How CEO Zak Brown Turned Around McLaren Racing | Leadership Next

0:00I find so many similarities between being a racing driver and a CEO. Your engineers are telling you what you need to do. You need to have a tremendous amount of trust. Hi, everyone. Welcome to Leadership Next, the podcast about the people and trends that are shaping the future of business. I'm Diane Brady. And I'm Kristen Stoller. This week, Kristen, we have a treat for me, the Formula One fan, Zach Brown, CEO of McLaren Racing. Yes, Zach has been on this incredible turnaround story. I mean, they won last year for the first time in 26 years. and they've just won again twice in a row. Now we spoke to Zach before they secured their second, it's called the Formula One Constructors Championship title, which is incredible, but he knew it was coming.

0:45They've had a banner year and this is not only the team to watch, but they have incredible personalities. And Zach himself, I think is somebody who seemed to be a great leader. So he just came out with a book as well. He did. It is seven tenths of a second, which Diane, you learned what that is. Please share. It's the difference essentially between success and failure. And that's, I think, how he leads his teams. He's one of the rare U.S. CEOs. He came in, said the culture at McLaren Racing was just very toxic, instituted a no blame culture, which I think is a really good call. And he has such interesting stories.

1:21He's got Hollywood stories. He's got stories about managing these personalities. And he's got a lot of thoughts about the future of the sport itself, which I think is fascinating. And I got to toss in my little favorite spoiler, which is that before we did this interview, our executive producer on the video team, Lydia Randall, told us to ask about his tattoos. And I think everyone should stay tuned, see if we get a tattoo, see if he got another tattoo. We'll see. And some of those good celeb stories. There's lots more to come. We'll be right back after the break. As technology and AI continue to reshape industries, hiring for technical skills remains important, but fostering creativity, curiosity, and empathy are also essential for organizations to remain competitive and resilient.

2:06We're here with Jason Gerzatis, the CEO of Deloitte U.S. and the sponsor of this podcast. Jason, always good to see you. Thanks for joining us. Thank you for having me, Diane. So Jason, how can organizations balance the development of human skills and technical skills to drive innovation? It is a tech-driven world, but still human skills matter. And I think it comes down to being intentional for leading organizations to still invest and have very directed strategies around building human skills. is curiosity, imagination, how to team. These are still critical ingredients to creating differentiation and competitive advantage.

2:50At Deloitte, we've committed to building those skills and have over time evolved our programming. Jason, could you say at Deloitte, what role really does apprenticeship play in fostering a culture of continuous learning and development? It's interesting. There was some, I think, time when people thought that apprenticeship and mentorship could maybe be digitized or entirely done remotely. And I think what we've learned is that that's not the case, that apprenticeship and mentorship need to continue to be a formal part of our culture, a part of our learning environment. Absolutely. Well, great insights, Jason.

3:29Thank you so much for sharing them with us. Well, Zach, thank you so much for joining us. My pleasure to be here. Yes, I'm going to dive right in. So when you took over at McLaren, The team was underperforming both financially and on the track. What would you say was the single riskiest decision that you made that absolutely could have failed that you think was responsible for the turnaround? Ooh, good question. I mean, ultimately, people. So I guess I could have picked the wrong people. But it seems like you didn't. I know I got the right people. I got the right people. We've got great people at McLaren.

4:03I think, yeah, as you mentioned, when I started, we were at the back of the pack. We were losing tons of money, and employee morale was down. Other than that, everything was great. But what we did have great was a great brand. And even though it was totally underperforming, it's a brand that sounds like the New York Yankees or pick a sport where people are still attracted to the historic nature of the team. So I knew I had that to work with, and I also knew we had a lot of great people that were just underperforming as a team. So changed all my leadership team kind of one at a time. Some were internal promotions.

4:42Some were some people I'd worked with before. Other were strangers that we headhunted and got the right mix of people that push each other very hard, very transparent, very collaborative, but very challenging. There's no kind of yes people on the team. and ultimately got the momentum reversed, got everyone working well together, being great in their respective lines of business. And now we're kind of firing on all cylinders to use, I guess, a racing pun. There you go. As many racing puns as we can get into this podcast. Let's do it. You know, having written books myself, I feel it's important to promote every book and promote reading.

