Motorsport reported that, in 2021, Formula One generated a direct revenue of $2.136 billion US, and that is not counting all the other business generated around races, team events, and sponsorships. This multi-billion-dollar industry is driven by speed and efficiency and there is no room for mistakes.
The efficiency, teamwork, and data analysis required to work at this level are to the highest standards known to men. Any minor error anywhere along the production line, mechanical work, or driver’s execution, means milliseconds that can make the difference between victory and defeat, and millions of dollars in prizes and sponsorships.
But, what does formula 1 car racing have to do with business?
A championship-winning Formula 1 team is the sporting pinnacle of teamwork, collaboration, data analysis, and technological innovation. It is not enough to thrive in one of those categories, you need to really hit the nail in all of them to make it to the top in Formula 1.
Here are 5 insights you can drive straight from the track to the boardroom to help you win the business race:
1) Speed is everything
The old rules of business were that the biggest and most established corporations would dominate the smaller ones, but those days are over. The key to business success in the XXI century is all about speed. Those that can move the fastest and adapt the quickest dominate the slower-moving companies regardless of their size.
One great example of the need to adapt quickly is Blockbuster. It didn’t fail because it was poorly run, by all accounts the leadership had created a well-oiled operational machine. It was just unable to move fast enough when new opportunities were explored by online streaming competitors like Netflix.
F1 Team Tip – If you want to win, you need to be agile, regardless of the size of your organisation. Focusing energy and resources on building a culture of speed can set you ahead of the rest. Building a fast and responsive organisation must be done without sacrificing quality standards needed to maintain customer and partner relationships.
2) Don't be the First, be the Best.
We live in disruptive times and with the speed of technological change accelerating, some leaders can feel pressured to demonstrate how they can be more innovative than their competition. This sometimes means radical direction changes in business models or product development often under the premise of obtaining a ‘first mover advantage’.
In Formula 1, studies show that teams who made the most radical changes–disrupting previous norms for racing cars–weren’t usually the most successful on the course. “Teams sometimes believed that the more the rules changed, the more they had to change along with them,” Jaideep Anand said. “But we found that small, incremental improvements were often better than big changes.”
So how can you mitigate the risk of failure when making more radical innovation plans? Some known innovative companies, like Google, apply a 70/20/10 innovation model. Most of their innovation resources (70%) are invested in improving what they do at the core, but they are also not afraid to invest some of their resources in transformative ideas in adjacent services (20%) or new markets or services (10%), where failure is less impactful on the bottom line.
Experts often recommend looking for incremental gains you can implement quickly. You should protect the core of your business offering while innovating at the edges. Being first to market is not the most significant advantage- it’s the first to product-market fit that counts.
3) Innovate to survive
Following the previous point, innovation is key in Formula 1 and business. Continuous improvement is very important, and so is finding the right time to apply improvements.
Formula 1 has a lot of rules and they change frequently. The FIA, the sports independent governing body, police extremely detailed guidelines on every element of the sport from car dimensions to safety standards and these change year by year. This regulation is not always well received by everyone but it is necessary and also an opportunity. Winning teams have always been those who innovated in their design and found a way to integrate technologies into their car.
Most teams don’t apply innovative changes necessary in the car they are competing with, but they are already working on the car they will compete in the next championship.
4) Data Analytics: You can’t manage what you don’t measure
An enormous volume of data is generated by each individual car during a Formula 1 Grand Prix. It all began with stopwatches and chalkboards. Then, in the 1990s, things progressed toward basic computers—used to analyze the dozens of data points collected during testing—before finally reaching the mass data gathering and real-time analysis used today.
Data insights fuel decision-making in Formula 1. Team leaders need the right insights at the right time in order to make the strategic calls that will win the race. It is important to have a Plan B and C but even more important to know when to make the decision to switch.
This data is used not only to inform strategy during the race but is crucial for design improvements from one race to another and in developing the cars for future seasons.
5) Championship Winning Teamwork
F1 is the ultimate team sport. The drivers are superstars, often with millions of social media followers and multi-million-dollar endorsements, but every employee is a critical piece of the car’s performance and the overall performance of the team.
“What you see on the racetracks is just the tip of the iceberg. There is such a big structure below it; 90% of the car’s performance is done in the factory and even the tiniest of jobs is important. Each of us has an opposite number in the other organisations and you shouldn’t forget that. You might be thinking you are just adding a little bit to the car’s performance but if you do your job better than your opposite number in the other team, that brings lap times down. You know, it drives me nuts to see a dirty entrance to the building because I want everyone to come here and say ‘Wow, that’s how I expect a Formula One team to function.” Toto Wolff (Executive Director of Mercedes AMG F1 Team)
Smooth communication between the trackside team and the support staff at HQ is critical and this can also extend to partners such as engine manufacturers and other technical partners assisting the team’s overall race performance. In the heat of competition, it’s faultless execution and teamwork that really wins races and probably none more so than the pit stops in boxes.
Every team member has a specific duty to perform, they all know perfectly what their task is and they have to be perfectly synchronised to beat the competition.
BP) Partnerships Fuel Success
Teamwork doesn’t end inside the organisation.
The most successful F1 Teams carefully select partners that deliver best in class industry expertise to transform and help improve their performance. External partners become an extension of the team that bring specialist skills and insights that can result in competitive advantages.
As the margins between success and failure get ever finer, F1 teams are actively pursuing partnerships with deep technology businesses outside of engineering and manufacturing fields to drive future success, none more important than data collection, analysis, and visualisation.