End of an Era at Maranello

September 14, 2014

The departure of Luca di Montezemolo from the role of chairman of Ferrari is undoubtedly the end of an era. For many this was perhaps necessary to get new thinking into the Scuderia, currently experiencing a period of underperformance similar to that of the early 90s prior to the ‘Schumacher era’. The irony is that the person who was responsible for turning things around back then, protecting Ferrari from Fiat’s corporate culture, and appointing Jean Todt to help build what became the most successful F1 team of all time, was Luca di Montezemolo.

With Fiat CEO Sergio Marchionne now taking over as chairman and with the Scuderia being led by the former head of Ferrari’s US road car operation, Marco  Mattiacci, it looks like history may be repeating itself. Back in 1988 when Enzo passed away Fiat’s stake in Ferrari shifted from 40 to 90% and resulted in one of the least successful periods in the proud history of the Scuderia. A long line of Fiat managers were parachuted in with disastrous results. You only have to look at the contrast between Jaguar Racing and Red Bull to see what a dysfunctional effect corporate management can have on entrepreneurial, fast moving F1 teams, you need racers like Christian Horner, not corporate managers to win in F1. Let’s hope Ferrari aren’t going through corporate paralysis once again – it took ten years to recover from the last time. If I was Fernando Alonso, I’d be seriously considering my options.

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.

In one of my lectures on strategic change I use a quote from Professor Larry Greiner, formerly of the Harvard Business School, ‘The clues to future success lie in the past’. I use it to explore the notion that every organisation has a unique history and it is only by understanding that history and using it to build future success that organisations can succeed in a way that is impossible for their competitors to copy. Let’s face it, most organisation’s today have very similar strategies, what makes the difference is their ability to deliver the strategy and the uniqueness they bring from their past. When you look at success stories like Apple and Harley Davidson you can see that the key is that they build on their past successes in ways that are relevant to present and future markets.

Never has the principle of remembering your past, but adapting to the future been more readily demonstrated than in Formula 1. Enzo Ferrari was first and foremost a builder of racing cars, he moved into supplying customers with versions of his racing cars to help fund the racing, but he was never a mere automotive manufacturer. Ferrari’s focus on the cars led to suggestions that he disliked drivers becoming too successful and would often manage things to suggest that ultimately it was the car that was the reason for winning, not the driver. A strong focus on the car has permeated many of the F1 teams in the UK, with Lotus, McLaren and Williams all concerned with the racing car as the focus, of course they wanted good drivers, but ultimately it was all about the car. Frank Williams’ famous mantra for anyone wanting him to sign a cheque was always ‘Will it make the car go faster?’.

The story at Red Bull Racing however demonstrates a very different history. Dietrich Mateschitz supported by his driver coach/mentor Dr Helmut Marko was never into cars. His focus has always been unequivocally on the driver. Red Bull entered F1 not as car maker, but as a sponsor with a clear focus on developing driver talent. They bought a stake in the Sauber team in 1995, and in 2001 introduced the Red Bull Junior Team under the guidance of Dr Marko. The purpose of Red Bull Juniors was to develop young talent, and ultimately to move them into F1. This included a young German, Sebastian Vettel, who Red Bull had first supported driving karts in 2000 when he was 12 years old. In 2001 Mateschitz had a disagreement with Peter Sauber; Mateschitz wanted Enrique Bernoldi in the car, whereas Sauber was keen on a young Finn called Kimi Raikkonen. As a consequence Mateschitz withdrew his funding from Sauber and looked to purchase the struggling Arrows team to provide a seat for Bernoldi. This failed to work out, but in 2004 he was looking for a drive for a young Austrian driver, Christian Klein, and in discussions with Jaguar Racing discovered that Ford might be interested in selling the team. He purchased Jaguar Racing with the initial intention of keeping the existing management team, but a disagreement over…wait for it… drivers, meant that they were relieved of their posts and Christian Horner became the new team principal at the start of 2005.

So in the end what we have is a very different history that marks Red Bull Racing ultimately as a team constructed for Red Bull drivers to show their talent, not, like Ferrari, McLaren or Williams for the building of racing cars, and like most aspects of an organisation’s history, it is both a strength and a weakness. So what happened in the 2013 Malaysian Grand Prix is perhaps less surprising than you may think and maybe what arises from Vettel ignoring team orders is more a question for Christian Horner and, particularly, Adrian Newey as to the kind of organisation they want to work for, and the kind of history they want to leave behind, than it is for anything related to drivers or indeed cars.