5:21So 7 Tenths of a Second, the book that you've just written that's coming out soon. Talk a little bit about why now you wanted to write a book. that experience i'm not sure i can answer that question because i'm not sure why i did it no um i was approached so it wasn't something that i had uh was kind of like seeked out but uh i thought actually we've got some pretty cool stories over the years that i think uh should be hopefully entertaining for people to to read and um all about kind of leadership but what starting off at a very young age at school to where we are today, everything I've kind of learned.

6:00The Valley Boy. No, look, I think there's so much, and we'll get into it. You've got some great people from Gene Simmons to Jackie Stewart, Bernie Ecclestone, lots of great names in there. But one thing that I wanted to focus in a little bit is you've had a storied racing career, but you're also one of the first Americans to take a leadership role in Formula One. Can you Give me a sense, what was it like? Because it's a brand that's still relatively new to the U.S. We've got a Netflix series. But what was it like when you first got in there as an American? Is it culturally quite different? It definitely wasn't.

6:34But that was more when I was racing. Now I've been in Europe and England for so long. I'm pretty settled in. But when I first moved over, everyone wants to kind of beat each other. It's a pretty nasty environment. It's not very welcoming. And then if you're an American, you're definitely on the outside looking in. So that was very tough. And as you know from the book, Richard Dean, a Brit, kind of took me under his wing. And I think without Richard supporting me, I would have kind of never stayed in England. So he kind of taught me the ropes of racing and introduced me to everyone. And it was difficult.

7:16Now, I'm definitely kind of part of the furniture, but I do kind of feel like I represent America in F1 to a certain extent. And I like that because I'm obviously proud of my roots and it's such a cool sport. And because it's a global sport, it's got a very, you know, the Italians and the Brits and the French. And so kind of to have make sure America is represented because it's not from a driver point of view. and I'm the only American team boss to my knowledge. I'm thinking out loud as I say that, but that's the case. So I think it's kind of cool to kind of help represent America in Formula One.

7:58How do you think you draw in that American audience that, like Diane said, is used to NASCAR? How do you adapt what you do? I think the sports come a long way. I think about the first time I was introduced to Formula One was 1981 at the Long Beach Grand Prix. I met my first racing driver, Eddie Cheever, who is American, the Formula One driver. I remember the cars. I just remember the whole experience. And that has stuck with me to this day. I remember what grandstand I was in. And so that impact that it's left on me is the impact that I hope that myself and our drivers and McLaren leave on, you know, the other 10-year-old, Zach Browns, that might be coming to a Formula One race for the first time and getting their experience.

8:43And I think what happened when Liberty acquired the sport, we were a very exclusive sport, look, don't touch, and Liberty brought a new way of thinking. And so when Netflix came out, two of the top teams didn't even participate year one because we don't show anyone behind the scenes what's going on. And that kind of bit them because all their sponsors and fans were like, what are you doing? This thing's the world's greatest show. Why aren't you in it? It was like, politics and money and all sorts of stuff. That was kind of old school thinking. And so I think Netflix and Liberty turned our sport from an exclusive sport to an inclusive sport.

9:21It's always been an awesome sport. I've loved it forever, but people didn't necessarily understand or they couldn't feel engaged with it. And now in this modern day era where everything used to be about awareness but now it's all about engagement i think we figured out how to let people in the tent and how to engage with the sport and some want to engage with the drivers someone engage with the team some love the technology some love the politics so there's so many different ways uh to enjoy uh formula one and and then we're a very fan first racing team we're all about our fans starting with going back to our iconic papaya that's because that's what the fans said they wanted and I remember uh one of the old school if you'd like uh people saying to me we only did that because that's what the fans want and I was like is that kind of a trick question that's exactly why we did it that's kind of what the fans want and we're in the sport and entertainment business and that's what our fans want so let's give our fans what they want and And the sport's just totally evolved from here.

10:23You know, one of the things, we have a lot of leaders come in and talk about the need for servant leadership, followership. The adrenaline, both of how you lead, the nature of the sport. I mean, you've got drivers that compete with each other, not just for the team. How important is that sort of adrenaline, aggression, speed as a way of managing, as a way of getting things done? I think it's critical to what we do. We don't talk about it that much for people in leadership roles. Yeah, there's obviously the racing car, and we're constantly developing the racing car, but we're fighting for talent, we're fighting for drivers, we're fighting for engineers, we're fighting for sponsors, we're fighting for fans.

