Leadership by Design: Steve Jobs and Colin Chapman #F1 @HarvardBiz

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.

#F1 The Reason why Ferrari and Red Bull Racing Left FOTA

So after a great start to the 2012 season the F1 teams have left Melbourne and are on their way to (or have already arrived in) Malaysia. Aside from the racing, which is sometimes more interesting than the politics of F1, is a recent piece on the Autosport website by two well connected F1 journos: Jonathan Noble and Dieter Rencken. The piece is significant as it suggests the underlying reason as to why both Ferrari and Red Bull Racing left the team’s association: FOTA.

One of the perpetual tensions between Bernie Ecclestone’s Formula One Management (FOM) and the F1 teams, is that the teams feel that they are not receiving their rightful proportion of the media/ circuit revenues – as they are a key part of the show – and Mr E points out that they are taking none of the risk in running races and securing media deals and therefore do not deserve a more significant share of the benefits. The indications from the Autosport piece is that this could be the start of a process where some of the teams actually end up taking a stake in the commercial side of F1. They speculate that Ferrari shares could be transferred to provide them with a stake in the sport – you may have seen that the Lehman Brothers $1.5billion stake in F1 is up for sale, so ‘go figure’ as our American cousins like to say.

While the Autosport piece makes no direct reference to Red Bull Racing, or their owner Dietrich Mateschitz, acquiring a stake, they do mention RBR in the same piece with a quote from Christian Horner, so there is a certain amount of implication by association going on. An investment by Red Bull would make a lot of sense as Mateschitz currently owns two teams (RBR and Toro Rosso) and so, you could argue, is more exposed than individual teams and could therefore, like Ferrari, see the sense in acquiring equity in FOM. This provides a rather persuasive explanation for why they left FOTA, as presumably this placed some restriction on their flexibility in dealing with FOM, which could involve a range of issues, including share swops or buying shares for cash. Of course all of this is pure speculation at present, but I suspect the story will unfold simultaneously with the negotiations for the Concorde Agreement. I hope that the politics etc. don’t become more interesting than the racing, because I hope the racing will be fantastic this year, but I suspect that we will have a fascinating sideshow evolving that will certainly bring about some different arrangements than we have seen in the past. Don’t expect more of the same.

The Future of Red Bull Racing

Last night, at the Roundhouse in London, Adrian Newey was inducted into the Motorsport hall of fame. Another acknowledgement, along with an OBE in the New Year’s honours list, that Mr Newey is a major force in the evolving technology of motorsport and specifically Formula 1.

I remember once talking to Patrick Head, back in 2000, about the role of Adrian Newey in the development of championship winning cars, Newey was then at McLaren, having left Williams during 1996. Patrick in his usual forthright way didn’t believe that Adrian was the common factor in the success of Williams in the mid-nineties, followed by McLaren in 1998, ‘he’s very  good at moving at the right time’ I remember him commenting, but I suspect asked that question again today  he might have a different view. One of the reasons cited for Adrian’s departure from Williams was that Frank and Patrick were unwilling to give him an equity stake in the company, suggesting that Adrian perhaps had bigger ambitions than just being a technical director.

I reflected on this when hearing of the various rumours that Ferrari were now after Adrian Newey in a bid to restore some technological dominance of the sort they enjoyed from 1999 through to 2004. At the recent launch of the Red Bull RB8 Adrian was asked about this and responded as follows: “I can’t see myself going anywhere else. I’ve been involved in the team from very early on, I feel very centrally involved in it and proud we’ve managed to get from the ashes of Jaguar to where we are today. That in itself brings a huge amount of satisfaction and the slightly paternal feeling of wanting that to carry on. To now leave for another team would kind of feel a little like walking out on your children in a way.”. Of course a few of those with memories back to 2001 remember him ‘leaving’ McLaren to go to Bobby Rahal’s Jaguar Team, but then subsequently changing his mind and staying with McLaren, Rahal then going back to the USA and handing over to another Team Principal in the merry-go-round that was then Jaguar Racing. So perhaps things are different this time? It also made me wonder as to whether he still harboured ambitions to be a bit more than just an employee of an F1 team, and certainly if you were to keep someone as talented as this, this could be one of the options to explore. There will come a time when Dietrich Mateschitz decides that he will do something else with the millions of dollars he makes from energy drinks, or perhaps if they win their third successive championship in 2012, he may decide that he no longer needs to own the team. This could perhaps be an interesting opportunity for Adrian Newey and perhaps Christian Horner to be more than just employees and run their own F1 team. Who knows? Stranger things have happened in the world of Formula 1.

