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.

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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.