I’ve just switched my blogs to a new site:

www.f1professor.com/blog

The old ones will still remain here I hope!

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There seem to be a range of articles around at the moment analysing the current problems at Ferrari. There are suggestions that Ross Brawn is returning, that Eric Boullier should be recruited, or that Ferrari should relocate to the UK, as they once did in the 1980s.

To add my own pennyworth into the discussion, I see the problem as one which impacts on many organisations around the globe. The problem is the nature of the relationship between a specialist business unit and the corporate centre. Corporate centres, and the senior managers within them, like to feel they are the ones in control, they are the ones that call the shots, and, generally, because they own the overall business, they are correct. However the managers in the business unit are the ones who really understand the industry, the market and how to get things done in this particular situation. So there is inevitably a tension between these two worlds. The term often used to describe the relationship between the business unit and the corporate centre is corporate parenting.

There are many different approaches to corporate parenting. At two extremes we have the laissez faire approach where – to extend the parent/child analogy – we don’t care what our children do, as long as they are getting the right results. We don’t tell them when to work on their homework, or what to write in their reports, we give them a set of boundaries and we let them get on with it, we judge them by their results rather than their activities. In a corporate sense this could be like the relationship between Tata and Jaguar Land Rover. Tata don’t tell JLR what cars to build or where to sell them, they set some overall targets and tell them to get on with it. At the other parental extreme we micro-manage and attempt to control everything our children do. We tell them when to do their homework, we continually check their work (whether they ask or not) and suggest how they could improve things in a great deal of detail, and perhaps we even end up doing it for them. This is over-protective parenting, where we focus on control and micro-managing activities in the assumption that this will produce the best results. This is analogous to the relationship between JLR and their previous owners the Ford Motor Company. In this relationship they were told what models to lauch in what markets, how to price, market them etc. In other words the managers in the business unit were being micro-managed by the centre, unable to do the things that they felt would work best in their specific markets.

Ferrari are the most successful team in F1. Ever. Their most successful period owes much to the driving skills of Michael Schumacher, the technical orchestration of Ross Brawn, the design brilliance of Rory Byrne and engine director Paolo Martinelli. But it owes equally as much, if not more, to the management style of Jean Todt. Todt protected the F1 Team from the parent Fiat. This also would not have been possible without the support from, then President, Luca di Montezemolo. Montezemolo had been responsible for appointing Todt. It was always tempting for Fiat/Ferrari to meddle with the F1 team, particularly in the mid-nineties when the results were not yet there, but this would ultimately have destroyed their ability to compete and dominate F1. Just look at what happened when the Ford Motor Company took over Stewart Grand Prix and turned it into a corporate political football called Jaguar Racing. The team lost its direction and leadership and ultimately failed. When they then became Red Bull Racing the story was somewhat different.

Parents who micro-manage their children may be well-intentioned, but ultimately misguided. If we want our children to become capable, well-developed individuals, we have to give them space to grow, make mistakes, learn and build their own capabilities. Organisations are no different. The main problem I see at Ferrari is the managerial style and approach of Sergio Marchionne. As Chief Executive of Fiat Chrysler he has ended up micro-managing the F1 team – Scuderia Ferrari. He has made their success in F1 a very personal crusade and he has also been quick to get rid of those that he saw as not supporting his approach. Hiring and firing can be very important to build a great team, but, if done badly and for the wrong reasons, it can destroy a great team and create a culture of blame and fear from which success will never grow.

Great leaders are great enablers. Their secret is that they allow others to flourish and develop and bring their abilities to the organisation. Just look at how Mateschitz built up Red Bull Racing. He doesn’t micro-manage. He has good people in place, they know about racing, and he lets them get on with the job. Marchionne should take a step back and give Scuderia Ferrari and its leaders the space they need to build future success.

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This week the FIA has released another technical directive designed to control the level of information being passed from the team to the driver. These regulations are getting increasingly detailed and will, in my view, confuse and complicate F1 racing rather than improve it. It will generate more protests and leave us with situations, as we experienced after the 2016 British Grand Prix, where fans leave the circuit still not knowing the final result of the race.

But aside from the regulatory problems, F1 is and should be the pinnacle of racing technology. We live in the era of big data. You can’t escape it and you can’t put the genie back in the bottle. Every organisation in the world is currently trying to work out what their digital strategy is, how they are going to maximise the use of data to improve performance. What is Formula 1 doing? It is trying to roll back the years to a time when the only communication between driver and team would be via a pit board or frantic hand signals.

Formula 1 is the most amazing exemplar of high performance. In F1 talent combines with technology to create amazing levels of performance, innovation and teamwork. And that is the point, Formula 1 is about teamwork. Drivers are the stars and we want to see them fighting on the track. But we also recognise that it is a team of hundreds (and in some cases thousands) of people that contribute to the on-track performance. We should recognise and celebrate the power of technology in F1. We should use it to the maximum to give fans more insight of what is happening in real time. I want to hear more interactions between the team and their drivers, not less.