11:09Everything's a competition in Formula One. And speed, part of winning is getting there first, whether that's on the track or off the track. And so I think that competitive nature, I love doing deals and the competition and our competition is amazing. You know, as I say, the worst team in Formula One is really good. So the competition bar is very high. There's only 10 teams, soon to be 11 teams. And that competition, I hate to lose. We hate to lose. And so that keeps us very motivated. So I think you're dealing with a lot of big personalities day in and day out, not just your team, the people you talked about you hire, but also the drivers.

11:51And Diane hinted, I think that dynamic between the drivers is so interesting where they're both teammates and competitors. How do you, as a boss, manage that? Insights on Oscar and Lando? Yeah, exactly. So I think we're very fortunate to have Lando and Oscar. Not only are they two of the fastest racing drivers in the world, They're two of the nicest guys in the world, but they're also killers when they put their helmet on. So total transparency, treating them equally, fairly, giving them equal opportunity to race each other. And most of the time, competitors in the same team, it ends up in tiers.

12:32We've got seven races to go, so far so good. But we're on top of it. It's the elephant in the room. We talk about it. We don't shy away from it. People say, are you nervous? No, it's a challenge, but it's actually a fun challenge, and we're determined to get it right. And so far, they've had some on-track incidents, but they put their hand up, I got it wrong, or this happened. And so we want to put them in a position where hopefully we can get the constructors wrapped up here shortly. We're in a pretty good spot. But we just want the drivers, we want to give them an equal opportunity and let the best driver win.

13:07I think if you look at some of the other drivers on the grid, as awesome as they may be, they maybe wouldn't have that same chemistry with the team. So when we're selecting our drivers and our people. You do like a chemistry test? 100%. Really? Yeah. Well, speaking of Hollywood, you know, I'd be remiss not to mention one of my favorite people to interview, which is Gene Simmons, who is a friend of yours. Okay, so Kiss, what have you learned from Gene Simmons? I know your dad was a musician, but give me some sense, just a little bit of lessons from him. So he's unbelievable with fans. I mean, he's a very distinctive individual, but, you know, I've spent a good amount of time with him.

13:48And he's all about brand. You know, if you think about how long that brand has been going, he's all about licensing, marketing, you know, their image. They have a certain image and he's extremely warm to people. when you walk through an airport with him, you can tell when someone recognizes him. He'll go up to him. You know, he kind of sends off an aura of, I'm very approachable. I've never seen him be rude to anyone. Very worthy of Kennedy Center honors. I was kind of pleased when I saw his, actually. And what's interesting is, you know, people that don't know him might, you know, have a certain image of him, but, you know, he's literally a rock star.

14:29So there is that. I got to kind of be a rock star, but he's an unbelievable business person. One of the things he said to me was never show up late to a meeting. So like if you have a meeting with him, he's always five minutes early. He speaks seven different languages. He is very intelligent. He knows exactly what he's doing. And when he kind of gets into the shock and awe, that's very deliberate. And he's a rock star and he can do things that some of us can't do because that's part of his brand and image. So I got a lot of time for him. He's great with kids, loves his racing, and he keeps things simple.

15:08Like, you know, he stays on brand and message and repeat, repeat, repeat. And yeah, he's an interesting guy. All right. Well, speaking of behind the scenes stories, you had teased when we first started some of these exciting stories that are in your book. What is your favorite one or one you want to share with us that you think is super unusual? Definitely a handful of them. Probably my favorite one is Mickey Mantle. You know, I'm a huge baseball guy. I got that from my mom. My mom was from Brooklyn, is from Brooklyn, and a big Yankees fan. And I wanted to be a baseball player before racing. But in order to be on the high school baseball team, you kind of need to go to high school.

15:49So that kind of killed the baseball career. But that was my first love and kind of actually still is. Went to the Yankee game last night. You got a Mets fan over here, but I will forgive you for saying that. I'm actually a Cardinals guy. Oh, okay. I'm actually a Cardinals guy. You're a good person. And so I read in the TV guide, that's how long ago that was, that Mickey Mantle played golf at Preston Trails Country Club in Texas. So I just started calling Preston Trails Country Club. I'm 12, 13 years old. I know nothing about golf. I have no appreciation for how grumpy you would be if you were called in.