#F1 and the big screen: timing is everything

After dropping rather a lot of hints, I received the Senna DVD for Christmas and enjoyed watching it in between various helpings of turkey and Christmas pudding. It was certainly an outstanding film, recounting the story of the Senna versus Prost duel simply by using film clips and interviews. It was also good to see a clip featuring a rather younger version of my co-author Richard West announcing Senna’s arrival at Williams back in 1994.

I am also looking forward to the much-heralded ‘Rush’ to be directed by Ron Howard: Richie Cunningham from Happy Days and director of Frost/Nixon; Da Vinci Code and A Beautiful Mind, amongst others. The film will, I understand, be a dramatisation of another epic F1 duel, that which took place between James Hunt (McLaren) and Niki Lauda (Ferrari) in 1976. It is rumoured that Russell Crowe will be playing Richard Burton, who really did feature in Hunt’s life at the time – I wonder if Tom Cruise will be playing Bernie? One of the contrasts between the Senna vs Prost and Lauda vs Hunt battles was that Lauda and Hunt actually got on very well off the track while fighting for the championship on it – both of them spoke their minds, regardless of political niceties, and both recognised the other as a kindred spirit. Given the early publicity surrounding the film I was rather amused to see that the former editor of BusinessF1, Tom Rubython, had undertaken a wonderful bit of opportunism and followed up on his biography of James Hunt ‘Shunt’ (Btw if you want to read about James Hunt his ‘official’ biography by Gerald Donaldson is outstanding), with a book on the battle between Hunt and Lauda entitled ‘In the Name of Glory – 1976’. So we now have the book as well as the film, but it isn’t the book of the film and it won’t be the film of the book, but probably most people won’t know and won’t care  – timing is everything.

On the subject of #F1 driver management and Elvis Presley

Apparently an exchange of views has occurred between Bernie Ecclestone and Lewis Hamilton regarding the choice of management Lewis made, following his split with his father Anthony, back in 2010. Bernie having the view that it would have made more sense for Lewis to stick with his father, and Lewis declaring himself very happy with his move to Simon Fuller’s XIX Entertainment.

The subject of driver management in motorsport is an interesting one. There have been various forms of ‘manager’ over the years, the fact that Bernie is commenting on Lewis’s management is germane as he began his involvement in F1 as a driver manager, first advising Stuart Lewis-Evans in the 1950s and then with Jochen Rindt in the 1960s. Here the focus was very much on negotiation and contracts, something that Bernie, as we now know, had a bit of talent for. These tend to be independent managers, focused on motorsport who are directly advising one or several drivers and who certainly tend to be with them at races. They have often moved into management either from being a driver, or more often when they supported the driver at an earlier stage in their career. Examples would be David Robertson who looked after Kimi Raikkonen and Jensen Button, Martin Brundle looking after David Coulthard and Willi Weber with Michael and Ralf Schumacher.

Today it is very much the norm for drivers to have their own managers, effectively managing their financial affairs and negotiating on their behalf, although there are still one or two who like to handle things themselves such as Gerhard Berger and current world champion Sebastian Vettel. At the F1 level there are not often the close family relationships between driver and manager, such as that which existed between Lewis and his father, although Mark Webber took things a stage further and is living with his former manager, Ann Neal, and Jean Todt’s son Nicolas was managing Felipe Massa when Todt was CEO of Ferrari, which must have made negotiations interesting. Flavio Briatore may have had to negotiate with himself when he was Team Principal of Renault and also managing Fernando Alonso. So things have sometimes got a bit complicated.

An alternative approach is followed by those who go down the professional sports management route: using a specialist organisation to provide the support, such as the services provided by CSS Stellar which in addition to a range of sports/entertainment businesses includes individual sportsman/woman management.  This was founded by lawyer Julian Jakobi, formerly Ayrton Senna’s manager. As far as I’m aware the first driver to go down the route of using a professional sports management organisation was Jackie Stewart in 1968. JYS enlisted the help of Mark McCormack’s IMG operation, (he of – ‘What They don’t Teach you at Harvard Business School’ fame), which up to then had focused on professional golf players such as Arnold Palmer, Jack Nicklaus and Gary Player. Famously JYS’s first ‘assistant’ ,provided by IMG, was one Martin Sorrell who went on to do rather well for himself eventually becoming chairman of marketing communications conglomerate WPP. Here the benefit of the management company is more geared towards the wider ‘celebrity’ of the driver and makes a lot of sense – as was the case with JYS – if you have an eye on the longer term earning potential of the individual ‘brand’. It is therefore probably too early to say whether or not Lewis has made the right decision in going to XIX Entertainment. However one thing I did find out on a visit to Tennessee was that XIX Entertainment owns Graceland, Elvis’s former residence, I wonder if they’ve now got an eye on a certain property in Stevenage?

