One of the fascinations of Formula 1, from a business strategy perspective, is how the same organisation suddenly shifts from being nowhere to a championship contender and equally how a championship contender suddenly ends up nowhere.

The obvious explanation for many is that it is simply all about money, the more money you have the better car you produce and the better driver you recruit so inevitably you will win more races. Not so. If it was all about money why didn’t Toyota’s huge investment in an F1 operation allow them to win a single race, even though today some of the top-teams are still making use of their wind tunnel in Cologne? If it was all about money then Renault would not have won their world championships in 2005 and 2006 and the team that was BAR and then Honda would surely have achieved more success on the track before they became Brawn in 2009?

Of course money is a key part of the equation. I remember former Jaguar Racing boss, Tony Purnell, describing Formula 1 as a ‘celebration of unfairness’, you can see his point, the richest teams have the most resource to get sponsors and performance on the track, and when they do well they get even more revenue from the distributed media royalties via Formula One Management, the more you have the more you can get. But that’s what makes it fascinating when the underdog does pull through. When Williams produced their FW07 car back in 1980 they were running on a shoestring and only could afford one week in the wind tunnel at Imperial College to try out Patrick Head’s ground-effect design, and yet they produced a better car than the all-dominant Lotus and went on to become world champions. When Dietrich Mateschitz bought Jaguar Racing for a ‘nominal sum’ (and all the debts as well – so in reality a bit more than £1) most could not see how he would turnaround a team that had showed potential as Stewart Grand Prix, but had become a corporate political football for various groups of Ford’s management to fight over and ultimately destroy, and yet today we all see them as the obvious favourites for the championship.

Today many argue that the technology is so tightly regulated and the focus so much on continuous improvement, rather than innovation, that we will not see the kind of turnarounds that we have seen in the past. I’m more optimistic, there is a huge wealth of engineering talent in F1 and it is not just about the superstars drawing the seven figure salaries, there’s a lot of creativity out there and maybe this year we could get a few surprises that show that at the end of the day performance in F1 isn’t just about money.

Luca Marmorini, Ferrari’s Head of Engines, has been quoted in Autosport.com as saying that it is important that Ferrari have a second (ie in addition to Sauber) customer for their 2014 power unit – note the term ‘power unit’ as effectively these are engine + energy recovery systems, so the simple term ‘engine’ no longer seems to do it justice.

The reason for this concern is that their current second customer Toro Rosso have recently announced that they will be shifting to a Renault power unit in 2014, which makes sense organizationally as they are co-owned by Dietrich Mateschitz of Red Bull with Red Bull Racing, so presumably they can share more data during development and racing and therefore improve the performance of both teams. However Toro Rosso’s location in Faenza makes Maranello the ideal partner from a logistical point of view as they are literally a few kilometres down the road. Location matters in F1, otherwise we wouldn’t have Motorsport Valley in the UK, and so the proximity between the power unit supplier and customer cannot be ignored. For this reason, Marmorini hopes that all is not lost with Toro Rosso and that they may review their decision to go to Renault, as he says on the Autosport site:  “I don’t know if Toro Rosso will be with us next year. We are still working very well with them now. They’re an important contribution to Ferrari engine development, but I also think we are giving them a competitive engine.”

A key factor in this is data. Derek Gardner, the now sadly departed designer of the six wheel Tyrrell, told me that a key problem that they had with the six wheeler was the speed of development of the front tyres, which were far smaller than the standard F1 front tyre that Goodyear supplied to all the other teams. As a consequence they were getting far less data on the performance of the tyre – as it was only fitted to two cars and so were unable to develop it as fast as the other which had feedback from twenty four cars (there were 13 teams racing back in 1976). Data therefore is everything if you want to improve performance.

So currently it seems (and things could still move around a fair bit) that if Toro Rosso move to Renault then Renault will be the leading supplier with power units in five teams: Red Bull Racing; Toro Rosso; Lotus; Williams and Caterham. Mercedes will be supplying power units to three teams: their works team plus McLaren and Force India. Ferrari will be supplying two teams – themselves and Sauber. It seems very unlikely that Cosworth, who currently supply Marussia, will be in the frame for 2014 (but never say never) and so who knows, we may see Ferrari supplying the power unit for Marussia, which will make an interesting dynamic in their race with Caterham to tenth place.