Inspired Leaders Network

July 21, 2016

On 5 July 2016 I took part in a panel discussion at an Inspired Leaders Network event held at the London School of Economics. I shared the stage with my co-author on ‘Performance at the Limit’, Ken Pasternak, and Williams F1 Chief Technical Officer Pat Symonds. Hosted by the ILN’s own business guru René Carayol, the focus of the discussion was the learnings that organisations and leaders can take from looking at the world of Formula 1. As ever, Pat was succinct and insightful in his comments and Ken and I were able to reprise some of the key messages from the third edition of the book. You can find a review of the event and some video clips here:

http://www.inspiredleaders.com/event/performance-at-the-limit

PATL Final

I’m delighted that the third edition of our book ‘Performance at the Limit: Business Lessons from Formula 1® Motor Racing’ is now available:

https://www.amazon.co.uk/Performance-Limit-Business-Lessons-Formula/dp/1107136121/ref=sr_1_2?s=books&ie=UTF8&qid=1461141496&sr=1-2&keywords=performance+at+the+limit

It’s been a lot of hard work as this is a lot more than a simple update of previous editions. We’ve created a new structure, some new frameworks such as the ‘Performance Pyramid’ and have been able to add in a lot more content. As usual this has only been possible with the support of Formula One Management and the teams themselves. Mercedes AMG F1 were particularly helpful in providing support and interviews for the book and feature strongly in this latest edition. It was also a great honour that Mercedes AMG F1’ Non-executive chairman agreed to write the foreword. Having started a couple of international airlines from scratch and won three F1 world championships he was the perfect person to connect the world of Formula 1 to the world of business and organisations.

Although Daniel Ricciardo failed to win the 2016 Monaco Grand Prix he did secure pole position with a time of 1 minute 13.622 seconds. This equated to an average speed of 102.3933 mph. This is the first time that the 1.6 litre V6 hybrid power units introduced for the 2014 season have beaten normally aspirated engines at Monaco. In 2013 the pole lap time was 1 minute 13.876 seconds, an average speed of 102.0413 mph, however this was achieved with a 2.4 litre V8 engine.

Monaco is one of the few tracks that has changed little since the inception of the F1 Drivers’ Championship in 1950. This has enabled us to review the relative performance of Formula 1 from 1950, as shown in the attached chart.

Monaco 1950-2016

This figure illustrates the constant improvement in performance that F1 teams have to achieve, it also provides an insight into how they respond to regulation changes. We see the effect of these changes when the curve dips and the cars are slowed down, but usually within a couple of years the cars will be going just as fast as they were before. This is exactly the phenomena we can see from 2013 to 2016, the change in power unit regulations in 2014 causes a dip in performance (and an impressive drop in fuel consumption by 35%) and yet by 2016 the cars are going just as fast as they were in 2013. In F1, regulation doesn’t stifle innovation it stimulates it.

Tipping points and Formula 1

December 16, 2015

EmbracingComplexity

You may be interested in a book some of my colleagues have had published by Oxford University Press. It is called ‘Embracing Complexity’ and you can find more details on the OUP website:

https://global.oup.com/academic/product/embracing-complexity-9780199565269?cc=gb&lang=en&

The reason I raise it here is that complexity theory brings some interesting ideas to help us deal with and adapt to change. One of these ideas is the concept of the ‘Tipping Point’. The term actually originates from the work of epidemiologists – those who study epidemics – and was taken by journalist Malcolm Gladwell in his book of the same name (more details can be found at:

http://www.amazon.co.uk/Tipping-Point-Little-Things-Difference/dp/0349113467/ref=sr_1_1?s=books&ie=UTF8&qid=1450271936&sr=1-1&keywords=The+Tipping+Point)

essentially it is when something reaches critical mass – it could be a disease like AIDS or it could be a social phenomenon such as Facebook or Twitter. Here change is created by a number of small events which suddenly ‘tip’ the phenomena from something relatively insignificant to something of global significance.

Formula 1 remains the biggest global phenomenon in motorsport, but many within and outside of it are suggesting that the business model is out of date and that ultimately it is not sustainable economically, technologically and, most importantly, in terms of generating interest and demand from consumers. Formula E has a very different model to F1 and is currently very much a minnow in comparison to the great whale. But the announcement yesterday that global luxury car brand Jaguar are planning to enter Formula E in 2016/17 in collaboration with Williams Advanced Engineering may just be one of those relatively small events that we look back on as a tipping point. Time will tell.

