We took a group of senior Executive customers on a tour of McLaren’s Technology Centre in Woking. There we learned about Ron Dennis, his style of leadership and the ‘business’ of Formula 1. The parallels with our own industries were greater than we imagined.
In 2005 the ban on the use of tobacco advertising came into effect in Formula 1. This effectively took away the largest funding provider for the sport and the individual race teams, creating for them their own ‘financial crisis’. In response to this the McLaren team set about their own transformational change. New sources of income had to be found and McLaren recognised that they were competing for the attention of ‘customers’ – not only the brands who would provide sponsorship, but the race-loving public who buy tickets and could easily have their attention diverted by other world sports.
Change wasn’t solely driven by the tobacco ban. In Formula 1 the rules change continuously whether to improve safety or to provide a level playing field between teams. One fact is certain in this industry, the rules will change and the teams need to interpret and comply with the new rules, often between each race. These changes, together with the improvements a team will make in order to win, means that 80% of the car that starts a season will be replaced by the end. Increasing regulation, continuous improvement and managing change are constant themes in Formula 1, an industry where 0.1 of a second can mean the difference between winning and losing. These themes are the core of their business with the outcome either a win or lose result.
How McLaren handle winning and losing provides lessons for all businesses. Every trophy they have won is displayed in a corridor that all staff have to walk through several times a day. It conveys Ron Dennis’ message to his whole team that ‘this is what we are here to do’.