The Digital Transformation Flywheel: How AWS Helps Accelerate the Digital Transformation of Stellantis

Digital transformation is a strategic business initiative enabled by digital technologies that aims to maximize business outcomes. This blog post introduces an iterative approach to digital transformation – the Digital Transformation Flywheel – that can be used to help guide and accelerate the business transformation of large scale enterprises. Selected examples from our collaboration with Stellantis [see Amazon Press Release, 2022] demonstrate how this framework helps enable the transformation of Stellantis towards a more data-driven and software-focused mobility company [see Stellantis Dare Forward 2023 Plan, 2024].

Generally, an organization’s need for digital transformation is underpinned by one or more compelling events. For example, a company may seek to 1/ drive year-over-year revenue growth, 2/ optimize its business portfolio for change velocity or industry pressure, 3/ reinvent its business and operating model [see e.g. HBR Article, 2023] by adding new digital products and services [see e.g. HBR Article, 2008], or 4/ increase business agility and speed to accelerate product development. A crucial key to success on this path is the executive vision of the company’s leadership that provides the guardrails for the long-term transformation strategy and forms the business case for digital transformation supported by a top-down executive mandate.

Since Amazon started selling books online in 1994 and offering cloud services in 2006, digital transformation has been at the heart of our Day 1 Culture [see AWS Executive Insights, 2024] and the only constant is our belief in putting the customer first. That is why we start each customer initiative with the question “Why?”. We want to understand the needs of our customers since building the “right thing” is more important than building the “popular thing”. In the scope of digital transformation, we must attain a clear understanding of the compelling event(s) that drive a customer’s need for digital change. For the why, we typically conduct a series of working-backwards-from-the-customer workshops that aim to answer the following five questions [see Working Backwards at AWS, 2021]:

1. Who is the customer?
2. What is the customer problem or opportunity?
3. What is the most important customer benefit?
4. How do you know what the customer wants?
5. What does the customer experience look like?

Iterative product development backed by this working-backwards-from-the-customer methodology is a full circle, which rotates in circular motion and scales up the value of business outcomes with each cycle. At Amazon, we call this effect a Flywheel or Virtuous Cycle [see Youtube, 2012], which is one of the oldest concepts of Amazon’s Culture of Innovation [see Youtube, 2020]. This concept was originally created by Jeff Bezos on a napkin and used to project company growth by relentlessly obsessing over the customer while continuously improving the customer experience. It has remained a living part of our innovation culture to this

day. With the term flywheel we generally refer to a closed-loop process that spins faster and faster as we ingest energy in each of its components. For example: if in its first iteration we enable customers to return items over a webpage, the second iteration might enable customers to track the status of their return while the third iteration might enable customers to better evaluate the articles they buy online. As a result, the customer return process in enriched by more and more features over time and will occasionally reduce the number of customer returns in the future.

The same iterative logic can be applied to digital transformation itself, once viewed as an iterative change process. Here we introduce the Digital Transformation Flywheel, a transform-by-build approach, that can be used to kick-start and accelerate the digital transformation of large-scale enterprises. Our novel approach is shown in Figure 1. The Digital Transformation Flywheel organizes digital transformation along six mutually reinforcing and consecutive components: 1/ strategic objectives & key results (OKRs), 2/ scale digital products and services, 3/ refine business processes, 4/ empower people, 5/ reshape organization, and 6/ foster innovation culture.

Figure 1: The Digital Transformation Flywheel describes digital transformation along six mutually reinforcing domains starting with strategic OKRs.

01 | Strategic Objectives & Key Results

The flywheel starts with the portfolio of Strategic Objectives and Key Results (OKRs), which are business outcomes that the company’s executive leadership likes to achieve through digital transformation. As we have already seen above, digital transformation may also be triggered by one or more compelling events, such as the disruption of automotive supply chains in consequence of the corona virus pandemic in 2020. A strong business case for transformation is quintessential since technology-enabled digital transformation is not an end in itself but rather an enabler of concrete business outcomes. Business outcomes are closely linked to the business model of an organization, which defines the way the company promises to create value for its customers and employees. Since the backlog of business outcomes usually contains impactful and less impactful outcomes, it is important to prioritize them according to their business impact, such as their cost reduction potential and other KPIs.

