re just at the beginning of what AI can accomplish.

Designing an Intelligent Enterprise Operating System

Picture an enterprise-wide system of intelligence—a single, integrated platform that links up every function, every data source, and every person:

1. Unified Data Layer: All your data from across departments is fed into a single AI backbone. This is crucial because AI needs vast, high-quality datasets to produce its best insights.
2. AI Agents Everywhere: Intelligent virtual assistants embedded in each department, not just to execute tasks but to interpret them, predict outcomes, and suggest next steps.
3. Cross-Functional Collaboration by Design: No more departmental silos because your system fundamentally disallows them. Project creation, resource allocation, and approvals all happen within the same architecture, with AI facilitating smooth transitions.
4. Continuous Improvement: As the system runs, it gathers more data about how tasks are accomplished and outcomes achieved. AI uses this to refine its own recommendations—compounding your improvements exponentially rather than linearly.
5. Focus on Innovation: When day-to-day tasks get automated or augmented, you free human capital. These employees can then channel their creativity into new revenue streams, product ideas, or strategic initiatives.

That, my friends, is what an AI-first business transformation boils down to: not merely accelerating old processes but reimagining the entire way you do business, top to bottom, front to back.

The Future Is Exponential

We’re standing on the cusp of a new era, one where “digital transformation” might look like a quaint stepping stone. AI has the potential to create the sort of exponential leaps that 20th-century businesses could only dream of. If we seize the opportunity, we won’t just see incremental gains; we’ll witness leaps in productivity, the birth of entirely new business models, and a surge in personalised, data-driven solutions that deliver value for everyone—customers, employees, and stakeholders alike.

As the world keeps shifting under our feet, one thing remains crystal clear: standing still is not an option. Doing nothing, or doing the bare minimum, risks being left behind by those who adopt AI-first strategies early and wholeheartedly. And if we learned anything from the digital-first revolution, it’s that latecomers can catch up, but it’s a much harder road.

So, here’s your rallying cry: challenge every assumption, connect every silo, unify every dataset, and bring in AI not just as another tool, but as a co-creator of your future enterprise. The age of linear growth and departmental thinking is drawing to a close. The time of interconnected, exponentially enabled businesses is here.

What Do YOU Think?

Will you settle for being a digital dinosaur stuck in the old ways, or will you harness AI to boldly redefine your organisation for a future where transformation is continuous, interconnected, and exponentially powerful? Let us know in the comments below!

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