Cranfield School of Management
Interview: Professor Mark Jenkins
Performance at the Limit: Business Lessons from
Formula 1 Motor Racing
TT
Welcome to the Knowledge Interchange Podcast. I'm Toby
Thompson from the Learning Services Team and I've been talking to
Mark Jenkins, Professor of Business Strategy here at Cranfield
School of Management. Mark specialises in looking at the role of
knowledge and innovation in the development of Formula 1
motorsport. We were talking about his recent book entitled
Performance at the Limit: Business Lessons from Formula 1 Motor
Racing. Mark co-authored this book with Ken Pasternak and Richard
West. To give a flavour of Mark's book – here is what some of the
reviewers are saying of it:
“Performance at the Limit demonstrates how Formula 1 embodies
the essential synergies of business – the conjunction of leadership,
knowledge and attention to detail.” So it was with that in mind that I
asked Mark some questions about his book.
Mark, could you tell me how you became interested in the
performance lessons from Formula 1.
MJ
The first thing that got me thinking about the Formula 1 teams was a
challenge we had on our MBA programme to teach an area of
strategy called the 'resource based view' which is essentially saying
that companies are able to achieve high levels of performance
because they have unique and distinctive resources at their
disposal and the great thing about Formula 1 is that the teams are
very, very similar - they are similar sizes, they are even located quite
closely together and yet some are able to outperform the others. So I
then wrote a series of case studies really to explore how these teams
were able to create performance in particular time periods and what I
realised as I got into it was how much depth there was and how
much difference there was in between those teams. So I am
particularly interested in performance in terms of understanding the
real idiosyncratic details of companies. Every company is different
and every company achieves its performance in a different way.
TT
Something that you should have expected to be quite similar across
each team has turned out to be quite different.
MJ
Absolutely in management, you get a lot of well known statements –
treat your people right, your people are important, you need to
communicate and so on but I think the thing for me is doing one thing
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in one company can have a different effect than it can in another and
it's understanding those details that's the important issue
TT
How much do you have to understand that full context to get that
information out?
MJ
I think you have to understand it very deeply because from the
outside superficially it's all about drivers and politics really but actually
when you look underneath there is a lot of organizational issues
going on that explain why some of these teams are able to
outperform others. You can tie very clearly back to strategy, to
people thinking about the organization, what it's trying to do and
putting all the right resources in place.
TT
So the key question for this is how do you apply the lessons from
Formula 1 to executive development?
MJ
I think for me the key issue in Formula 1 is you've got money
financial resources, you've got technical resources, you've got
human resources. You've got to combine them together to
outperform the competition. And that is at the nub of what most
organizations are trying to do.
TT
So a resource based view of the organization.
MJ
Well yes it’s a general parallel. How do you get all this stuff, people,
money, whatever to work together to achieve an incredible
performance outcome that outperforms everybody else in this
particular business. So that makes it a very relevant context for
people to think about. You've got issues around teams, you've got
issues around inter-team coordination - how different technology
parts work together – how you work with your supplier network – how
you manage talent. All these things are current issues for most
executives.
TT
Some of them seem non resource based – they seem quite
intangible?
MJ
Well, the resource based idea actually would say the real secrets of
performance are intangibles. In other words you can have a driver,
who's great in one team and you move him into another and it all
falls apart and that driver hasn't suddenly lost his ability to drive in
that time. It's because the interface - the way they are working with
their engineers, the way the development process is going has all
fallen apart and needs to be built up again.
TT
In Formula 1 most people get an idea of the pit stop and teamwork.
Do you have examples, spectacular examples where Formula 1
teamwork has failed?
MJ
Absolutely, we've got a few video clips that I sometimes use on some
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of my sessions. There is a famous one with Ferrari in 1999 where
they had one car come in and then Eddie Irvine in a second Ferrari
followed a few seconds later, and they only brought out three wheels.
So they stood around wondering where the fourth wheel had got to
and there are other more serious examples where fires have broken
out. There was Jos Verstappen in 1995 I think it was (correction 1994)
where they spilt some fuel and the whole thing erupted into an inferno.
