Why Europe’s Industrial Transformations Succeed or Fail Before They Begin
Europe speaks the language of transformation fluently. It funds transformation. It creates committees, drafts roadmaps, launches alliances, and names programs with theatrical ambition.
And yet nothing fundamental has changed.
Seventy percent of large-scale transformations still fail — the exact same figure reported by Kotter in 1995. Meanwhile, 21 percent of European industrial companies now face acute strategic stress, a 50 percent increase in two years.
The paradox isn’t mysterious. It is simply misunderstood.
We blame leadership. Or communication. Or resources. Or methodology. We rotate through new frameworks — agile, OKRs, design thinking, product operating models — as if better choreography could fix structural gravity.
We keep refining the method.
We keep ignoring the soil.
Transformation rarely fails because the plan was wrong.
It fails because the substrate makes execution impossible.
The substrate is the organization’s relationship with risk, truth, iteration, disagreement, and failure.
European industry was built in a world where failure meant bankruptcy, injury, or operational collapse. Today, failure means data. But the reflexes haven’t changed.
When the substrate punishes experimentation, transformation becomes theatre:
agile rituals without agility, innovation boards without innovation, cultural programs without cultural movement.
A perfect methodology on a hostile substrate produces nothing.
The real divide isn’t technological — it’s civilizational
Look globally and the contrast is blunt.
- In Silicon Valley, failure carries social currency. A founder who crashes a startup raises money for the next one.
- In China, entire industries pivot in a single quarter. Velocity is systemic.
- In Europe, committees multiply while decisions evaporate.
Our industrial memory was shaped by decades of stability: optimize, standardize, eliminate variance. Those instincts were rational when a poor automation choice could shut down a factory.
But today, when business models depend on rapid iteration under uncertainty, the same instincts become an anchor.
And anchors don’t transform.
This substrate determines why identical methodologies produce opposite outcomes in organizations that look identical on paper. It determines why some European companies accelerate while others stall. It explains why capital, consultants, and pilots accumulate — but little actually changes.
A Tale of Two Giants
Siemens: engineering failure tolerance into the operating system
During COVID, Siemens shifted 300,000 employees in 190 countries to remote work in two weeks. Not because of technology — because of culture.
Siemens practices Customer Zero: every new tool, product, or module is deployed internally first, at scale, with real consequences.
Bugs are not shameful; they are expected.
Engineers surface issues early.
Iteration is rewarded, not penalized.
Transformation isn’t a program.
It is a physiological function.
The substrate supports adaptation.
Volkswagen CARIAD: when political survival destroys technical truth
CARIAD, launched in 2020, was meant to unify software across Volkswagen’s brands.
6,000 engineers. Billions invested.
Four years later: layoffs, restructuring, and a $5.8B partnership with Rivian that bypasses CARIAD entirely.
The issue was not technological — Rivian proves the technology works.
The substrate failed.
At Volkswagen, brand sovereignty outweighs software unification.
Audi engineers answer to Audi.
Porsche engineers answer to Porsche.
Six teams reportedly built the same feature six times because no brand would adopt another brand’s work.
When failure becomes political ammunition, engineers stop iterating.
And once iteration stops, transformation is dead.
CARIAD didn’t fail in execution.
It failed in conception.
A centralized software substrate was incompatible with Volkswagen’s political substrate.
Three questions that predict transformation outcomes
Executives often ask: “Which method should we choose?”
The wrong question.
These three reveal the truth with brutal precision:
1. When was the last major failure discussed openly in an all-hands meeting?
If leadership can cite one — and what was learned — the substrate tolerates reality.
2. Who received the last three major promotions — risk-takers or risk-avoiders?
This reveals the real incentive system. It is the operating truth behind the PowerPoint.
3. How many days between “we have an idea” and “we test it in real conditions”?
Under 90 days → experimentation is possible.
Over 180 days → bureaucracy suffocates innovation.
The decision matrix writes itself:
- 3 positives → transform boldly.
- 2 positives → transform selectively.
- 1 positive → fix the substrate before scaling.
- 0 → do not transform internally. Partner or rethink strategy.
Volkswagen’s partnership with Rivian was not a failure.
It was substrate honesty.
The truth Europe avoids
Europe does not lack capital.
It does not lack engineering talent.
It does not lack ambition.
It lacks a healthy relationship with failure.
Our industrial DNA rewards consistency over curiosity, predictability over iteration, political safety over technical truth. As long as this substrate remains intact, the 70% failure rate will remain intact.
Siemens succeeds because it aligned its substrate with today’s world.
Volkswagen struggles because it defends a substrate built for yesterday’s world.
Methodology is irrelevant in both cases.
The only question that matters
Before the next €50M transformation program, leaders should stop asking:
“Which methodology should we use?”
and instead ask:
“Does our organization tolerate the failure rate this transformation requires?”
If the answer is yes, the transformation has a chance.
If the answer is no, the transformation is already over.
→ Read more about our approach to industrial transformation in the About page.
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