16:22So two weeks go by, Mickey Mantle and Mickey Mantle. And finally they go, hold on. Oh, my God, I'm going to talk to Mickey Mantle. It takes about 15 minutes, so they've called him off the golf course. They must have thought it was his son or someone based on the pitch of my voice. Picks up the phone, is this Mickey Mantle? And he chewed me out like there was no tomorrow. No. And hung up the phone. So I go in my room, and I'm crying my eyes out. My mom comes in, tells her the story. She disappears for 30 minutes, comes back in and says, pack your bags. We're going to Dallas tomorrow to hang out with Mickey Mantle.

16:53She called him back, explained to him. Said you're a jerk, Mickey? Yeah, I don't know exactly what she said, but it was probably along those lines. He thought it was a prank call. He said, bring your kids here. I'll spend half a day with them, which was a really cool story. There's a life lesson in that. I'm not sure if stalking is the lesson. Stalking, yeah. Since we're talking about Netflix shows and you get a lot of fandom now that's increased. Yeah, it was. Do you want to glean anything from that? It was young, well-intentioned stalking, but it probably was in the stalking category now that I never really thought about it that way.

17:25Well, no, I look, I mean. I viewed it more as the start of my sales career. I know, very, very good. Find out some piece of data and figure out how to get in there. So I put it down to my sales career. But you do mention, and I think it's something that you mentioned a little bit about almost with, you don't have to go to get an MBA to do what you do. There's this school of life. There's experience. I am curious if you think there's just a formative experience as well you've had as a leader. And we don't have to go back to when you were a kid. I think you've got lots of stories. You know, Jackie Stewart comes to mind.

18:00I'm Scottish, so I have a little bit 10 points for him. What are some of the other experiences you think that have shaped you that really are lessons you now want to convey to the next crop coming up? Probably all the mistakes. Oh, good. Give us one of your biggest mistakes. I've made a lot of mistakes over the years. Good. Congratulations. I think I, not I think I know, I used to be terrified of kind of making that difficult phone call. But what I figured out early on is you're going to have to make it eventually. And the longer you wait, the bigger the fire gets. You're fired kind of thing? No, I've never been fired.

18:38Oh, no, that's not true. I got booted once. No, but telling other people they're fired. Fired. My first employee, I was kind of tormented for a week in my own mind. Having difficult conversations. I had a sponsor, which I wrote about. It was a client, and it was non-exclusive. And I landed a bigger deal with a competitor, which was totally cool. But I didn't want to make the phone call and give them a heads up. And I kind of hoped they just maybe won't find out. and it took him about two minutes because it was like, oh yeah, competitors follow competitors' press announcements. And the CMO, rightfully so, lit me up and he was spot on.

19:24He's like, you didn't call me because these guys are probably spending more money with you and you were too chicken and it was like, yeah, that's pretty much exactly what happened. So you got to just, if you got to have a difficult conversation, just be real, be honest, pick up the phone, have the difficult conversation because the fire doesn't put itself out and the fire just gets bigger. So I think, you know, who likes to have difficult conversations? It's enjoyable, but I think as you mature as a business person, you realize, hey, that's part of business. And people are actually respectful of picking up the phone going, hey, you may not love what I'm about ready to tell you, but, and then at least people go, you know what, they shot me straight.

20:00So I think hiding early on from difficult conversations because no one likes to have them, but you need to have them. Well, speaking of difficult conversations, you've talked before about how you instituted this no blame culture, which I think is really great because that's a trap a lot of people fall into. But what do you do when you have someone who is underperforming, be it a driver, a team member? Blame, fire. That's the difficult phone call. But like what's your threshold for making that decision? So I always kind of say around the factory, mistakes are okay, just don't make the same one twice.

20:31So everyone kind of gets a free pass. As long as it was an honest mistake, they were trying. As I mentioned, I've made a thousand mistakes, and I've learned from all those. So I'm okay with mistakes. Just learn from them. So don't make stupid mistakes. Don't hide from things. Put your hand up. So we all get things wrong. And I remember when we started to make progress on that at McLaren was, this would have been five, six years ago. you bring different rear wings and configurations to the racetrack and this was in the russia race and we brought the wrong rear wing and someone put their hand up on friday and we were terrible on friday went i think we brought the wrong rear wing and we got the right rear wing there on saturday and we went on and i think we qualified seventh finished fifth it was a good race i think the older culture and i don't mean that from an age standpoint but kind of yeah what days of your Would have gone, let's just kind of not raise our hand.

