70% of digital transformations fail and the problem is rarely software 

Data consolidated in April 2026 by TI Inside and corroborated by McKinsey indicate that 70% of digital transformation initiatives in companies fail.For Virgilio Marques dos Santos, PhD in Engineering from Unicamp and founding partner of FM2S Education and Consulting, the problem is not necessarily in the technology adopted, but in the way organizations lead the change.

According to the expert, there are three recurring illusions that lead to the collapse of these projects: the belief that technology replaces process strategy, the misalignment between incentives and operation, and the use of digital transformation as a symbol of modernization, without real structural changes. 

The first illusion is to believe that implementing technology is equivalent to transforming processes. “The most common mistake of leadership is to superimpose modern systems on dysfunctional and highly bureaucratic organizational structures.In this scenario, the company only creates an electronic bureaucracy. Automating an inefficiency does not solve the problem; it only increases the speed with which waste happens”, says Santos. 

Institutional redesign needs to come before technological implementation. Without reviewing flows, responsibilities and operational bottlenecks, digitalization tends only to sophisticated old problems.

McKinsey data shows that companies that actively engage employees during the change process are up to eight times more likely to succeed. Still, many organizations implement new tools without reviewing metrics, goals, or forms of evaluation.

“Leadership imposes a new tool from top to bottom, completely changes the routine of those who operate value generation, but maintains the same charges and indicators of the previous model.The worker perceives operational risk and creates parallel mechanisms to ensure the delivery”, he explains.

According to Santos, it is in this context that the so-called“hidden spreadsheets and informal controls arise, which coexist with official corporate systems.”O the system fails because incentives remain misaligned. Technology changes, but organizational logic remains the same“, he points out.

The third illusion, according to the manager, is deeper and involves the corporate culture itself.“Transforming a company requires facing internal conflicts, dismantling power fiefdoms, admitting vulnerabilities and going through a temporary period of lost productivity.

In this scenario, the acquisition of great technological solutions can work as a kind of symbolic shortcut. “Signing a millionaire contract with a big tech generates the immediate sense of modernization. The purchase of technology becomes a comfortable alibi to avoid the wear and tear of the management of the CHANGE”, he says.

In Santos“ assessment, digital transformation only produces sustainable results when it is treated as a broad organizational change ¡ ̄ and not just as a technological update.”The illusion of transformation is bought so as not to have to pay the price of the real effort”, he states. Without alignment between culture, operation and strategy, digitalization risks only expanding existing inefficiencies under an appearance of modernization