McLaren: Continuous Improvement in the Real-time world of Formula 1

August 25th, 2017

Recently eg has been paying a lot of attention to motorsport both through our sponsorship of @RickParfittJnr @BentleyRacing #BritishGT3 and our recent customer visit to McLaren.

So what’s the connection between a back office optimisation solutions company and these motorsport interests?

Surprisingly, quite a lot.

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’.

Motivation and ‘not winning’

So when the team is losing how do they maintain their motivation? Well, firstly, it’s known as ‘not winning’. A subtle change in words that keeps their focus on the positive.

McLaren are currently working with engine supplier, Honda.  Their engines are not yet providing the results they need to win races, but the team knows what milestones they need to achieve in each race and what they need to do to win races again in the long term. The team are always analysing what they are doing as well as the results they are achieving; feeding this information back to Honda and working with them on improvements and planning what to do next. The roadmap is shared with everyone.

This culture of perpetual ‘in-process learning’ is made possible through the use of technology. In fact McLaren is as much a technology company as it is a Formula 1 team and they use advanced technology extensively.

Sensors are fitted throughout the Formula 1 cars to constantly collect and feedback information to the race team, not just track side but back to HQ in Woking. All the data is sent back in real-time to the Technology Centre where in-race decisions are made. It’s no surprise then that McLaren partner with two of the best Enterprise Technology companies in the world; SAP and Vodafone.

Their business performance depends on predictive analytics, real-time performance monitoring and decision making as well as instant communication throughout the team. This is a technology business on speed – literally.

The importance of Teamwork

Teamwork is also imperative in this real-time world. One slip can mean seconds lost, injury or worse. The whole team of teams (both on the track and back at HQ) need to work together so harmoniously that, McLaren have called this ‘synchronisation’ and everyone shares the goal of operating at peak physical and psychological performance throughout the company.

This is achieved through personal training in the on-site gym, continuous practice and a constant search for new learning. For example, pit stops are practiced twice a day even when there is no racing and the pit crew consulted with the Royal Ballet to help them choreograph their movements to perfection. Using techniques such as this enabled them to reduce pit stop time by 50% from an average 4 seconds to 2 seconds – so fast now it’s almost done in the blink of an eye.

This real-time approach to business is the brain-child of one man, Ron Dennis. He is clearly adored by every member of the team at the Technology Centre. There is a real sense of ‘Ron everywhere’ as you walk through the building. But also a sense of order and calm. Ron demands focus from everyone. He had the tunnel from the staff car park painted white to clear minds before the working day starts. Corridors are wide, empty, quiet spaces.

But everyone takes their breaks at the same time in the restaurant, walking through the trophy corridor on their way in and out; ‘this is what we are here to do, and we can only do it if we pull together’.

Achieving Continuous Improvement in Real-time

On the face of it McLaren is the glitz and glamour of Formula 1, but in reality it is just like any other business. First and foremost it is customer focussed and has to work hard to maintain customer loyalty in order to survive. It is also a technology business using Big Data to demonstrate compliance and achieve continuous improvement in real-time.

But those two words sum-up the major difference between McLaren and most other businesses. One hour, same day or next day service just isn’t good enough for this business. It couldn’t operate with such latency. Now is not soon enough and the business model of McLaren has been optimised to make this happen.

Yet despite all the investment in technology it’s still people that make this business work. How they are led, the synchronised teamwork, the individual physical and mental preparation, the constant practice and learning. Despite being leaders in their field, there is also a complete lack of arrogance and a real hunger to find out how practices from other industries might help them, as well as shared learning with other sports such as cycling and rowing.

So for us the connection is way beyond motorsport. It’s an opportunity to learn from a world class business about managing change in real-time and from great sports people about teamwork, collaboration and the psychology of winning. All important skills in the business world of today.

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