Business Lessons taken from Formula 1 Motor Racing

I have worked for over 7 years in the marketing department of one of the worlds leading Formula One Teams, the Williams F1 Team. In my time at Williams F1 I was lucky enough to work closely with some of the worlds top Fortune 100 brands and gain a unique insight into how Formula 1 motor racing and businesses today connect in many ways.

During my time at Williams I met some extraordinary people and characters that form part of the pit lane. One such person was Richard West. Richard has worked in the sport for more than 25 years working as Head of Marketing for Ferrari, Mclaren, Arrows and Willliams and drivers such as Senna, Prost, Schumacher and Hill. He has also worked in 24 le mans. In 2006 Richard together with his co authors produced a book ' Performance at the Limit, Business Lessons from Formula 1 Motor Racing', it focuses on parallels between Formula 1 and running a business today. I have attached a quick summary, I hope you find it interesting.

Performance at the Limit

Copyright, Cambridge University Press Jenkins, Pasternak and West.

The authors devised " The Twelve Lessons"

Lesson 1: Maintain open and constant commuication

During our research one concept was voiced by virtually all the individuals we interviewed; that is, the importance of maintaining an open flow of communication involving everyone in the organisation. This communication takes place both formally and informally, on a small and large scale, in-person or virtually.

Lesson 2: Isolate the problem, not the person: The no blame culture

Here we pick up on WilliamsF1’s Team Manager Dickie Stanford’s comment that when something has gone wrong, the focus must be put on resolving the problem in a systemic sense, rather than blaming the person. This is difficult to achieve in practice. In many instances when a team falls onto difficult times it goes through a period of blame to explain the failure. It is the ability to break out of this blame culture which often signifies a period of further success. This can be stimulated by improved performance, but to be sustained it has to be underpinned by a work environment that allows failures to be shared and openly discussed by all.

Lesson 3: Build the organistion around informal processes, networks and relationships

Across all of the teams we found a common emphasis on building from the expertise and relationships of the people within the organisation, and the partners allied to the business. This approach enables the structure to emerge from these relationships, rather than imposing a ‘theoretical’ organisation which is populated by rigid, specified roles and job descriptions that do not relate to the pressurised world that Formula 1 teams inhabit.

Perhaps we could criticise those teams who do not have ready-to-hand organisational charts or detailed job descriptions. Clearly these are important aspects of modern organisational life. But in a situation where there is real commitment and passion from employees, the lack of such management tools illustrates how the organisation becomes ‘empowered’, by removing layers of potentially needless bureaucracy.

In reality, we know that organisation charts rarely reflect how people in the business actually work together or, relate to one another in terms of getting tasks completed. The Formula 1 organisation is an emergent structure that is designed to optimise and facilitate the potential of individuals and their relationships, rather than determining and micro-managing such interactions. The conclusion that we reach is that, it is only through effectively supporting these interactions and relationships through an emergent structure that performance can be truly optimised.

In business management there is a mantra that, structure drives strategy which in turn drives performance. In Formula 1, people and their relationships drive the structure which in turn drives performance. Perhaps surprisingly for its strong technology orientation, Formula 1 is a very people driven business.

Lesson 4: Alignment of goals between individuals, teams and partners

There are two parts to the issue of alignment. One is commonality of goals towards which teams and sub-teams in the organisation are striving. The other is the connection between the individuals’ actions and the end result. Perhaps this is best illustrated in the way that Frank Williams constantly asks the question when signing cheques: ‘How will it make the car go faster?’ against which all can measure the value of their specific contributions on a day to day basis. From the Formula 1 team partner’s perspective the question may be different, ‘Will it help us sell more product?’ It is the continual alignment of these factors that help to optimise business processes in Formula 1 teams.

Lesson 5: Focus, Focus, Focus

The rigour of a nineteen or twenty race season puts a heightened premium on getting the right job done at the right time. It seems quite a basic concept, given the industry’s often changing regulatory constraints, budgetary limitations under which many teams operate, and very tight deadlines. Formula 1 teams must focus on the tasks at hand in order to be on the grid with an improved car, week after week. Even in this context, we have seen examples of where successful teams have lost their focus, lost their edge and ultimately paid a very high price; perhaps most famously through McLaren’s departure into high performance, limited edition road cars in the early 1990s, (the McLaren F1).

Likewise, drivers who are facing great demands on their time have to learn to focus on what truly matters, which in the end is performance on the track.

Lesson 6: Make quick decisions and learn from the results

Seeing the opportunity, being decisive, and then learning from the result of one’s actions is central to continual improvement of performance in this fast-paced environment. These ideas fit closely with the concept of the learning organisation, where continual experimentation and learning provides the basis by which firms move forward. Formula 1 teams have to continually learn from their mistakes otherwise they soon fall off the pace, and lose the interest of their sponsors.