At the beginning of our collaboration with Stellantis, we organized a series of executive visioning workshops to create a compelling north star narrative, which describes the Stellantis digital mission in terms of a list of prioritized business outcomes and how AWS can help support those outcomes. One exemplary business outcome was to accelerate automotive product development by providing a virtual simulation environment called the Stellantis Virtual Engineering Workbench (VEW). The VEW is an open, automated, and scalable suite of end-to-end developer tools and toolchains that can be used by Stellantis for virtual simulation, testing, verification, validation, and functionality integration of automotive hardware and software components [see AWS Blog Post, 2024, AWS Blog Post, 2023, and Youtube, 2023]. Another exemplary business outcome was giving Stellantis a product-based view on connected vehicle data through the Stellantis Data Infrastructure Architecture (DIA). DIA refers to a centralized, secure, and scalable cloud environment designed for storing, processing, analyzing, and sharing connected-vehicle data across Stellantis and its partners and suppliers to help enable new data and business use cases including data monetization [see AWS Blog Post, 2022].

Using the north star narrative as the basis, Stellantis and AWS created a so-called PR/FAQ document [see Working Backwards, 2006], which breaks down Stellantis’ digital vision to actionable roadmaps for VEW and DIA. Further to a press release (PR) called section that describes the customer need, benefit, and experience, this PR/FAQ also captures frequently asked questions (FAQ) that users of VEW and DIA may have. The particular structure of this PR/FAQ allowed us to identify gaps in our thinking and provided an excellent basis for the development of a technological solution design that addresses the end-user problems and enables the business outcomes envisioned by the executive leadership.

02 | Scale Digital Products & Services

Based on the insights gained from writing this PR/FAQ, experts on both sides selected the most suitable technology stack and developed first prototypes to test and validate the chosen cloud architecture for its ability to deliver the desired business outcomes – we are still in the grey loop of our Digital Transformation Flywheel shown in Figure 1. Each prototype was refined based on Stellantis’ feedback iteratively to fail-fast-and-early until all acceptance criteria for a minimum-viable-product (MVP) that can be deployed to production were met. In order to facilitate independent deployment and easy scalability on-demand, each prototype was based on distributed micro-services – rather than monolithic services – with self-service portals and easy-to-use application programming interfaces (APIs), which turned out to be the key to minimize the time-to-production for each MVP. This phase of the Digital Transformation Flywheel is called “Scale Digital Products & Services” and completes the customer-centric product development cycle [see AWS Executive Insights, 2024].

Once deployed to production, we onboarded a selected group of Stellantis users, so-called beta-testers, to each MVP and started to collect user feedback. This feedback not only informed product improvements with respect to things like performance and usability but also inspired the development of new product features that were added to our backlog and rolled out over time. Each major build or refinement step was jointly implemented by Stellantis and AWS teams in one-week sprint-like workshops called hackathons to strengthen the team spirit and create excitement around our VEW and DIA solution, both internally and externally [see Stellantis Press Release, 2023]. Please also see the AWS Blog Post titled “Hackathons for Accelerated Vehicle Software Development at Stellantis” [see AWS Blog Post, 2023] to better understand how to organize and conduct hackathons successfully.

03 | Refine Business Processes

Developing and deploying digital products and services to production using agile methodologies increases the pressure to change various support processes. For example, the successful deployment of the VEW required the associated Stellantis operations team to implement a ticketing system to collect user feedback and respond to it in a timely and flexible manner. In other words, effective collaboration across teams should always be supported by efficient business processes, i.e. structured activities and (automated) workflows to make decisions, deploy organizational resources (including people, budget, etc.), and deliver agreed business outcomes. It is worth noting that such processes need to be reviewed and refined continuously as responsibilities and roles in an organization change along the digital transformation journey. Establishing efficient business processes is thus another core component of our Digital Transformation Flywheel. It is sometimes described in terms of rethinking an organization’s operating model to achieve operational excellence by streamlining processes through digital technologies.

