Insights · Value Creation
How to create genuine value-adding transformations
Why only 12% of transformations create sustainable performance gains – and how a shift from process to people unlocks the value the other 88% miss.
Palladium Digital Group
·
8 min read
Introduction
12% of transformations create sustainable performance gains1. Why?
Transformational value creation is becoming ever more important for private equity. ~10% of employees in PE now hold an operational VC role and 70% of respondents in a KPMG study voiced increasing investment towards AI by >25%7. Only succeeding 12% of the time, therefore, just won’t cut it. For AI transformations, it gets worse, as a MIT found only 5% pilots succeeding2.
In this article, we try to decipher why transformations aren’t being fruitful, and how to start creating bonafide value from them. We’ll propose that a shift towards thinking about people over process is the key to unlocking real value. Harnessing some of the ideas from former McDonald’s CIO-Phil Le-Brun and ex-Tesco Transformation Director Jana Werner’s book: The Octopus Organisation5, we’ll explain how Corporates, PortCo’s, and Private Equity can approach transformations with a different attitude.
What are we getting wrong?
In short, transformations are failing today because we are approaching them similarly to the pre-digital revolution. No longer are companies expected to operate like machines reacting to predictable outcomes; built for standardization, specialization and control. This for few companies and industries, does still work, but for the majority of us, we now live in a world that is complex… not just complicated9.
Le-Brun and Werner use systems theory9 to illustrate the point that when companies are built for the complicated world, they have many parts, requiring large amounts of expertise BUT the processes are knowable, repeatable and produce predictable results. Complex worlds however (like we have today) are like the home to an octopus – one small deviation in the current can create unpredictability miles away.
So, what are we to do in response to this new world that can make our transformations work? Palladium proposes 3 core mindset changes all under the umbrella of ‘People over Process’:
Make changes with people, not to them.
Understand the why.
Eliminate the idea of being ‘done’ – transformation is a continuous form.
People over Process
When undertaking digital transformation, organisations can easily get lost in the minutiae. How are processes completed? What are each of the steps? Where can we improve them? Answering these questions is key during the digital transformation process but fails to consider one core component: the people. Organisational buy-in, from the C-suite to the most junior employees, is the single most effective way to implement lasting transformation. Without investment from across the organization, even the most well-defined roadmaps cannot succeed.
We understand this is easier said than done but getting out of what ‘The Octopus Organisation’ calls ‘antipatterns’5,9 can contribute towards less conditioned, formulaic responses to the complex challenges we face. Here are 3 antipatterns causing transformations to fail today:
Everything is the strategy
Say a PE fund acquires a home services business and sets 10 priorities ranging from margin growth, NPS, new products etc. Local teams don’t understand what to trade-off, so effort is spread thin thereby, many half-built initiatives are launched that miss key milestones.
Delegation without authority
Imagine a CEO informs product and country teams ‘you own the P&L now.’ But every actual change and decision still requires bureaucratic approval. Teams become slow, bold moves vanish, and transformations have a lack of initiative.
Kill Learning
Picture a retail PortCo pilots a new store format that underperforms in Q1. Instead of viewing this as an experiment to learn from, leadership blames pilot teams and cancels further tests. Teams stop trying new ideas to protect careers and stick to old models, making generating any value from transformations nigh on impossible.
Luckily, they’re counters to these antipatterns including having a clear short-list of priorities, an understanding of your north-star, caring about the transformation itself, and trusting the people who will make it happen. We’ll explore these later but there’s three we think embody the principle of people over process.
Psychological Safety
Coined by Amy Edmondson4, the term psychological safety has been around for years now, however according to a Mental Health First Aid England and Henley Business school study, only 41%3 feel psychologically safe at work. As a reminder, psychological safety is the shared belief that it is encouraged to express ideas, concerns, ask questions, and crucially admit mistakes.
If your employees and particularly, your ‘doers’ aren’t empowered in these ways, transformations will be doomed. You may introduce the change, but it will likely never create value as employees were not encouraged or partook in the transformation coming to fruition.
Changemakers & The People-Centric Approach
Once a plan is in place to enable psychological safety and empower those in the organisation, the next step is to identify who the changemakers are. These changemakers can be at any level, but they share a few core characteristics: collaborative energy, strong social ties, and most importantly, an appetite for change. Engaging these changemakers is essential across the entire transformation process; from design through to implementation.
As valuable as sitting down with senior stakeholders can be, often the real value comes from speaking to those who carry out the day-to-day work. Once we determine what’s broken, this is where the changemakers come into play. Together with these changemakers, we can craft a vision for the future aligned to both the senior stakeholders’ strategic goals and the daily needs of the team.
The real value of the changemakers lies in their role in the implementation process. By involving these individuals in the solution design, we embed invested individuals throughout the entire organisation. These are the people who might lead a training session on new platforms, or start using the tools we design, or even just support a colleague who is struggling through the transformation (providing psychological safety), enabling digital transformation that actually lasts.
Transformations by Private Equity: How to avoid value erosion
As we mentioned in the introduction, value creation is now a core part of private equity, and it seems headed in only one direction. As transformation projects continue to increase, in order to add value (across several ways), the PortCo’s and PE’s themselves, need to ensure they’re adding value and not eroding it. When spending critical capital, you need an ROI that has sustainable value attached to it. A Simon Kucher8 report for example, revealed two-thirds of failures stem from controllable factors such as PortCo resistance. So how can we put into practice people over process, to make transformation projects work?
Understand your North Star
With any major transformation, the task at hand can seem overwhelming. Juggling multiple stakeholders, workstreams, and priorities can feel like a balancing act, especially when everyone has their own perspectives. When it comes to digital transformation, the first thing we must do is understand our North Star. Maybe our goal is to be a globally recognised business, or to be the premier provider of services in our industry. Whatever the goal is, successful organisations have a clear North Star that the entire organisation can work towards.