But to work it also requires a culture where individuals are not constrained from trying something, and that failure does not undermine their position or credibility in the organisation.

Lesson 7: The real gains come at the boundaries

The real performance gains occur at the margins, at the boundaries between the various interfaces, whether these are component areas of the car, between partner organisations or between different teams and sub-teams. These are the gains that are particularly difficult to achieve and sustain, but they are the ones that will make the difference in performance, if all other areas are working effectively.

When teams are operating at the top of their game, their focus moves from building up particular specialist competence, to integrating the whole system and ensuring that it operates to the maximum. In order to deliver the best racing package silos between functional departments must be eliminated so that communication between and across them can be clear, constant and directed towards achieving their common goals.

Lesson 8: Be realistic about what can be achieved

Continual change is necessary in order to keep pace with competitors strategic actions and customers ever-changing demands. However, change fatigue is not an unusual problem in organisations today. One of the important lessons which can be drawn from the recent success of Ferrari is that change in organisations has to take place within realistic constraints, otherwise the development process may fall apart. Setting high, but realistic goals and keeping everyone apprised of progress against those goals is a key factor in driving the change process forward.

Lesson 9: Never believe you can keep winning

The Icarus Paradox 1 considers the problem of success blinding the organisation to future threats. In considering the case of Ferrari, the trick appears to be to refuse to believe that you are inherently capable of being consistently successful. Always assume each win is your last victory and, therefore, you will continually search for those extra tenths of seconds that will sustain you at the top. There is not a better time to challenge one’s processes and methods, or business strategy for that matter, than when leading the industry. The really hard part is maintaining the pressure and urgency to do so while retaining the energy and motivation that is so important for the team. That is one factor why Ferrari has been able to build such a formidable record in recent years.

Lesson 10: Leaders exist at all levels of the organisation

Due to the fast pace of this industry, employees throughout Formula 1 teams are empowered to make decisions, drive processes and take risks. We have witnessed people at all levels within Formula 1 organisations stepping up to be accountable and to lead their colleagues when it is their time to take responsibility.

This means that the more senior roles are concerned with problem solving and connecting up different parts of the organisation, rather than coaching or directing. At times this can be problematic particularly where big egos are not in short supply, but the lesson here is to recognise that in the most successful teams people are prepared to put their heads above the parapet and lead their project or initiative. Also, in these contexts, the drivers are not prima-donnas but real catalysts for the team, encouraging everyone to play their part to achieve performance at the limit.

Lesson 11: Measure Everything

Formula 1 is first and foremost an engineering based industry. In that context, the delivery of their key product, a fast Formula 1 car, is entirely contingent on design, manufacture and refinement using the latest in software, telemetry and computer capacity, to measure everything.

Measurement comes into play at the factory, in the pit lane, on the track and also, as we have seen, in the physiological readings of the drivers. Like all people in business, Formula 1 teams have to determine what useful information can be drawn out of the massive amount of data that is captured. They must apply reasonable thinking to utilise that information, to make strategic and tactical decisions. In turn, those decisions need to evolve, usually very quickly, into actionable tasks. Once delivered, the impacts of those tasks are measured, and the process starts over again. Recording of input and measurement of output goes beyond the teams themselves, and is the primary process by which sponsors determine whether their investment in the sport provides the returns they are seeking.

Whether a business is using scorecards of some sort or re-engineering techniques, they are embracing a model of measurement, evaluation, and action in the organisation, just like Formula 1 teams do.

Lesson 12: At the Edge, Not Over the Edge

This may be an obvious statement, but conflict within an organisation can undo all of the strong efforts and goodwill that has been built to that point. Given the competitive nature of the individuals in Formula 1 and the fact that they operate within a media fishbowl, it is not uncommon that dirty laundry is aired in public.

Whether it has been an employee disgruntled because he was passed up for promotion who then shares insider information with a competitor, or two drivers on the same team who cannot seem to get along, the impact of their attitudes and actions most certainly infect the organisation culture and eventually performance in a negative way.

Organisations that have a culture where people feel free to share their thoughts with peers and bosses without reprisal; organisations where managers are in touch with their employees aspirations and development needs; and, organisations that foster teamwork as a guiding value are less prone to find themselves operating with internal conflict situations that will get out of hand.

1. Miller, D. (1990). The Icarus Paradox. New York: HarperBusiness.

Taken from, ‘The Twelve Lessons’: PATL 2nd Edition - Jenkins, Pasternak, & West – Copyright 2008.

If you would like further information on any of the above or to watch the BBC World documentary series "Formula for Success" inspired by PATL go to becenglish.com and click BEC.TV

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