We Finally Know Why Transformations Succeed

(And Why We’ve Been Doing Them Wrong for Decades)

Let’s Stop Pretending We Don’t Know Why Change Fails

There is a specific kind of fatigue that sets in when you mention the word “transformation” in a boardroom today. You can see it in the executives’ eyes. It’s a mix of skepticism, exhaustion, and a quiet resignation that suggests they are about to spend another eighteen months and several million dollars to end up exactly where they started.

And honestly? They are right to be skeptical.

By now, the statistics on failure are just background noise, but they are impossible to ignore. We’ve all seen the numbers. A 2023 McKinsey study found that only 31% of transformations succeed – a number that has remained frustratingly flat for two decades. BCG reports that over 70% of digital transformations fail to deliver expected value.

If this were any other aspect of business – say, manufacturing or logistics – a failure rate of 70% would be grounds for immediate dismissal of the entire leadership team. Yet, in strategy, we accept it as the cost of doing business.

So, here is the question that should keep us up at night: If we have better methods, sophisticated tools, and smarter leadership programs than ever before, why haven’t we moved the needle?

The “Operational Mindset” Trap

For years, the default diagnosis has been lazy. We blame poor execution. We say we lacked sponsorship, or the communication was weak.

But the real problem isn’t how we execute; it’s where we execute.

Most organizations are still running on an operating system designed for the 20th century. This system was built for stability, efficiency, and control. It prioritizes the “Department.” It loves hierarchy. It is engineered to repeat the same task a million times with zero variance.

But Transformation is a Project. It is, by definition, a temporary, unique effort to create something new.

When you try to force dynamic, cross-functional change through a rigid, siloed hierarchy, you trigger an organizational immune response. The “Department” views the “Project” as an intruder—a side-of-desk distraction that steals resources from the “real work” of operations.

We are trying to run the business of the future using the org chart of the past. It is like trying to upgrade the software without changing the hardware. Eventually, the system crashes.

The Hardware Upgrade: The Project Driven Organization (PDO)

To break this cycle, we need to move beyond just “doing Agile.” We need a fundamental shift in architecture. We need to become a Project Driven Organization (PDO).

In my new book, Powered by Projects: Leading Your Organization in the Transformation Age (HBR Press, 2026) I define the PDO not as a buzzword, but as a reversal of the power structure.

In a traditional company, operations are the sun, and projects orbit around them. In a PDO, projects are the primary unit of value creation. The organization’s structure, leadership, and culture are all redesigned to support the delivery of change.

Based on recent research and case studies from companies like Haier, Bayer, and Repsol, here is what that hardware upgrade actually looks like. It requires pulling levers across three critical areas: Organizational Design, Leadership, and Value Generation.

1. Organizational Design (The Foundation)

• Culture: The shift must be from risk avoidance to embracing change. In a PDO, failure on a project is seen as a strategic advantage and a source of learning, provided it happens fast.
• Structure: It moves away from silos. Instead of work stopping at departmental borders, teams are cross-functional and “cocreate” from the start.
• Governance: This is one of the most critical shifts. Governance changes from “steering committees” (which often slow things down) to real-time decision-making. For example, Bayer eliminated 95% of middle-management layers to allow autonomous teams to make funding and scope decisions in 90-day cycles.

2. Leadership (The Driver)

• Strategic Prioritization: Leaders must stop spreading resources thin across hundreds of initiatives. A PDO focuses on a top-three list of strategic priorities that everyone understands.
• Human Resources: In legacy orgs, HR is static. In a PDO, talent is fluid. Employees are assigned to fully dedicated teams rather than trying to fit transformation work around their “day jobs”.
• Performance Management: The metric shifts from “efficiency” (on time/on budget) to “impact” (value delivered). Rewards are tied to team success rather than individual functional performance.

3. Value Generation (The Delivery)

• Operations as Enablers: Operational functions (IT, Finance, Legal) stop acting as gatekeepers who say “no” and start acting as service providers who help projects move faster.
• Iterative Execution: Projects are broken down into short, manageable chunks (3–6 months) with clear deliverables, rather than multi-year marathons that drift off course.

Structure Eats Culture for Lunch

Some will argue that this approach ignores the “human” side of change. They will quote Drucker and say, “culture eats strategy for breakfast.”

But I would argue that structure eats culture for lunch.

You cannot build a culture of agility within a rigid structure. You cannot build a culture of “ownership” when people have to ask three different bosses for permission to open a spreadsheet.

When you shift to a Project Driven Organization, you are fixing the hardware. You are removing the friction that makes transformation so painful.

The companies that succeed in the next decade won’t be the ones with the best functional departments. They will be the ones that can spin up, execute, and close down projects with fluid precision. They will be the ones who realize that in a world of constant change, the project is the only stable unit of work we have left.

We finally know why transformations succeed. It’s not because they executed better within the old rules. It’s because they changed the rules of the game. They stopped fighting their own structure and built an organization designed to deliver.

Antonio Nieto-Rodriguez is a world-renowned expert in project management and strategy execution and a Thinkers50 Ranked Thinker. He is the author of a new book published by HBR Press, Powered by Projects: Leading Strategy in a Project-Driven World and the bestselling Harvard Business Review Project Management Handbook. A former chairman of the Project Management Institute and Thinkers50 award recipient, Antonio is the creator of the Project Economy and a pioneer of the Project-Driven Organization. He advises senior leaders and global organizations on how to transform strategy into results – by turning projects into the engine of value creation.