What Leaders Can Learn from a Formula 1 Turnaround

0:01Zac Brown:Legal teams face more data and more scrutiny than ever. They need AI built for both. Relativity is the AI platform for legal work, delivering defensible AI that handles the tedious tasks so judgment stays where it belongs with you. Learn more at relativity.com slash ideacast.

0:23Zac Brown:by 2030 finance could harness hindsight insight and foresight to elevate your function from necessary cost center to value creator explore deloitte's future of finance publication to shape your team's impact visit deloitte.com slash us slash future of finance

0:54Zac Brown:I'm Adi Ignatius, and this is the HBR IdeaCast.

1:06Zac Brown:If you're a fan of Formula One, then you're familiar with the complex elements of strategy, teamwork, and innovation that go into a successful racing season. If not, trust me, there are lessons in this for you as well. I'm speaking today with Zach Brown, the CEO of McLaren Racing, which operates an iconic Formula One team. McLaren just won the overall F1 championship for the second straight year, the latest milestone in Brown's remarkable turnaround of an enterprise that had lost its way. I spoke with Brown as part of a series of live events that we offer to our HBR executive subscribers. The conversation wasn't just about winning, but about what it takes to rebuild a brand, to overcome low morale, to learn through failures and setbacks, and to develop the clarity of vision required to make it back to the top.

1:54Zac Brown:We'll hear his insights into what leaders need for sustained high performance, and you might be amazed with how McLaren is using AI. Here's my conversation with Zach Brown.

2:15Zac Brown:look it's hard to win in business it's hard to win in the professional sports world you've now done it the constructors championship in two consecutive years talk about you know how you've accomplished that and what the leadership and maybe organizational lessons there might be for listeners who aren't familiar, who aren't F1 fans?

2:34Adi Ignatius:You know, it's never a simple answer, but if I had to put kind of what was top of the list, it was people and specifically our culture. You know, obviously we're in the most technically advanced sport in the world. So technology clearly plays a huge role, but it's the people utilizing the technology, working together to develop an awesome racing car, to give you two awesome racing drivers the chance to go out and win world championships. For us, and I think this applies to business, certainly applies to sports teams, which is getting everyone to understand their contribution to the sport. And while we have, let's call it 1 ,000 people, 600 of those kind of touch the race car.

3:25Adi Ignatius:It's the other 400 that are equally as important to add performance to the racing team because without them doing an excellent job in their role in finance or commercial or communications or HR, we wouldn't be able to put the team together to be able to give the designers, the aerodynamicists, the tools, resources that they need to be able to actually put together the best race cars. So I think it's about getting everyone to understand how they contribute to a common mission.

3:56Zac Brown:You took over McLaren Racing during what was a pretty tough chapter in its history, struggling financially, low morale. The team wasn't performing. There wasn't a lot of sponsorship money. When you think back to those early days for yourself, what were one or two of the hardest decisions you had to make? And what did you learn about leading through a turbulent period?

4:17Adi Ignatius:I wouldn't say the decisions were particularly hard because I like making decisions. It was getting what you just described, a very toxic environment, both with our fans, our sponsors, which sponsors we did have, which weren't many, weren't very happy. And our employees weren't happy. Our drivers weren't happy. So I think the hard part wasn't the decisions because it was clear decisions needed to be made. It was getting everybody bought in, changing the trajectory we were on, building trust through transparency and communications, getting the fear out of our culture. So it was making decisions that drove that.

5:01Adi Ignatius:The hard part was more, it's a big boat. We have 1 ,400 employees at McLaren Racing. Obviously, there's companies that are significantly larger than that, but it's a healthy size organization. And when you have lack of alignment, lack of trust inside your own house, until you get your house in order, forget about making any impact to the outer world. So I think the difficulty was reversing the momentum, which takes some time and it's kind of hand-to-hand combat.