Until a few years ago when referring to Lotus and Formula 1 things were pretty straightforward. In my view, with the exception of Ferrari, Team Lotus were the greatest team ever to race in Formula 1. Perhaps from the statistics and race performances they were not so great, but their contribution went far beyond mere statistics. If you look at today’s F1 car: many of the key features can be attributed to innovations pioneered by Lotus: monocoque chassis, the engine being a structural part of the chassis, rear mounted radiators and the use of underbody aerodynamics are some of the list. Lotus were a great team (note the underlining) and like Ferrari deserve to be remembered as playing a major role in the history of F1.

Sadly of late the name of Lotus is no longer associated with such greatness but with petty legal arguments and as a name which is for sale to the highest bidder. This is a sad state of affairs and appears to have got even more confused with the sale of Group Lotus’s owner Proton, the Malaysian car manufacturer, to another Malaysian automotive operation: DRB-Hicom. This has led to the end of ‘Lotus’ sponsorship for the former Renault team (and before that Toleman and Benetton) who are now called Lotus F1. So perhaps this means the Lotus name will finally be allowed to bow out of this sad attempt to resuscitate the Chapman legend? It seems not, owner of Lotus F1, Genii Capital’s Gerard Lopez is recently quoted “We are happy to carry the Lotus name as we believe it is a good name for F1″. Actually I think the opposite, please treat the name and legacy with some respect and let it be, we’ve seen how great automotive brands can be destroyed by those who are simply trying to make a fast buck. If someone is going to regenerate the Lotus name we need someone like Ferrari’s Luca di Montezemolo, someone who understands the care and attention needed to make an established brand live on, not those who seek to make a quick return from its sale and exploitation. It’s time for everyone to move on and leave the Lotus F1 legacy in peace.

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.

The Canadian GP was over four hours long from flag (or rather lights) to flag. It was also quite the most extraordinary race that we’ve seen for some time.

Winners

McLaren: It has to be said that so far this year McLaren do not appear to have really delivered on the promise their car has been showing. But that changed in Montreal, well it certainly changed for one of their drivers and the team must take a fair amount of credit for opting for the high-downforce setting, something that neither driver seemed particularly happy about during qualifying, but it paid off in the race.

Jenson Button: It is perhaps a bit unfair that Jenson’s Championship season was achieved in an outstanding car, and one which most people remember for the rather creative interpretation of the regulations relating to rear diffusers. However it has to be said that on his day Jenson is peerless and this was another one of those days, he showed the kind of controlled aggression that you only associate with the best of Champions. There are still a lot of races to go (although not quite as many as Bernie might have liked) and there is still plenty of time for things to shift in the championship stakes in Jenson’s favour.

Charlie Whiting: Race Director Charlie Whiting often gets a lot of stick over this or that, and particularly from Martin Brundle relating to how long the safety car is out. Of course we don’t want to see safety cars, but we want to see loads of wrecked cars and injured drivers much less. I think he achieved a great balance between anticipating undrivable conditions and keeping the racing alive for the fans. I was convinced the race was going to be called off during the red flag period – not because I wanted to watch Antiques Roadshow – but because I felt that was the lower risk route. But he didn’t and what a race we had. Thanks Charlie.

Sir Stirling Moss: Stirling has retired from racing at 81 years old after giving himself a fright on the Mulsanne straight at Le Mans, the equivalent of what most other 81 year olds might feel batting along the pavement in their mobility scooters. What an absolute winner, never a champion, but one of the most respected drivers of all time, and someone who Enzo Ferrari rated as the closest to Nuvolari he’d seen, you don’t get higher praise than that.

Losers

Lewis Hamilton: Lewis could have won this race, but in the way that Alonso is often ahead of his car, Lewis seems to be ahead of everything, particularly the car in front, before he’s passed it. There seems to be an air of desperation about Lewis’s driving. Let’s hope he’s got things a bit more under control for Valencia.

Ferrari: As in Monaco Ferrari showed great promise for the actual race with Fernando not really being able to mount a serious challenge. Filipe had a rather erratic race, but redeemed himself with a last minute charge to take sixth away from Kobayashi.

