New Coke

July 29, 2014

Mark:

Great piece from @willbuxton

Originally posted on The Buxton Blog:

Team Pack Up c/o James Moy Photography

Team Pack Up
c/o James Moy Photography

The arrival of August may mean an enforced break for most of the F1 world, but not it would seem for some of the sport’s key decision makers. It emerged over the weekend of the Hungarian Grand Prix that Bernie Ecclestone intends to hold a crisis summit over the sport’s popularity. Formula 1 team bosses were made aware of this on Saturday in Budapest, along with the shock news that alongside a hand-picked selection of team chiefs and Ecclestone himself, would be media representatives and disgraced former F1 team boss Flavio Briatore.

Although it has been claimed that the meeting should not be viewed as a negative, to many it can only be deemed thus. Coming at a time when the fans of this sport, along with a growing number of dissenting voices in the paddock, are having their say on double points…

View original 1,120 more words

The nice people at Virgin have published another guest piece from me on the subject of what makes an industry ripe for disruption? You can see it here: http://www.virgin.com/entrepreneur/what-makes-an-industry-ripe-for-disruption

As you will see from the piece I consider that F1 is most certainly ripe for disruption and that Formula E may be the disruptor that changes the rules of the game. However it is also worth making the point that many disruptors do not actually destroy the existing businesses, but create growth through the addition of new customers into the industry. Low cost airlines have not replaced the entire airline business model, but extended the airline business into new markets. You could also see a scenario where Formula E actually attracts a new group of fan into motorsport – someone who is passionate about low carbon technology and who likes the edgy new technology and city racing that Formula E will be showcasing. Who knows we may ultimately see teams like McLaren and Williams entering cars into Formula E when it becomes open to other constructors in 2016. Stranger things have happened in motor racing.

Following on from my last post on the relationship between innovation and regulation the nice people at Virgin asked me to do a guest piece for the Virgin Disruptor’s website, you can see it here: http://www.virgin.com/disruptors/do-regulations-place-innovation-in-a-straitjacket-or-give-it-wings

I used the example of how Colin Chapman created a huge opportunity for Lotus and, as it turned out, the British motorsport industry when he had to adapt to the change in engine regulations back in 1966. My point was that you can see regulatory change as a threat or an opportunity, and it is those that focus on the opportunity who will ultimately succeed. Just look at Mercedes in F1 at present. It would be wrong to think that the reason for Mercedes’ current dominance was that they are just lucky enough to have a good power unit – the decisions that brought about their current success were taken some time ago, choices made to focus on car and power unit for 2014 were taken back in 2012 and are now bringing the success they hoped for. Of course many of these choices were made by Ross Brawn who is not the one enjoying the current accolades, but presumably enjoying a spot of quiet fishing somewhere. I’m sure that this hasn’t gone unnoticed and I’m sure that, should he wish to, there are one or two openings for him to do the same again elsewhere.

Innovation vs Regulation

April 12, 2014

Lotus 49 & Ford Cosworth DFV

Lotus 49 & Ford Cosworth DFV

I just came across an interesting blog piece on the Virgin Disruptors Website regarding innovation vs regulation: http://www.virgin.com/disruptors/regulation-v-innovation-five-key-battlegrounds

It outlines a series of cases where regulation, often stimulated by lobbying from the incumbents, attempts to stifle some of the creativity of innovators. Undoubtedly this is sometimes the case, but a question which has interested me has been whether regulation can also stimulate innovation and create game changing opportunities rather than just protecting the profits of some rather comfortable firms who have grown lazy from success and want to avoid new competitors at all costs.
Last year I put in a research bid for some funding from the Leverhulme Foundation which aims to provide two or three years funding for academics who would like to spend some time on researching something they are really passionate about, but due to admin and teaching responsibilities haven’t had the time to do it. I felt I was a good case (but they obviously didn’t as I didn’t get the grant!) and of course my passion was to look more deeply into the world of Formula 1 and in particular the relationship between innovation and regulation. The situation today is a case-in-point, for 2014 we have totally new propulsion system, with V6 turbo-charged 1.6 litre engines combined with sophisticated energy recovery systems which create a further 160kw from mechanical and heat energy recovery. These systems are innovative, but it’s been quite interesting how some of the well-established teams and movers and shakers are unhappy about the changes and the way it has shifted the balance of competitive performance between the teams.

A major regulation change is of course both a threat and an opportunity. Back in 1966 the FIA decided to change the engine regulations and move from a 1.5 litre engine to a 3.0 litre (interesting that we have now gone in the opposite direction). For the British teams such as Cooper and Lotus this was a major threat as their engine supplier – Coventry Climax decided that they could not afford the costs of designing a new, bigger engine and so it looked like well-funded teams with the engine technology, such as Ferrari, would dominate. Colin Chapman at Lotus had a different plan. He sought to persuade Ford to fund the development of a new 3.0 litre F1 engine which would be a technological revolution. The Ford Cosworth DFV was designed as a stressed component of the car which meant that the engine could be simply bolted onto the rear of the chassis with the rear suspension and gearbox fitted onto the rear of the engine. It was powerful, light and cheap (in 1968 an F1 team could buy the engine for £7500, so Ken Tyrrell told me!), it created the many F1 constructors based in ‘Motorsport Valley’ that still remain today with eight out of the eleven F1 teams all based within a fifty mile radius of Oxford. So occasionally regulation does stimulate innovation, and with some pretty spectacular consequences.

