“You don’t drive races on paper”- Kimi Raikkonen
By Moenga Elvis
I must admit I am a big fan of F1. I mostly put my money on Max Verstappen of Red Bull racing or
Charles Leclerc of Scuderia Ferrari two of the best young drivers in the series. But beyond my driver
preference, F1 as a sport is a combination of probability, strategy and pure speed. In more ways than one, F1 mirrors modern day business and actions taken by business leaders to stay ahead of the pack.
Need for speed
A typical F1 car at top speed is cruising at 370km/h round a circuit with a number of corners and straights while avoiding crashing. In F1,being first in the race does not make you the fastest, with the right strategy, a team that is behind you can catch up and surpass you. In today’s business world, size is increasingly becoming a disadvantage to business growth especially in the technology industry. Firms that are adaptable and can easily morph to suit the changing business landscape with speedcontinue to outmaneuver established brands.
Those that can move the fastest and adapt the quickest will dominate the slower companies regardless of their size. Building agile and adaptable organizations should be done without compromising on the quality standards that have been set. Innovating at the edges and seeking incremental improvements to business processes should be the enduring strategy for all organizations. Also, going first to the market does not necessarily grant you the first mover advantage, consistency of output and brand quality are still at play.
An Evolving rather than a static strategy
Just like in finance, the conundrum of attempting to measure risk exposure is an evolving affair that begins way before the actual race takes place. Monte Carlo simulation is used to analyze the probability of different outcomes in a process that are hard to predict due to random variables. By running racesimulations on supercomputers and changing variables in each race, teams are able to determine what would be the most probable outcome and create the most sound strategy.
By the time drivers go onto race, which is mostly on a Sunday, the team behind the simulations have condensed the strategy into two plans. Plan “A” and plan “B”. During the instances where we as the audience are let onto the team radios, we normally hear drivers ask the race engineers whether they are still onplan A or whether they should move to plan B. Over and above the two strategies, factors can still change during the actual race which would require a change of plan meaning doing another round of simulations.
Similarly, businesses need to have a living,breathing strategy that takes into account the evolving business environment. The strategy is to a large extent supported by quantitative data collected from various business units and modelled throughsimulations to optimize profitability or operations.
The pit stop
With the exception of the Monaco grand prix, a typical race would cover approximately 305km. With cars going at high speeds, there is a lot of wear and tear and as such pit stops become necessary to get a new pair of fresh tires or fix anything that is going wrong with the car. As such a typical race would have a race car pitting at least once.The pit stop is pretty much a defining moment in F1 in the sense that you can win or lose the grand prix due to spending too much time at a pit stop.
20 mechanics crowd around the small car to change tires in a perfectly choreographed movement tospend as little time as possible. Currently Red Bull hold the fastest pitstop record at 1.91 seconds. Essentially, the pit stop is a team effort and one wrong move by any individual spells disaster for the entire team.
Businesses alike are faced with circumstances where they need to pit to get on some new strategy. This could be anything from rebranding, getting into a new market, changing the direction of a business or even closer home,adapting to a new way of working as we are experiencing now. The aim is to get aworking strategy and executing it together as a team. Teamwork is about winning and losing together, learning from it and training together to deliver consistently excellent outcomes.
“What’s important is experimentation. I only plan to succeed 10 to 20 percent of the time. I try a lot of different things and by sheer dumb luck, some of them work”- Vinod Khosla. The nature of innovation is that it is fraught with the unknown. The best way to find out whether things work or not is to experiment. This of course means that there will be ideas that will fail and others that become successful. Successfulcompanies understand that the need for continuous innovation in order to stay ahead of the pack.
While many crave innovation, the whole concept is easier said than done. Getting the whole “Just do It” culture engrained in many organizations is at best a nice to have for many companies. Giving employeesthe free range to come up with innovative ideas without subjecting them to 15 layers of approval is a very intentional and soul-seeking process. Additionally, to enable employees engage their creative capabilities at work,one of the quick hacks would be not having to go big before you have to with an idea or product.
That essentially means that at the onset of any novel idea,it is important to have it exist in its smallest form both from a team composition and budget perspective. In F1,teams continually introduce newtweaks and innovations covering various aspects such as aerodynamics, down-force and the shape of the vehicles to enable them to be quicker than the competition by a few milliseconds in order to clinch the constructor’s championship.
The nature of the sport is such that you either innovate or die. Teams that were dominant a few years ago have been utterly decimated by new players who have put their best foot forward in research and development. When it is all said and done, successful companies have employees at all levels tinkering, experimenting and bringing ideas to life. This is achieved by creating an enabling environment by hiringcreative people, getting out of their way and rewarding them for being innovative.
The aim is to get a working strategy and executing it together as a team. Teamwork is about winning
and losing together, learning from it and training together to deliver consistently excellent outcomes.
Big Data and Analytics vs the Black Swan
“You can’t manage what you don’t measure”- Peter Drucker. The modern F1 car has undergone a lot of modifications over its history and currently has about 500 sensors on it measuring varied phenomena from temperature, fuel burn, and wind force among other countless metrics. This information is relayed real time to offsite centers where a group of analysts use it to determine real time strategy as the race continues.
Real time data has helped reduce the risk gap significantly in F1 and enabled some teams to put in improved performances throughout the season. On the other hand, a black swan event is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.
While such events might still occur, the data collected can enable teams anticipate them beforehand and put in place measures to mitigate them. Businesses that continue to upskill and retool their staff and processes with Big data and analytics capabilities continue to reduce the risk of black swan events on the enterprise.
While black swan events such as the Covid-19 virus are highly unexpected, businesses that had leveraged technology continue to post stable returns and resume normalcy to their operations.A lot of lessons can be gleaned from F1 about business and these are just the salient ones. Overall, the sport is a masterclass in business strategy and building enduring enterprises.