Team Lotus: With one HRT and two Virgins ahead of them at the end Team Lotus won’t have been happy with their days work. They need to start making progress if they want to seriously challenge Toro Rosso, Sauber, Williams and Force India.

John Hogan is a man who has seen it all in Formula 1. As a key part of Phillip Morris’s development of the Marlboro brand in F1 he has been behind the scenes of many of the shifts and changes over the last forty years. Having had the privilege of sharing a platform with him in the past, I know he is also pretty clear as to who the most influential people have been in the history and development of F1. In his view there are three: Enzo Ferrari, Colin Chapman and Bernie Ecclestone. Each has had a profound effect on the sport/business of F1 well beyond their respective organisations. Ferrari in building the world’s most renowned motorsort business, capturing the blend between mystique, glamour and the power of racing; Chapman in driving new technologies and commercial opportunities, providing the basis for today’s focus on aerodynamics and the use of commercial sponsorship; and Ecclestone by creating a global media product out of a series of fragmented commercial arrangements between race organisers and teams, which is today surpassed only by the Olympics and World-Cup Soccer, and they occur every four years. The big question of course is will anyone approach the contribution and impact that these three gargantua have had on the development of Formula 1? I don’t have a ready answer, but I think Tony Fernandes could be on the right track.

One of the biggest challenges for global motorsport today is not finding new F1 races, but building the grass roots enthusiasm that underpins the development of talent and expertise that are needed for the future. With purpose built F1 circuits in places like Malaysia, China, Korea, India and Abu Dhabi the problem they face is that, unlike those in the UK, Italy, USA and Japan there is virtually no grass roots infrastructure of racing to support them. The next big opportunity is therefore to embed motorsport in these areas, in a sense to build the foundations under the house, because without this there will be no sustainable future for these circuits.

In addition we see many of the world sports car manufacturers fighting to go even further upmarket. In a market segment which is already well populated by powerful brands such as Ferrari, Porsche, Mercedes and Aston Martin we now see firms like McLaren and Group Lotus also trying to enter this space. Of course everyone wants high value products which can make massive margins due to their brand strength (just look at the success of Harley Davidson as an example of this), but that’s just the problem everyone wants to be there and so the competition is immense, and this of course puts downward pressure on margins. The big opportunity is not to go for the obvious high value end of the market, but the low value, low price segments which has the potential to grow the market and grow the enthusiasm that is needed to underpin and engage with motorsport in emerging markets. That is exactly where Tony Fernandes seems to be heading by linking his F1 project with the Caterham Car company, I think the opportunities here are immense, and it could be that Fernandes is making a small step on the road to becoming the fourth F1 visionary.

So with things now underway for the 2011 season do we now have a clear picture has to how the season will pan out? If we take the lessons from Bahrain in 2010 then the answer has to be no. As you may recall the Bahrain 2010 race was pretty boring and suggested that all the changes for that year hadn’t really worked, but what we ended up with was one of the most exciting F1 seasons ever. So Australia was not the most exciting race, a number of teams (RBR and McLaren) appeared to be continuing their 2010 form, a number of teams seemed to have fallen back (Mercedes and Williams), whereas some had moved forwards (Renault aka Lotus Genii), the Pirelli tyres seemed to be a lot more durable than anyone had anticipated, Sergio Perez looks like being the new find of the year and Martin Brundle got things off to a good start in his role as BBC ubercommentator.

The key lesson from Bahrain 2010 seemed to be that one race is never sufficient to pick up on trends through the season. Back in 2009 everyone was writing off KERS (particularly strong advocates BMW discarded their system), but Ferrari and McLaren got theirs to really deliver as the season developed, so there’s no reason to believe that this won’t be the case in 2011. The thing that the teams need is feedback to understand what is working and what isn’t and they will now be absorbing all the lessons from the first Grand Prix of the year to put into the second, and the third.. and so on.

So the main lesson is let’s give it a few more races before we jump to any conclusions.