04 | Empower People

Further to refining business processes, another important component of our Digital Transformation Flywheel is the empowerment of people by continuous training and enablement. This component cannot be overestimated since people make change happen in the end. Using the services provided by the Stellantis VEW and DIA, for example, not only requires automotive developers and engineers to acquire basic AWS cloud skills but to also have knowledge about methodologies that promote agile ways of working, open innovation, and collaboration, such as the AWS Cloud Adoption Framework (CAF), Scaled Agile Framework (SAFe), and Scrum [see e.g. AWS Website]. In order to train and enable Stellantis’ employees in these disciplines effectively, Stellantis in collaboration with AWS Training and Certification launched the TechXelerate training program [see AWS Training and Certification Blog Post, 2023] that aims to up-skill and re-skill more than 5,000 Stellantis developers and engineers by 2024 and accelerate Stellantis’ transformation into a data-driven and software-focused enterprise [see Stellantis Press Release, 2022].

05 | Reshape Organization

According to the mirroring hypothesis – also known as Conway’s law – the collaboration and communication structure of an organization mirrors the architecture of its products and services [see HBR Article, 2016]. In other words, interrelated tasks, such as the implementation of an end-to-end toolchain for automotive software development on VEW or an automated extract-transform-load (ETL) pipeline for connected-vehicle data on DIA, are best performed by cross-functional teams focusing on the end-to-end use case rather than a single product function or feature. Reshaping the organization to establish new ways of agile collaboration is thus mandatory for completing a digital transformation successfully. Stellantis and AWS have established various cross-functional project teams that bring together technology experts from both organizations to develop innovative VEW and DIA capabilities. This includes experts from Stellantis’ Software Driven Experience, Global Analytics & Data Products, Information Communication & Technology, Global Security Operations, and AWS Professional Services (AWS ProServe), for example. Many teams are organized in 2-pizza teams small cross-functional teams to rapidly launch innovative products and services, and best take advantage of the agility and speed a micro-services architecture could provide [see AWS Executive Insights, 2024].

06 | Foster Innovation Culture

Establishing an open innovation culture based on agile collaboration across the organization is crucial for completing a digital transformation successfully and thus another core component of our flywheel. In this context, innovation culture refers to the collective capability of an organization to create value for its customers and employees. Clayton Christensen from the Harvard Business School once defined this integral part of any organization as follows: “Culture is a way of working together toward common goals that have been followed so frequently and so successfully that people don’t even think about trying to do things another way. If a culture has formed, people will autonomously do what they need to do to be successful” [see C. M. Christensen et al., How Will You Measure Your Life, Harper Business, 2012].

Stellantis and AWS foster an open innovation culture by frequently organizing hackathons with automotive engineering teams across Stellantis, AWS, and external partners. The north star and PR/FAQ documents created at the beginning of our collaboration are reviewed regularly in think big and executive workshops to align our collaboration to our strategic OKRs. We also engage with third-party developers, suppliers, independent software vendors, as well as external consulting and technology partners from the AWS Partner Network (APN) at conferences [see e.g. re:Invent 2022 and Automobil Elektronik Kongress 2023] and other industry events. In this way we continuously develop ideas for new digital products, services, features, and capabilities that inspire and form the basis for the next iteration of our Digital Transformation Flywheel.

Conclusion

The examples from our collaboration with Stellantis show that AWS helps supports Stellantis’ digital transformation to a more data-driven and software-focused organization by building cloud-native products and services, such as VEW and DIA. They also demonstrate that digital transformation can be viewed as a virtuous cycle that accelerates from one iteration to the next. To this end, the Digital Transformation Flywheel presented in this blog post provides a holistic, structured, and iterative approach to digital transformation that is inspired by Amazon’s Culture of Innovation and can be used to help guide large-scale enterprises through their digital transformation journey to become more modern, data-driven, and software-focused organizations.