5:32Zac Brown:So I'm somebody who came to where I am, Harvard Business Publishing from the outside. And you sort of come in and you think, look, I'm going to be reasonable and I'm going to present some new ideas, but also try to respect the old ideas. It's not that easy, right? I mean, the kind of entrenched workforce resists, has its way of doing things. How did you deal with that part of it? Here I am, I want to do some new things. People don't like to do new things.

5:55Adi Ignatius:Yeah, it is difficult. People don't like to change their habits. I think you can almost break the organizations down into three groups and not necessarily 33, 33, 33, 33, but you have Those that want change, embrace change, recognize change is needed. That's a pretty easy group because they're willing. Then you have another group that's kind of on the fence. They're not so sure. They've seen it before. In our instance, we had about five different leaders in seven years. So I remember when I started, it was, how long is that going to last? Because the last guy was here, wasn't here very long. So you have a group on the fence, but they need to be kind of buy-in.

6:37Adi Ignatius:which they want to. There's just a kind of skepticism. And then you have another group which needs to be changed out. And they're the ones that probably created the issue that you're dealing with, the naysayers, what we call a loser's mindset instead of a positive mindset, a winner's mindset. And those people need to change. Now, if you're walking into an organization that's in turmoil, which we were, all the things that you just mentioned, And clearly you need to drive change. The way I did that was by changing my leadership team structure. I can't go with this alone. So everywhere on my leadership team, CFO, head of HR, head of commercial, head of comms, head of the racing team, all changed.

7:23Adi Ignatius:And I didn't come in going, I'm going to change everything. I came in going, I got to understand what's going on here. And then I realized I need some new leadership. And then once I created that bond and we all challenge each other, I definitely don't have any yes people sitting around the table. We all, we challenge each other. We're very performance oriented. We're very straight talking. But then once we align on a topic, we've debated it. You would never know who in the room wasn't initially on board. So it's a very strong team. Once I was able to get that place, I was able to kind of get them to carry that same energy through their organization.

8:01Adi Ignatius:So finance got new energy, HR got new energy, commercial got new energy. And then you get everyone rowing the same direction, you get some positive energy, trust going, and then it's amazing how quickly that accelerates when you get people all in the right frame of mind.

8:17Zac Brown:So you came to McLaren, I think shortly before Liberty Media acquired Formula One and really has transformed it from something of a niche motorsport to, you know, really global entertainment business. I'm interested in, you know, how you think about navigating the balance between, you know, the traditional, let's say sporting integrity and the newer kind of entertainment driven expectations. Is that a tricky balance for you?

8:42Adi Ignatius:For us, it's not. And it's something that, you know, I, I hear often and I kind of don't get it. You know, people go, oh, sport and entertainment. It's not the same. Well, to me, if you buy a ticket to go see a firework show, a motor race, a movie, that's entertainment. And so we're here to, obviously we're a technology driven sport. We don't want gimmicks and maybe that's what people think when they think entertainment. But I remember the first time I went to an F1 race, it was 1981. I met a driver, I saw the cars and I remember how much an impression it left on me. And I wanted the merchandise and I've still got actually the race program.

9:23Adi Ignatius:And so I think what sport entertainment means for me is, you know, the sport takes place on the field. The entertainment part is how do you get our fans, uh, existing fans, new fans closer to McLaren, closer to the sport. So they can feel that affinity, that engagement, you know, the world's now moved from awareness to engagement. Digital plays a great role. Netflix has been wonderful for our sport. And so for me, it's been about, here's how we go racing, but how can I now get our fans close to the action, getting to know the drivers, seeing how we build our cars so they can really feel part of the journey.

10:02Zac Brown:So you mentioned technology. I mean, Formula One produces more data, I don't know, as much data as Major League Baseball now, right? So a ton of data. How do you make sure it converts into insight and not just noise?