One of my most enjoyable Christmas presents this year came from my mother-in-law. It was the biography of Steve Jobs by ex CNN CEO Walter Isaacson, it was an impressive read, not just in terms of Jobs himself, but also in terms of the way Isaacson managed to combine the social, emotional, technical and business dimensions to build a deep and insightful portrait of the man. When my latest edition of Harvard Business Review arrived it contained ‘The Real Leadership Lessons of Steve Jobs’ by Walter Isaacson, there has been a lot of poor quality writing about Steve Jobs, particularly in terms of the ‘leadership lessons’ variety, but this was one article I was going to read at all costs, and so last night I did.

It confirmed many of the insights I got from reading the book and which I have used in my strategy sessions with our MBA students, Steve Jobs is very much an inspirational figure, as much for his dark side as the light. As I was going through the HBR piece it suddenly struck me that many of his qualities and quirks I had come across before in an individual who has been as innovative and revolutionary in his spheres of work as Jobs had in his, Colin Chapman.

If I look across Isaacson’s lessons many (but not all) relate very strongly to my picture of Colin Chapman. The importance of focus, the ability to cut through a complex technical issue to the core – think of Chapman’s ideas for fuel sacks rather than tanks which came out of them trying to thread the tanks through a complex spaceframe, the search for elegance and simplicity – Jobs hatred of using screws in his products, Chapman’s concept of the monocoque chassis in the Lotus 25 and the engine becoming part of the structure of the car in the Lotus 49, the lack of tolerance for any who were not ‘A’ team players, it can be said that neither Jobs or Chapman were model managers particularly on the people skills front and yet both had the cream of the crop wanting to work with them, why? Perhaps because they were the best, or perhaps because people saw the interpersonal deficiencies as symptomatic of someone in an hurry, someone who was going to get things done, make things happen and this was a ride they were not going to miss. There was also Jobs’ famous Reality Distortion Field where the impossible became possible, this was very much reminiscent of Chapman where the car could be redesigned and rebuilt just before the race, to incorporate a new innovation thought up by Chapman that day! And perhaps the best of all: ‘When behind Leapfrog’ – anyone remember the Lotus 78? In the mid seventies Lotus had fallen behind and so Chapman got Tony Rudd, Peter Wright and other brilliant technical minds to go back to basics and redefine the grand prix car, no copying competitors, just developing the best solution, in this case ground-effect aerodynamics.

Of course there were also differences. As far as I’m aware Chapman was not a fan of Zen Buddhism, Chapman was also an adept collaborator and, unlike Enzo Ferrari, did not feel the need to build his own engines, Jobs, in contrast, wanted to control the whole thing from end to end, he would have instinctively gone down the Ferrari route. So there were differences, but on balance the similarities win out, for me the most poignant are that both started their businesses in their garages from nothing (although in Chapman’s case this was a stable behind his dad’s pub), and sadly both left us well before their time.

There are relatively few examples today of where a single leader imprints their personality on an organisation. A couple from contemporary businesses would be Steve Jobs at Apple (now holding more cash than the USA) and Richard Branson at Virgin. The question will be how long after these individuals have gone will their shadow remain in these organisations? I am reminded of a documentary I watched on the making of the Disney animated film Hercules. The Artistic Director was artist Gerald Scarfe (remember the animation of Pink Floyd’s The Wall? – that was Scarfe). There was one scene where Scarfe had drawn a satyr which showed a certain amount of buttock cleavage, ‘I don’t think Walt would like that’ said one of the Disney animators, who’s Walt I immediately thought, was he one of the producers? He was referring to Walt Disney who died over forty years ago, but clearly his spirit was alive and well throughout the organisation.

I have been very fortunate to have been able to meet and occasionally interview many of the movers and shakers in F1, but if I had to select the one person I would have loved to ask some questions to, above all others, it would have been Enzo Ferrari. Like Walt Disney, Enzo’s presence is still very much in evidence at Ferrari. The term ‘racer’ is often used to describe someone whose very being is driven by the need to race, and win races. If all of the money disappeared from F1 many people would disappear, but the racers would still be there. Enzo was the original racer, he was, at one time, a works driver for Alfa Romeo, he created one of the first motorsport companies: Scuderia Ferrari which provided cars and the support for rich individuals to go racing. His road car operation was there to help raise funding to go racing. Many car manufacturers have tried to emulate the Ferrari mystique by racing to promote their road cars. None of them come close and the reason is Enzo Ferrari, his passion and his values. I recently managed to get a copy of his autobiography ‘My Terrible Joys’, it is one of the best motorsport books I have ever read, it is candid and insightful, it is, of course, his view of the world, but it is all the more engaging for that.

It is now twenty three years since Enzo’s death and Ferrari have just put a piece on their website asking for comments on the great man:  http://www.ferrari.com/English/Formula1/News/Headlines/Pages/110814_In_memory_of_Enzo_Ferrari.aspx

I am certain that Enzo’s shadow will be there for as long as there is a prancing horse on a Ferrari.

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