So there are examples where people have made mistakes and things
have gone wrong. The important bit from an organizational
perspective is how they recovered from that and what they learned
from it. Because the other important thing about Formula 1 is that
everyone has to learn all the time and get better and better. You
have to learn from your mistakes – you have to analyze these
problems – try and understand what really went wrong here. The
natural instinct is often that person screwed up so we've got to fire
them. Actually that's very rarely the case – it's more a systemic
problem and you need to understand that and get away from blaming
particular individuals to see what that systemic problem really is.
TT
So the success in this context is an appreciation of the whole
system?
MJ
Absolutely, one of the things we talk about in the book is a 'no blame'
culture and that's one of the twee terms but essentially what it means
is what goes on here. The minute you start to blame people, you start
to hide mistakes – you get the cover-up mentality because you know
you're going to get blame. So how do you create a situation where
people feel- are able to say “I screwed up there” and this is what
went wrong. You need to understand that to make sure it doesn't
happen again. That's not a natural human tendency and it is partly
because in Formula 1 particularly people see this close link between
their actions and the performance outcome or between their actions
and the lack of a performance outcome that really helps them get
that kind of culture where people are prepared to say “Look I made a
mistake there.”
TT
So performance orientation, so everyone is thinking how does this
affect the performance of the team.
MJ
Absolutely, everyone understands why they are there. In many
organizations, the overall performance of the business is not what's
uppermost in people's minds. It's their own personal situations, the
situation of their department, protecting their resources rather than
seeing that whole and moving together to actually achieve that
overall performance outcome because it often means to get the overall
outcome you've got to trade off between the resources and there are
some areas that perhaps don't need top perform fantastically. We've
got a great quote from Ross Brawn “This isn't about making the best
engine, its not about the best aerodynamics, the best chassis. It's
about making a Ferrari. Its how these parts work together that's the
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critical bit and organizations are no different.
TT
There's an interesting unitariness – things cohering together. Is it
always to do with unitariness Is there a fragmentation, people doing
different things and thinking different things.
MJ
Yes, another quote I like from Pat Symonds, Engineering Director for
Renault Formula 1: “We like people who think as individuals but
behave as team players.” In other words you want people to have
creative ideas, you want people to think outside the box because
otherwise you don't move forward. But those people have to work
together and you have to understand the team and that team and I'm
not talking about team in a cosy, everyone's friendly and loving each
other, they are all challenging each other but they work and listen to
each other and they work together to get that performance outcome.
TT
So critics who would say it's all to do with money are wrong? It's a lot
more than just money.
MJ
Absolutely, I wouldn't say its nothing to do with money because the
work we have looked at, and there are examples in the book, is that
typically the most well funded teams will be at the top end of the
performance and the least funded teams will be at the bottom.
TT
So there's a correlation there?
MJ
There is often a correlation at the top and the bottom. The interesting
thing is what's going on in the middle. So what you often find, for
example, in 2006, Renault were the F1 Constructors and Drivers
champions. So they were first among 11 teams. Their budget is
ranking around 5th and 6th out of those teams. So they far
outperformed their budget relative to the other teams. In contrast
Toyota have the biggest budget and still have not won a Grand Prix
since 1999 when they started.
So they haven't been able to convert the financial resource into
performance. So it's not a hard and fast rule. It's at those kind of
exceptions where it's interesting to see why was one team on a
small budget having to perform so well and another team on a very
big budget can't actually convert that into performance.
TT
So it’s those intangibles and that systemic picture again – interesting.
So where is your research taking you now from this book?
MJ
One of the interesting areas from this is, one of the things I talk
about is strategy as teams. We think of team work as a small group
thing but the really interesting thing about team work is you get
different teams of people working together and that's what strategy is
about i.e. the sales team, the marketing team, the finance team
working together to achieve the best overall performance. So you
begin to think of it more how you integrate these different teams and
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how they trade off between each other and how you create an
environment that allows them to a) work together, communicate well
and b) coordinate what they're doing, I think is really where
organizations should be aiming so that's an area I'm particularly
interested in.
TT
So maybe your next book? Great. Mark, thanks a lot.
Transcript prepared by Learning Services for the Knowledge Interchange
www.cranfield.ac.uk/som
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Cranfield School of Management
Produced by the Learning Services Team
Cranfield School of Management
© Cranfield University 2007