10:16Adi Ignatius:Yeah, so we pull down one and a half terabytes of data, which is about 10 million documents, because I never knew what a terabyte was. I was like, well, put that in English for me. And that's a 10 million documents, 400 movies, just to give the kind of size and scope. We have 300 sensors on the car. And you're exactly right. You get all that. You're not going to have someone kind of picking through one and a half terabytes of data. AI plays a role in that. And then our technology partners play a big role in that. So when we're pulling all this data off the car, we know what we're looking for and we know how to get it.

10:51Adi Ignatius:And then things like AI help us get it quicker because we're all about speed. There's some data. We're developing a car that we don't need to react on urgently. But when you get into the race, you need to react to data now. literally split second decisions. And so we have a lot of technology partners that help us in that area.

11:14Zac Brown:So talk about AI more, to what extent you're using it in designing the car, in making strategic racing decisions, in engaging with fans. What are your AI use cases at this point? And what do you think about in the future?

11:29Adi Ignatius:Yeah, it's definitely going to grow, right? And we're using it all throughout the business. We're using it with our fans, our engagement with fans. We're using it in strategy. We're using it around tire degradation, which is a big part of what drives the strategy for us. And we're able to work with one of our partners, Google, to work with them through cloud where we're looking at what the competitors are doing with their tires, as are we. we're all listening to each other, kind of like a third base coach at a baseball game. We're sometimes throwing some bokeh signs out there because we're trying to pull people into different strategies.

12:10Adi Ignatius:So we may say, if we say something to Lando and we ask about tires and we say a word after the word tires, we want an incorrect answer because we're trying to pull another team into maybe a different strategy. So Lando, how are the tires doing? He has to then go, ah, that's a Q4. I need to give a bit of a bogus answer. All of our competitors, we do the same. We'll then go look at the tires and look at some thermal imaging and AI will help bring out any anomalies to try and tie up is what we just heard from a driver, actually what we're seeing. So AI helps us do that. That's some of the data that we pull.

12:49Adi Ignatius:Then you get into voice recognition when people tend to not be telling the truth. Sometimes there's a difference in their tone of voice. So you get into some voice recognition. So we're listening to another driver and it can start to pick up. That doesn't sound like a kind of like having a lie detector test. And so it's all those types of elements in which we're using it. We're starting to use it in aerodynamic development, but I think it's early days and only going to evolve very quickly.

13:16Zac Brown:Those are some of the most interesting use cases for AI I've heard of for coding, for decoding, for lie detector. That's amazing. All right. But then the money ball question. So how do you balance relying on data versus your gut instincts learned during a career in the sport?

13:34Adi Ignatius:Well, I think it's data first. And then ultimately, it's just like a business, right? You get all this data in, you still need to make a decision because data can be misleading. You can look at data different ways. You got to kind of know what data you want to look at to help solve decisions. So All of our decisions are data-driven decisions. Some of them are very black and white and the data makes it very clear what you should do. Other is you're piecing together different pieces of data. It's not just one piece of data, but you take a pit stop strategy, which is a big part. I want tire data.

14:12Adi Ignatius:I want weather data. I want competitive data. I want insight from the driver on what they're feeling. So you get all this data in and then you need to use what we call racer instinct, which would be no different than business instinct and go, right, based on all these dynamics and all this data that's coming in, here's what I think we should do. So I think at the end of the day, the human is still making the decision.

14:40Zac Brown:You've worked hard to get where you are, but what's next? strawberry.me career coaching helps professionals like you take their next big step with confidence they'll match you with a certified career coach who understands your goals and challenges this isn't just advice it's a personalized results-driven approach to uncover hidden strengths overcome obstacles and accelerate your career growth visit strawberry.me slash ideacast and take 50 off your first coaching session it's like therapy for your career

15:16Zac Brown:So your early career, and this is from your book, blended your racing ambition with a deal-making sense. And as you write, spending more than you had so you could grow the company. I'm interested, how did that tolerance for financial stretch shape your approach to a calculated risk-taking at McLaren's?

