What Leaders Can Learn from a Formula 1 Turnaround

[MUSIC] Your next VP is already on your payroll, recognized by peers overlooked by leadership. Future leaders by work human identifies your highest potential talent four years before traditional methods catch up. Develop smarter with future leaders from work human. [MUSIC] [MUSIC] I'm Adi Ignatius and this is the HBR IdeaCast. [MUSIC] 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 it 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. 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. [Music] Look, it's hard to win in business. It's hard to win in the professional sports world. You've now done it, the construction championship in two consecutive years. Talk about 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. It's never a simple answer, but if I had to put what was top of the list, it was people, and specifically our culture. 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 involves applies to sports teams, which is getting everyone to understand their contribution to the sport. And while we have a, it's called a thousand people, 600 of those kind of touch the race car. 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 car. So I think it's about getting everyone to understand how they contribute to a common mission. You took over McLaren Racing during what was a pretty tough chapter in its history, struggling financially, low morale, you know, the team wasn't performing, there wasn't a lot of sponsorship money. When you think back to those early days for yourself, what, you know, what were wanted to, one or two of the hardest decisions you had to make? And, you know, what did you learn about kind of leading through a turbulent period? I want to say the decisions were particularly hard because I like making decisions. It was getting what you just described, the very, you know, kind of toxic environment, both with our fans or 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 body and 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. The hard part was more, it's a big boat. We have, you know, 1400 employees at McLaren Racing, obviously, those companies that are significantly larger than that, but it's a healthy size organization. And when you have a 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. So I'm somebody who, you know, 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. Like, 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. Yeah, it is difficult. People don't like to change their habits. I think you kind of, you can almost break the organizations down into three groups. So not necessarily 33, 33, 33, 33, 33, but you have those that want change, embrace change, recognize changes 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, you know, I remember when I started, it was you know, how long's that going to last? Because the last guy was here, I wasn't here very long. So you have a group on the fence, but they need to be kind of buy in, 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, the 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, literally you need to drive change. The way I did that was by changing my leadership team, structure. You know, I can't go at 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. 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. What's I was able to get that place? I was able to kind of get them to carry that same energy through their organization. So finally, it's 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. 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 really global entertainment business. I'm interested in, how you think about navigating the balance between the traditional sporting integrity and the newer kind of entertainment driven expectations. Is that a tricky balance for you? For us, it's not. And it's something that I hear often and I kind of don't get it. People go us, weren't 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 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 to merchandise. And I've still got actually the race program. 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, 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? So you mentioned technology. I mean, you know, Formula One produces more data that I don't know as much data is a major league baseball now, right? So a ton of data. How do you make sure it converts into insight and not just noise? 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 you the kind of size and scope. We have 300 sensors on the car. And you're exactly right. You get all that. And you're not gonna have someone kind of picking through one and a half terabyte to data. AI plays a role in that. And then our technology partners play a big role in that. So when we're pulling off the state off the car, we know what we're looking for. And we know how to get it. And then things like AI help us get it quicker. 'Cause 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. - So talk about AI more. To what extent you're using it, and designing the car and making strategic racing decisions and engaging with fans. What are your AI use cases at this point? And what do you think about in the future? - Yeah, it's definitely gonna grow, right? 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 a 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 cloudware. 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 in a baseball game. We're sometimes throwing some bokeh signs out there. 'Cause we're trying to pull people into different strategies. So we may say, if we say something to land though, and we ask about tires, and we say a word after the word tires, we want an incorrect answer. 'Cause we're trying to pull another team into maybe a different strategy. So they know how are the tires doing. He asked 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 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. 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 live 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. Those are some of the most interesting use cases for AI. I've heard of for coding, for decoding, for, for live detector. That's, that's, that's amazing. All right, but then the money ball question. So how do you balance relying on data versus, you know, your gut instincts learned during a career in the sport? Well, I think it's data first. And then you 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 then, you know, 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 know, you take pit stop strategy, which is a big part. I want tire data. I want weather data. I want competitive data. I want insight from the driver on what their feelings. You get all this data in and then you need to use what we call race or 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. So your early career, you know, and this is from your book, you know, blended your race and ambition with kind of a deal-making sense. And as you write spending more than you had, so you could grow the company. I'm interested, you know, how did that tolerance for sort of financial stretch shape your approach to, you know, kind of a calculated risk-taking at McLearns? I've always had bigger ambitions than resources. So, but I've always kind of followed the ambition as opposed to the resource that 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. 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 though. You 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. 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 some of the else's. How do you think about that? Well, I think one of the advantages that 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, right? 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 the teams you want to work for, McLaren and Ferrari are always going to be kind of at the top of the list. 