In this session Collin & I use Volkswagen’s struggle to build Electric Vehicle (EV) software as a way to explore two themes:

1. the importance of getting a digital transformation right, and
2. the opportunity presented to competitors when large players simply cannot deliver good quality digital products.

We use two articles from the Financial Times as a springboard for our conversation. The first article, dated Jun 28, 2024 “Oliver Blume, VW and Porsche boss steering an EV strategy shift” and the second one, published September 2, 2024 “VW considers closing factories in Germany and cutting jobs” (both behind a paywall - sorry)

The first article describes an investment of $5 billion in the US based EV startup Rivian. The purpose of the investment is to create a joint partnership that allows VW to use Rivian’s EV software. The article quotes VW’s CEO Oliver Blume as saying, “In terms of a big tech transformation, you can’t do it all on your own… It should be a win-win situation . . . The motivation from our side is to speed up software transformation at Volkswagen in all our brands. Rivian has best in class architecture . . . Volkswagen has the scale”.

Collin and I explore this thinking of an acquisition / strategic partnership as a means for fixing an internal digital transformation challenge. For those of you who have listened to Collin and I, you probably won’t be surprised to hear that we are not convinced that such an approach will easily remedy digital product development challenges.

As we ask in the show, what mental models will need to change for these two companies - a digital native and a non-digital native, to work effectively together? As Collin highlights, ultimately these transformations are culture changes, which require heavy-lifting.

Since recording this session, the FT has come out with more articles on the challenges Volkswagen is facing. I have also started listening to some of the VW YouTube influencers who have been discussing software issues for a number of years. I am finding this to be a fascinating case study, albeit quite sad for the workers of Wolfsburg if the leadership of VW can’t get its digital act together.

In this session, I also refer to a 2017 Medium post on how Revolut used the build-measure-learn cycle to develop digital products quickly and acquire customers.

Hope you find the session useful.

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