15:36Adi Ignatius:I've always had bigger ambitions than resources. So, but I've always kind of followed the ambition as opposed to the resource. I want to do this. Therefore, I got to figure out how to do it as opposed to what can I afford to do? Because I could never really afford to do what I did. So I always kind of put myself out there and it put some pressure on myself. I'm one, I think there's two types of people. I talk about this in the book. Those people that are motivated by the thrill of victory. those people that are motivated by the fear of defeat. I'm the motivated by the fear of defeat, which I think is the less or more stressful way to go about winning if you'd like.

16:20Adi Ignatius:But what I did is I always kind of just set the bar a little bit higher than I thought I could jump. But then I was nervous about not making the jump. I was uncomfortable. And then that just got me up every day. And that's kind of still how I operate. So I think it's kind of like that, you know, the pull vote is just get a little bit higher and think you can go. But when it comes time to the Olympics, it's amazing what you can do if you really put your mind to it.

16:44Zac Brown:This is another audience question from a viewer named David, who says, you know, you were close to last a few years ago. Now you're on top. You know, there are nine other teams trying to achieve exactly that. And they all want to leverage their people, their processes, their data, the way you are. Is there something that makes McLaren different? Or is it just, you know, some years it's your year, next year it might be somebody else's. How do you think about that?

17:08Adi Ignatius:Well, I think one of the advantages that we have, as do a couple other teams, is we're a mega brand, right? So, you know, I'm a baseball guy, so forgive me for all my baseball comparisons. You know, when you grew up, did you want to play for the New York Yankees or I don't want to pick on another team? But you get, you know, where I'm going with that, We're a big brand. We're an iconic team. So we're fortunate that when people want to get involved in racing, if you kind of made a list of who are the teams you want to work for, McLaren and Ferrari are always going to be kind of at the top of the list.

17:43Adi Ignatius:So that allows us to attract awesome talent. So I think we do have a little bit of a built-in advantage because of our brand, our history. We're the second most successful team in the history of Formula One. We're the second oldest team in the history of Formula One. And I think that gives us a little bit of an advantage when it comes to attracting corporate partners, attracted employees, drivers. It's kind of everyone wants to put the pinstripes on and be a Yankee if you're a baseball person, or in my case, the St. Louis Cardinals. And I think the same applies to McLaren and Formula One. So that gives us a little bit of a head start, if you like, on some of our competitors.

18:24Zac Brown:So here's another question from the audience. It's anonymous, but it came in. In F1, your drivers are very visible members of the team, but you've got hundreds, at least, of other workers that make up McLaren that are not sort of visible members of the team. How do you motivate everybody else and ensure that they receive the recognition, the praise in this kind of environment?

18:45Adi Ignatius:It's exactly that. It's recognizing them, kind of not forgetting about them. All the drivers are the people on TV in Pitwall. They're the famous ones. You know, there's eight, nine people on Pitwall. But like an example, I'm going to send out here shortly a lot of thanks to people that are involved in our racing team. And one will be my leadership team, which some of them are known, some aren't. But, you know, everyone kind of you win the race and the head of strategy gets all the credit and the engineers and the pit crew. But it's the people behind the scenes that are putting the pit crew and the engineers in a position to do their job.

19:23Adi Ignatius:So it's about making sure, not forgetting and giving that recognition. One of the things that we did as a team this year is when you win the race, you're able to put someone up on the podium from the team to celebrate with the drivers. We put up two female employees this year, very important, our CMO and our CFO, which was really cool. It was the 11th time a woman's been on the podium in the history of Formula One. That drew a lot of positive attention and made Lou feel very proud. Louise is her name. We call her Lou. lets her whole department because what we did is we rotated through departments and those people that were up on the podium were representing their department.

20:08Adi Ignatius:So Laura, our CFO got up. And so not only was it awesome for Laura and did she feel incredibly privileged because it's pretty awesome standing on a podium of a Formula One race, but then everyone in her finance department knew she was representing the finance department. So it was a signal to her team. You're so important to us. There's only one person that can go up on the podium. We did it 14 times this year. It is about letting people know and letting them be part of the journey.