 

 

Manor F1 Sporting Director Graeme Lowdon with myself and co-author Ken Pasternak

Manor F1 Sporting Director Graeme Lowdon with myself and co-author Ken Pasternak

I’ve just returned from the Belgian Grand Prix at Spa. Although many of my students think that I’m off to a Grand Prix every other weekend, sadly this isn’t the case. In fact, I only tend to visit a Grand Prix when we’re working on a further edition of our book – Performance at the Limit: Business Lessons from Formula 1 Motor Racing. In these situations Mr Ecclestone has kindly supported our endeavours by permitting us access to the F1 Paddock, the essential place to be if you want to meet up with the movers and shakers in the various F1 teams.

The first time was at Imola in 2004 – ten years after that fateful weekend when Roland Ratzenberger and Ayrton Senna lost their lives, then we were at Barcelona in 2008 working on the second edition. Now it’s time for the third edition and, as luck would have it, this time it was the Belgian Grand Prix at Spa that fitted into our publishing schedule – it is a circuit I have always wanted to visit, one that oozes from the history of F1, where else would you find a version of the circuit which was modified in 1979 being referred to as the ‘new’ circuit?

It’s always enjoyable to attend a Grand Prix and to breathe in the real atmosphere of F1, but on the other hand this would hopefully be a fairly straightforward visit – interviewing some familiar and some new faces to update the F1 story and how it provides real insights for organisations and their managers to learn from. I’d managed to make contact with a few people prior to Spa to see if it would be OK for us to talk to them. One of these was Manor’s Graeme Lowdon, I’d never met him before, but I’d always thought he seemed to be a straight-forward and approachable kind of individual, and this was borne out when he responded positively to my Email within 50 mins – no passing me on to the media team, or his PA, just ‘yes, come and see me when you get to the race’ they don’t hang around in F1.

This was great news, our book focused on how other businesses and organisations can learn from F1, and as Manor F1 had just effectively risen from the ashes of administration to race again – I felt that there must be some real issues here that would interest a wider readership. So we met with Graeme at the Manor hospitality unit and I started with the question as to how he and the organisation had dealt with the challenges it had been facing over the last twelve months and how it had managed to make it back to the F1 grid in 2015, my thought was that this would get us into a discussion about the problems of going into administration. But Graeme started talking about the 2014 Japanese Grand Prix and the dreadful accident that befell Jules Bianchi and the challenge of then going to first Russian Grand Prix at Sochi while Jules was still in a critical condition in hospital. How could I have been so crass? Why did I not anticipate that the biggest challenge the team faced was nothing to do with administration, but with the catastrophic injuries suffered by one of their drivers at the Japanese Grand Prix. Like every F1 fan I had been devastated to hear that Jules had lost his fight for life in July 2015, but somehow I had managed to separate this from the organisation and most importantly the people in that organisation. What was I thinking? Or rather why was I not thinking?

How many of us can envisage a situation where one of our colleagues dies in the course of doing his or her job? Sadly, it does happen – today we woke to the sad news that Justin Wilson had succumbed to his injuries at an Indycar race – how do we then pick ourselves up from that devastation, what can those leading the organisation do to help and support others when they themselves are grieving too? And then if you realised that your business was now in a desperate financial situation that could not be immediately resolved, wouldn’t it be easier to walk away? To decide that this was the time to do something else? Not so Graeme Lowdon and John Booth of Manor F1. They pulled Manor from the ashes or perhaps more accurately from EBay, where much of the teams equipment was due to be sold, and they put themselves back on the grid where, currently they are fighting with McLaren for position, a team with around four times the budget and people that they have.

We had a great time at Spa, many of the teams could not have been more helpful and co-operative – particularly Mercedes, McLaren, Williams and Sauber. But my abiding memory will always be Manor F1, what they’ve been through, but also the quiet commitment and resolve they have demonstrated, never giving up, when most of us would have been pleased to be able to do so. One term that is used now and again in F1 is ‘racer’ it means someone who has a passion and a commitment to go racing no matter what, it’s not about the money, it’s not about status or fame, but the joy of racing and the desire to win the next race. Teams like McLaren and Williams epitomise this approach, as do their leadership, and for me so do Manor F1. They have demonstrated a different order of commitment, one which shows who the real racers are.

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.

Interesting comments from Ron Dennis on the F1 drivers’ market

Adam Cooper's F1 Blog

Ron Dennis says he’s satisfied with the performance of Jenson Button and Kevin Magnussen in 2014, but confirms that McLaren is keeping its options open on future driver choice as it enters the Honda era.

The names of Fernando Alonso, Sebastian Vettel and Lewis Hamilton have all been connected with the team, although in theory none are free until 2016 or even later.

Dennis was reminded that a few weeks ago he said that Jenson had to “try harder,” a remark that created something of a stir at the time.

“Anyone who has actually seen the TV interview in question will know that there was an element of humour in what I said,” he told the official F1 website. “Having said that, did I also intend to give Jenson a bit of a wake-up call? Yes, I did. But I did it softly, not maliciously. Indeed, perhaps the efficacy of…

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