Have actual priorities
Beyond the North Star, every successful transformation requires clear priorities. Once we’ve set our main goal, it is essential to understand what our real priorities are. For example, if our aim is to become a globally recognised business, our priorities might be opening three new offices, getting published in industry-leading sources, or increasing outbound marketing. But it’s not just about picking these priorities; we also need to rank them, so we know what matters most. Having a clear sense of what’s most important is key to following our North Star.
Do it with your people
As the proverb goes, “If you want to go fast, go alone. If you want to go far, go together”. When working towards lasting digital transformation, the only way to ‘go far’ is to embed change throughout the entire organisation. It’s not enough for the senior stakeholders to drive the agenda; real transformation happens when people at every level are engaged and invested. By engaging changemakers throughout the organisation, we tap into a wider range of perspectives, skills, and energy. This means bringing together teams from different departments, listening to their insights, and empowering them to take ownership of the change. When everyone understands the vision and feels part of the journey, transformation becomes more than just a project, it becomes part of the culture. Creating a culture of change is how we move beyond quick wins, and into transformation that is sustainable.
Care about the transformation
It is very easy to implement a transformation with our eyes set on the ROI and/or quantitative, objective metrics we can derive from it. These aren’t bad things to keep our eyes on; however, we need to avoid being idolatrous of them. The transformation itself is usually much more than the ROI it will return6. Transformations bring intangible benefits that across both the short and long-term yield significant gains. They can increase employee morale, improved agility, enhanced company reputation, increased customer loyalty amongst others. Care about the transformation itself, this way your employees will care too and want to make it happen. Additionally, care about the transformation itself because you will devote attention to it in a way that ensures it is implemented with the greatest effect.
Use your ‘doers’
Transformations are hard, really hard. They take up capital, human resource, large learning curves, and time just to name a few. Across the PE Fund, the PortCo Leadership and Innovation departments, there are roles to be played. Ensure to identify who your ‘doers’ are within your organization, or outside such as engaging with consultancies like Palladium. Then let them do what they do best. Doers (usually also your changemakers) are critical to the transformation process, they take the abstract transformation, acknowledge the goals and priorities it sets to achieve, and they put into action the steps to make it happen. Day by day, task by task. Use your doers, so your transformation doesn’t get stuck in limbo. Doers ensure you have a lasting change beyond exit.
Figure out the why
How transformations are going to be done is extremely important, but not necessarily to everyone. Employees who will be impacted by the transformation don’t necessarily care about how the transformation will be implemented but rather the scale of the impact to them and why it is being done in the first place. Communicating this end outcome and the ‘why’ behind the transformation is important to everybody within the business. Figure out the ‘why’ and let people know, they’ll make the transformation’s likelihood for success vastly greater.
Conclusion
Transformations fail because organizations have been approaching them in ways not fit for our complex world today. People matter more than process: make changes with them, supported by a clear short-list of priorities. We can be quick to try and find the ‘best’ answer when transformations should be about creating the right answer.
At Palladium, when we engage with organizations making transformational change, we immerse ourselves in that business and their people. We work directly with the ‘doers’ to drive practical, continuous transformation moving beyond theory to build the capabilities that let the organization ultimately fly on its own.
If you are thinking about or planning a transformation, reach out and we’d love to have a chat about how we can best support you to make it happen.
Planning a transformation?
Reach out and we’d love to have a chat about how we can best support you to make it happen.
References
1
Armbuster, S., Busellato, N., Robson, N. and Sakamoto, T. (2023). Large-scale transformations for long-term impact | McKinsey. [online] www.mckinsey.com. Available at: link [Accessed 3 Feb. 2026].
2
Challapally, A., Pease, C., Raskar, R. and Chari, P. (2025). The GenAI Divide STATE OF AI IN BUSINESS 2025 MIT NANDA. [online] Available at: link [Accessed 3 Feb. 2026].
3
Faragher, J. (2025). People feel less comfortable to ‘be themselves’ at work. [online] Personnel Today. Available at: link [Accessed 5 Feb. 2026].
4
Gallo, A. (2023). What Is Psychological Safety? [online] Harvard Business Review. Available at: link [Accessed 5 Feb. 2026].
5
Le-Brun, P. and Werner, J. (2025). The Octopus Organization. Harvard Business Review Press.
6
Rigby, D. and First, Z. (2026). Get Off the Transformation Treadmill. [online] Harvard Business Review. Available at: link [Accessed 13 Feb. 2026].
7
Rodriguez, J., Ost, T., Germinder, G. and Ford, P. (2025). Value creation in private equity: From stock-pickers to the quant PE house. [online] KPMG. KPMG. Available at: link [Accessed 3 Feb. 2026].
8
Simon Kucher (2025). Private Equity Commercial Value Creation in Industrials and Business Services: Global Study Results. Simon-Kucher.
9
Werner, J. and Le-Brun, P. (2025). Become an Octopus Organization. [online] Harvard Business Review. Available at: link [Accessed 3 Feb. 2026].
CONTACT US
Make smarter growth decisions.
Understand the economics behind customer acquisition and build a strategy for sustainable, long-term growth. Whether you’re pricing an asset or improving one, let’s talk.
Your personal data will be processed as per Palladium Digital’s privacy policy. By submitting this form, you consent to the use of your personal data in accordance with the terms thereof.
London
1 Clerkenwell Green, London, EC1R 0DE
+44 203 882 8567
info@palladiumdigital.co.uk
New York
W 17th St, New York, NY 10011
+1 857 222 8188
info@palladiumdigital.co.uk
Oxford
102–104 St Aldate’s, Oxford, OX1 1BT
+44 186 579 3800
info@palladiumdigital.co.uk