21:35We'll all kind of know and we'll kind of blame everyone else and we'll figure it out on Monday. But the fact that someone put up their hand gave us a chance to fix it. And it was the difference between having a terrible weekend and a good weekend. And so I applaud that. Now, if you bring the wrong wing again, okay, well, what's going on here? So I think that's about, you know, and then mentoring people, understanding when a mistake happens. Why did it happen? Nicky Lauda, three-time world champion. I remember when he won one of his big awards, he said, I learned way more from losing than I did winning.

22:08So losing's okay. Making mistakes are okay. Just learn from it because it makes you smarter. When we won. Zach Brown says losing is okay. No, I'm just kidding. Yeah, I don't like it, but it does happen. But I remember Spain this year, we've had a lot of one-twos this year. And in our debrief, we start with what could we have done better. So even though we finished first and second, we didn't go, that was a perfect weekend. Because it wasn't. There were seven, eight items in there that could have gone wrong. So that's where we start. And in racing, probably in life, there's no such thing as the perfect race car, the perfect lap, the perfect weekend.

22:46But you're chasing perfection. So as long as you can get everyone going, God, they always seem to be critical. We just finished first and second, and we're starting this meeting talking about the seven things we did wrong. They only finish first and second. I'm like, well, don't take it personally. We're just trying to improve. So if you can get everyone in that mindset, then you're constantly driving forward. Now, I know obviously technology can always improve, but it's such a big component of the sport. And I'm sure you're always looking at what the competitors are doing in terms of what comes forward.

23:16Where do you see, are there particular opportunities? Because I often wonder at what point do you max out, which probably you never do, but what the next iteration of car will be. Is it AI? Is AI making a big difference? Is it the materials? I mean, what do you watch for? Because it's kind of all the above. You know, in our sport, 2 % separates the best from the worst. So we're working on the smallest marginal gain. So it's very rarely that. And it's a little bit there, a little bit there, a little bit there. So we're always trying to, whether it's new materials, As soon as something's done, you can always improve on it.

23:56You can make it lighter, more durable, faster, more downforce, whatever the case may be. So sometimes you strike gold and you develop. Other times you get stuck, and it doesn't mean that you've perfected it, and that's why you can't make it better. You've done a really good job, but you can always make it a little bit better. And so we're in the business of milliseconds. It's amazing the amount of work we put into you. That's the name of your book, right? Well, that's seven-tenths of a second. Seven-tenths of a second. I'm working in milliseconds now. I'm sorry. Yeah, yeah, yeah. That's forever.

24:25We're down in the technical conversation. Shame on me. Well, and where that comes from, and it's amazing, is 24 races. Last year, we won the Constructors' Championship, the first time in 26 years, and had the last pit stop in seven-tenths of a second slower than Carlos Sainz and the Ferrari would have been in our DRS. It's pretty hard to defend against DRS. Probably would have passed Lando. Whether Lando would have got him back or not, we'll never know because fortunately we don't need to find out. But after 24 races and hundreds of millions of dollars spent and 1 ,300, 1 ,400 people working on race cars, it came down to a two-second pit stop.

25:08Had it been a 2.7-second pit stop, Carlos is in our daires when Lando comes out of the pits. And maybe we don't win the championship because had we not won the race, we would have lost the championship. So it's amazing how you got seven tenths of a I would not want to be in pit lane. I would not want to be on that race car. I'm curious about your mindset about where to invest because, you know, there's the current cost cap. So I'm curious about whether, you know, do you have this choice of investing in race car performance and then versus investment in, you know, the brand, fan engagement, Netflix series, all these other things you have going on, other series besides that one.

25:47How do you balance that, and has the balance shifted over time? It has. In the cost cap, certain items are not in, so things like brand and marketing. So it's intended to be more pure sporting to balance the playing field, which last year there were seven different winners, multiple races, four different teams. That's kind of unheard of, so the cost cap has definitely worked. So within the cost cap, we have to figure out where best to spend efficiently because before when there wasn't a cost cap, you could just keep – you could spend your way out of problems. Now, if you're going to develop four front wings, you don't want to develop five to get to four.