Over the years car manufacturers have come and gone from F1, given the mass exodus we had in 2008/9 with Honda, BMW and Toyota all leaving and with Renault downscaling to engine supply, you could be forgiven for thinking that we were entering another manufacturer free period, similar to that that existed in the 1970s when only Fiat (via Ferrari) and Ford (via Cosworth) were involved.

However we have recently seen a new phenomenon with car manufacturers such as Proton’s Group Lotus and Nissan’s Infiniti entering F1, not as constructors or even engine suppliers, but as sponsors. This is an interesting shift and one which seems to suggest a changing business model for the manufacturers in F1. It may be that both Lotus and Infiniti will become more involved, but currently they have decided the acquisition of a team or building, or badging, their own engine is not the way to go. Perhaps we will see more partnerships of this kind between car manufacturers and F1 teams – watch this space!

Unfortunatley due to commitments here at Cranfield I have not been able to make it up to the Autosport International show at the NEC. But I have just seen some comments made by Virgin Racing’s Technical Director, Nick Wirth, about their optimism for 2011. I think the way the Virgin car goes in 2011 will be very interesting. I always remember Jackie and Paul Stewart telling me how the second year was far tougher for Stewart Grand Prix than the first, as they were now using a car that was developed while they were trying to make a reasonable go at their first season, and so we can get a far better idea of the capability (or not) of the new teams in 2011 as compared with 2010. I suspect we will see the new Virgin affirming that their approach of using 100% CFD as opposed to combining this with the wind tunnel, as the way to go, but it might still be too soon for this to really pull away from Team Lotus and HRT.

The other unknown is how Michael Schumacher will perform on Pirelli tyres and with a car that was developed with him in mind. At Ferrari’s annual Vrooom press event Fernando Alonso identified Michael as his biggest threat for 2011. So Schumacher and Virgin could be the big surprises of the season, with the other being just how many Lotus’s we end up with (what’s the collective noun for an F1 Lotus team – is it a packet?).

Apologies for the gap, but hopefully this is a return to a more regular posting pattern on the blog.

I’ve been watching the machinations around Team Lotus, Group Lotus and Renault with some interest, and although there seems to be some way to go (and presumably a lot of legal fees and a few trips to court) before we know which Lotus will be on the grid, we can be pretty sure that there will be a Lotus Renault of some description in 2011.

It is now clear that Renault’s strategy in F1 is to go in exactly the opposite direction to Mercedes, who have moved from being an engine supplier to a full constructor with the acquisition of Brawn GP at the end of 2009. Renault however are in the process of moving from being a full constructor to an engine supplier, having sold a significant proportion of their F1 team to Genii Capital, also at the end of 2009, it looks like they will continue this exit strategy and focus on purely supplying engines. After all, in partnership with Red Bull, they are the world champion engine supplier this year, their first since 2006. So as Renault withdraw as a constructor who will take their place in the Enstone based operation? Well, one scenario is that Group Lotus – with their new CEO, ex-Ferrari man Dany Bahar, and new ambitions: a full range of product concepts from the new Esprit due in 2013, to the four door, Lotus Eterne which looks to take on competitors such as the Porsche Panamera – will invest in the F1 team and create the new Lotus Renault F1 operation. Of course there is one problem to this scenario and that is the existence of Tony Fernandes’ Team Lotus who were the most successful of the new teams in 2010. Team Lotus is a separate legal entity to Group Lotus and continued to race in F1, following Lotus founder Colin Chapman’s death in 1982, until 1994 when they went into administration and the company, including the name and branding, were purchased by David Hunt, brother of F1 world champion, James Hunt. Hunt having recently sold the company to Fernandes’ F1 operation.

For 2011 Team Lotus have switched engine suppliers from Northampton based Cosworth Racing to the French manufactured Renault Sport power unit which proved so successful in the Red Bull chassis (and was also able to hold off Alonso’s Ferrari at the Abu Dhabi grand prix in the Renault chassis). Interestingly the new arrangement also includes gearbox and hydraulics from Red Bull Technology, so in effect the Team Lotus car of 2011 will be the same powertrain as the Red Bull. So whatever the outcome of the Lotus wars, we should still see a Lotus Renault of some kind on the grid in 2011, whichever one it is, it will be interesting to see how it compares to the Red Bull.

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