I’ve been interested to see the reaction of Silverstone to the planned Circuit of Wales, regarding whether or not they are receiving ‘illegal’ state aid (see – http://www.bbc.co.uk/news/uk-wales-south-east-wales-26712038).
I can understand why Silverstone may be concerned with a further circuit cropping up in the UK, their new Wing, which sits in the middle of the circuit is an impressive facility, but one which will require a lot of utilisation in order to keep it viable. In 2007 we already had 19 paved circuits in the UK (see – http://www.amazon.co.uk/Motorsport-Going-Global-Challenges-Industry), many of which are struggling to keep the cash flowing in and are heavily dependent on one or two big races either in cars or bikes, so why do we need another one?

For me the argument is simple. We have a unique capability in the UK to design, manufacturer and develop motorsport products, services and technologies. The UK has the largest concentration of motorsport turnover relative to GDP anywhere in the world and anything that adds to this capability is, in my view, a good thing. I understand that those who are fighting to capture as many big events as possible would see this as a threat, but if we take the perspective from UK plc it is a huge opportunity. But there’s a further point, if we capture the imagination of young people in the area who have never been to a circuit before, we may increase participation and the size of the cake, then we may also get some new Adrian Newey’s, Ross Brawn’s and perhaps even (showing my age) a Tom Pryce.

casspanel

Last night I was on a panel at Cass Business School (ranked #3 in Europe for Finance Research), which was something of a privilege, coming from a rival business school – Cranfield (ranked #1 in UK for Executive Education). I was in very good company with top F1 bloggers Joe Saward and James Allen, former CEO of Mercedes GP, Nick Fry, Leadership expert Dr Amanda Goodall and F1 technical guru Gary Anderson – why on earth have the BBC dropped him from their F1 coverage? Gary’s ‘cut off’ lap time predictions were always the highlight of qualifying as far as I’m concerned.

The panel was expertly chaired by Dr Paolo Aversa from Cass and we had a great time putting the world of F1 to rights, helped along by a great audience with lots of knowledgeable questions. Of course there was much to talk about – the new power units (I guess the term engine will now be consigned to history); what lies in store for Bernie (the view here was never underestimate him, and he will be back fully in charge by the end of the year); what’s going to happen at McLaren regarding the appointment of a new CEO (one or two people were a bit coy about this one, so maybe we’ll have an announcement soon); and will Lotus get the financial backing it needs to stop haemorrhaging great people. All in all there was much to discuss and that’s the great thing about F1: technology, finance, strategy, creative interpretations of regulations and above all people, and as Nick Fry reminded us, at the end of the day, it’s people that make the difference.

On 29 July 2013, the day after the Hungarian Grand Prix, an interesting piece appeared on the Ferrari website entitled ‘A turning point to tackle with a knife between the teeth’. It related the comments of Ferrari President Luca de Montezemolo, who was apparently less than happy about the team’s performance, and also the behaviour of its lead driver, Fernando Alonso. The piece stated baldly that Montezemolo had ‘tweaked his (Alonso’s) ear’ reminding him that “all the great champions who have driven for Ferrari have always been asked to put the interests of the team above their own. This is the moment to stay calm, avoid polemics and show humility and determination in making one’s own contribution, standing alongside the team and its people both at the track and outside it.” Nobody seems entirely sure why Alonso was on the receiving end of Montezemolo’s ire, but one theory is that it was his reply when asked what he would like for his (forthcoming) birthday, his response was ‘a new car’.

The public castigation of Ferrari’s most expensive employee by the President gave me a real sense of déjà vu. Last night I was re-reading one of Niki Lauda’s memoirs ‘For the Record’ written in the late seventies and focusing on his experiences during the season of 1976 when he almost lost his life and did lose (by a very small margin) the World Championship to James Hunt. I had got to the part where he was being criticised in the media by Enzo Ferrari saying that he made a mistake by coming back too early for the Grand Prix at Monza. Enzo Ferrari was renowned for communicating his pleasure or otherwise with the race team, Gestione Sportiva, via the media and it seems that Ferrari’s current President is following a similar line. However, interestingly, Montezemolo started off by saying that “The Ferrari I saw in yesterday’s race doesn’t sit well with me.” If he is following Enzo’s tradition of criticising his drivers through the media, he is not following his other tradition of never criticising his cars, but then I guess they don’t have his name on them.

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