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.

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One Response to “Innovation vs Regulation”

  1. Vijay Krishna Says:

    Dear Mark

    A very nicely penned blog, its always difficult to maintain competitive balance among all the teams given the fact that the difference between the top and bottom teams is only 5%. Rules change may not favour every time the top end team thats where contingency plan has to come.

    Sir every time I read your blogs it gushes the adrenaline of F1 out of me. While writing my dissertation on Tobacco-3rd party sponsorship, I referred your book for strategy planning.

    It will be a pleasure to attend a management speech on strategy at the premier B-schools of India.

    Best regards,

    Vijay Krishna
    +91-9910076021


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