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 or history with a second most successful team in the history of Formula One with 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 pins, drives 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. So here's another question from the audience. It's anonymous, but it came in. NF1, your drivers are very visible members of the team, but you've got, you know, 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? It's exactly that. It's recognizing them, kind of not forgetting about them, all the drivers or the people on TV and pit wall. They're the famous ones. You know, there's what are the eight, nine people on pit wall. But like an example, I'm going to, you know, 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. 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 a positive attention and, you know, made Lou feel very proud. Louie's is her name. We call her Lou. Let's her hold department because what we did is we rotated through departments and those people that were up on the podium were representing their department. 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 they did 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. So here's another question for the audience. This is jumping back a little bit to our in our conversation when you were talking about, you know, when you take over and dividing into sort of the people who are getting it, people who aren't getting it. And Darlyan's question is, you know, how much time did you give the group with the so-called losers mindset to have the chance to get on board with the new ethos? Not a lot. Yeah, now you give it time if If you feel like they're gonna get with the program, then you give it time. You don't just expect someone to go from, I'm not sure to, an avid fan if you'd like, overnight. But you can kind of, I give everyone a chance. That's what I would say. But if they're not gonna kind of start coming my direction, and I'm prepared to go their direction, it's not my way or the highway, but it's like, are we gonna be on the same team? And I like to listen and understand. So it's not, you know, here's how we're doing it. It's, here's how we're gonna work together. I'm gonna be a team, but I'm very open-minded about how we execute that. So I get people time if I feel like they're making progress. If there's a willingness, if they're kind of meet me halfway, but you can usually have a pretty good sense of someone pretty quickly, whether they have a winner's mindset, a loser's mindset, or if some of them are on the fence, especially when the organization had so much change, you can see why someone's like, well, I don't know if I'm gonna jump in, 'cause how do I know? It's not gonna change again in six months. So I'm patient as long as I see progress. I have very little patience if I don't see progress. - So you're obviously running in a high now. The sport has its highs and lows. No one's gonna win every year. Looking back, it may be the darker days. Was there a particular setback or error or mistake or failure that taught you something fundamental about how to be a leader? - Lots of them. I think that's what's made me a better leader. You learn from your mistakes. I say in the factory, mistakes are okay. Just don't make the same one twice because then you're not learning. I think some of the higher profile ones was probably the worst moment in my racing career was we didn't qualify for the AD 500 in 2019 with Fernando Alonzo, two time world champion. So here I am, bringing them a Claren Brand and a two time world champion to the AD 500. And we don't qualify. That's a total car crash for you to get the pun. And I made a lot of mistakes along the way. I didn't put the right people in place. That's my fault. I didn't trust my instinct. I knew early on I'd made some wrong decisions. And I got talked out of it. I wasn't, I underestimated the task 'cause I was so focused on Formula One. I underestimated what it was gonna take to start an Indy 500 Indy Car team and we failed miserably. But we didn't quit. We learned. And now last year we had the best season in our Indy Car history more podiums. We've been a second in the championship. We've finished second at Indianapolis twice in the last three years. And I remember when we failed, some people said, "Sorry, you're gonna kind of give up now." I was like, "No, no, no, no, we're gonna, you know, "in racing, you crash the car, you rebuild the car, "you go again." And so it's something people say to me, you know, it's kind of one of your proud moments. And they look at me with a raised eyebrow and I go, "Well, not qualifying for the Indy 500 "and how we reacted to it." - Do you think the extent that I know your background and even just talking to you? I mean, you blend a kind of commercial sense, commercial acumen with kind of, you know, racing instinct. Does that translate into kind of a leadership principles that maybe you have that others don't or maybe even push back on? - Yeah, for me, you know, I don't wanna speak about what others do or don't, but I can just speak about my own experience. I think having been a racing driver, if I think about what it takes to sit behind the desk as a CEO or sit in a race car, you, A, have to surround yourself with great people, you know, Landwood didn't win this championship by himself, he had 1,400 people helping him. So you need to have great people around you, you need to have great technology around you in today's world, right? Whether it's a race car or just any company, technology's critical. You need to be a great communicator, which means both speaking and listening because I'm giving feedback as a driver to my engineers and at the same time, I'm getting feedback from my engineers. I need to trust, you know, it's a life and death in a race car so you need to trust the people around you and you need to know risk versus reward. You know, are you gonna go for that pass? What are the consequences of getting it right? Or am I winning the V500? I might take some risk if the upside is winning the V500. If it's a practice session, am I gonna make that pass and crash my car? We've got nothing to win, it's practice. So I think risk versus reward and then you get data when you're driving but you're racing by instinct and sometimes you literally have split seconds to make decisions. Other times you can do a debrief, look at the data, talk to your team and come back and do it again tomorrow. So I kind of find a tremendous amount of similarities behind sitting in a race car and sitting behind a desk and seeing you. All right, Susak, this has been a great conversation. I wanna thank you for being with us. It's my pleasure, thanks for having me on. That was Zach Brown, CEO of McLaren Racing. A reminder, this conversation is part of our HPR executive subscriber content designed to give senior leaders the tools and practical solutions they need to handle the complex challenges that affect their businesses every day. You can access our monthly HPR executive live series with CEOs and much more at hbr.org/executive. If you found this episode helpful, share it with a colleague and be sure to subscribe and rate ID a cast in Apple Podcasts, Spotify, or wherever you listen. If you wanna help leaders move the world forward, please consider subscribing to Harvard Business Review. You'll get access to the HPR mobile app, the weekly exclusive insider newsletter, and unlimited access to HPR online. Just head to hbr.org/subscribe. And thanks to our team, senior producer Mary Dew, audio product manager Ian Fox, and senior production specialist Rob Eckhart. And thanks to you for listening to the HPR ID a cast. We'll be back with a new episode on Tuesday. I'm Adi Ignatius.