The Future of FOTA

The news that both Ferrari and Red Bull Racing are planning to withdraw from FOTA has led many to suggest that this is the end of the team’s association. Clearly it is better for the teams to act as one if they wish to get a bigger share of the FOM revenues, but as seems to always happen, self interest is the decider at the end of the day. They are all agreed that they want to reduce costs – doesn’t any organisation? The important question is therefore how do you do it? When you’ve got your own bespoke test track then a ban on testing means you can’t use one of your key assets to improve your performance, so you can see why Ferrari would feel that being in FOTA isn’t in their best interests, RBR are in a different situation where their business model is a very different one to the other teams, so, again it may make better sense for them to go their own way. Of course we also have HRT who were the first to leave FOTA back in January 2011. The other reason rumoured for the departure of Ferrari and Red Bull Racing is the issue of third (or fourth) cars where constructors are allowed to sell/loan their cars to other teams, a practice well used in the 1950 and 60s. Stirling Moss’s legendary victory for Lotus at Monaco in 1960 was not achieved for Lotus Racing, but for Rob Walker’s private team using a Lotus 18. This is an issue which FOTA has been divided on and it could be argued that building more cars would effectively reduce the costs of certain teams such as Ferrari and also for RBR, whose original concept was to provide cars for Scuderia Toro Rosso. It’s just a very different way of achieving the same objective.

However regardless of the reasons for Ferrari and RBR to leave the team’s association, does this spell the end of FOTA? As history has a habit of repeating itself, it is interesting to note that in the controversies around previous Concorde Agreements, there were three teams who were united in refusing to sign up to the fourth agreement which was due to run from 1997 to 2002. They were McLaren, Williams and Tyrrell. In many ways it was this stand that led to the financial demise of the Tyrrell organisation, a team who had dominated F1 in the late sixties/ early seventies. Eventually a revised, fifth, agreement was drawn up which included the three teams and was to run from 1998 to 2007. The current (sixth) agreement is to run until the end of 2012, and this is where the negotiations are focused. The point of history is that the three teams who resisted the fourth Concorde Agreement are very much at the heart of FOTA today, McLaren providing the chairman, Williams a committed participant and the team that was originally Tyrrell Racing has now morphed into Mercedes GP (sorry Mercedes AMG GP!), via spells as British American Racing and Honda, with senior management team Nick Fry and Ross Brawn very much committed to FOTA. So even if FOTA doesn’t represent all the F1 teams, it may represent a significantly powerful voice that can influence the terms of the seventh Concorde Agreement, if it holds together.

The Three Futures of #F1

With the 2011 season now at an end the teams are working even harder on their 2012 cars. We are also getting more clarity on driver line-ups, with F1 very much in tune with work practices in general - extending the retirement age with Kimi Raikkonen now returning to F1, this time with Lotus Renault, not sure if he’s having to make bigger pension contributions.

But while much of the media attention focuses on 2012, the movers and shakers: the Team Principals and FOTA, the FIA, Formula One Management and CVC are all focused on 2013. This is when a new Concorde Agreement should come into effect. Recently in the FT, Leisure Industries Correspondent, Roger Blitz aligned the politics of F1 to those of the Eurozone, with an intense battle emerging between the haves (Bernie and CVC) and have-nots (FOTA and FIA) – my definition not Roger’s. The complex web that is the governance of F1 is yet again going to be stretched and rewoven, and currently, no-one is quite sure how this will all end up. Certainly we will see Bernie at his best – he always enjoys a good fight – and will undoubtedly be focusing on divide and rule with the teams, not a new strategy, but always an effective one, but who knows perhaps Martin Whitmarsh and his peers will be able to keep FOTA united and carve out a good result? The key is going to be where the FIA end up. In the past they have traditionally aligned against the teams, but perhaps this time we will see a new permutation? Expect plenty of off-track fireworks during 2012.

However there are those in F1 for whom 2012 and 2013 matters not a jot: for the technical strategists in the teams work is well underway for the 2014 regulations which will require the cars to have 1.6 litre V6 power units and substantial Energy Recovery Systems (ERS) to harvest and reuse the energy to improve performance. The engine manufacturers are well underway with a variety of permutations and concepts and the teams will be keen to see how they can build the optimum package from this new powertrain.

All in all the next few years are going to be a busy time for anyone involved in F1, regardless of whether or not the Eurozone holds together.