The problem with Ferrari is over-protective parenting

August 8, 2016

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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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One Response to “The problem with Ferrari is over-protective parenting”

  1. Paolo Aversa Says:

    I fully agree on the analysis Mark. Beside that, timeline (and paddock rumors) give a sense of what is happening behind the scene. To bring Ferrari back to winning, the Prancing Horse reasonably needs at least 2 to 3 years of consistent work (or a miracle, but that is in the domain of faith, not engineering). All people with a minimum understanding of development cycles in F1 get that. It’s no rocket science. Sergio Machionne knows it’s too – he’s a smart man. But ha knows he doesn’t have so much time, as he will resign from FCA (and Ferrari) in 2018. He either wins now, or he’ll never win. So he refuses to listen to wise, experienced senior technical director telling him that it is not reasonable to win in 1 year, especially when the overall technological trajectory is radically shifted each season. When someone presents him this blatant truth – and a medium-long term strategy for victory – he prefer dismissing them, and giving the lead to more junior people that – perhaps because intimidated by his authority or lured by the prospects of a massive career jump – prefer to answer a “yes-Sir”, cash-in the career advance, and start praying for a miracle. There is no value for Marchionne in preparing the ground for a victory that might come after he leaves – the incoming President might actually rip the benefits with no merit (see what happened at Ducati with Gabriele Del Torchio cheering for a Moto GP success that was entirely build by his predecessor, Federico Minoli. As a card player who lost many hands, all that Marchionne can do is place all his fiches on a single number. The chances of winning are tiny, if any, but it is the only action that maximizes his likelihood of getting the Title before retirement. I wonder if this is the best for FCA and Ferrari – perhaps Agnelli family should give a read of corporate parenting as well as agency theory.


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