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Taking the fast track to recovery

Former head of Jordan Grand Prix’s marketing and sponsorship deals says there is so much industry can learn from Formula One

A Jordan Formula One car. “Jordan Grand Prix in 1999 was operating on a budget of $140m. That’s more money than many F1 teams run on today”

A Jordan Formula One car. “Jordan Grand Prix in 1999 was operating on a budget of $140m. That’s more money than many F1 teams run on today”

 

There is more to Formula One than merely racing. More than the on-track action, the behind-the-scenes political machinations, and even than the huge swimming pools of money regularly expended on the sports by global giants such as Honda, Mercedes, Ferrari, Red Bull, Renault and others. There are lessons. Valuable, valuable lessons which, if applied correctly, could help us to more quickly recover from the virus crisis.

That anyway is the thesis of Mark Gallagher. A Belfast native, he is probably best known for having been Jordan Grand Prix’s head of sponsorship and marketing. He has also worked with the likes of Jaguar Racing, Philip Morris, Red Bull Racing and Cosworth Engineering.

These days he runs consultancy company Performance Insights, and spoke to The Irish Times courtesy of the Industrial Research and Development Group (IRDG). 

Seriously, though, what can an audience of Irish business people really learn from the high-tech, high pressure world of Formula One? Isn’t a sport which throws piles of cash and resources at tiny aerodynamic problems a bit too far removed from the real world of managing a business?

Gallagher says no, it’s not. In fact F1 operates on less money than you might think.

“Most of the audiences that I speak to are not Formula One fans so there isn’t really an awareness of the size and scale of F1” he told The Irish Times. “Just as a very simple metric, if I ask most audiences how many people do you think work in a Formula One team, the usual starter is 100. When you tell them that there’s 1,000 people in a competitive F1 team, and that Mercedes employs 1,500 people on its F1 project, well most of them fall of their chairs. They have no concept of just how big an F1 team is.

Budgets

“You might think that then plays to the idea that people think Formula One is over-resourced, and that teams just throw money and people at problems. What I’m then very quick to point out is that while you might think F1 is a bottomless pit of money, actually in real terms budgets have come down quite a lot in the past two decades.

“If you consider that Jordan Grand Prix in 1999 was operating on a budget of $140 million. That’s more money than many F1 teams run on today. Actually, about the same money that Williams operates on today. So the budgets have come down.”

Budgets have come down primarily because regulations on tobacco sponsorship meant that F1 lost access to the cash cow that had kept the sport growing from the late 1960s. If you couldn’t put cigarette company logos on the cars, where was the money going to come from? That’s a question that has forced F1 teams to be ever-more agile in their thinking, and that’s where the potential transfer to less racy industries comes through.

“The business world as a whole is going through some huge changes and coming under a lot of pressures” said Gallagher. “And a lot of that has to do with the speed of the change of technology. Whether that’s in automotive, with the shift towards hybrids and electric and mobility, or aviation’s quest to reduce fuel consumption, or the new space race which has dawned with the privatisation of space travel. The world is changing so fast, and the problem faced by many companies, especially larger ones, is how to create and develop and integrate new product solutions, and do it quickly.

New product 

“So whenever I’m giving one of these talks around the world what I say is we effectively create a new product in F1 every year. People are really taken by that. Okay, so in some years the changes are marginal, but at others it’s really quite profound.

“The most extraordinary change of all was the switch to hybrid F1 engines in 2014. I don’t think many people get the extraordinary achievement of all the F1 engine manufacturers, even the ones who maybe didn’t perform all that well on track. I sat in the meeting in Paris in 2011 where we decided on what we were going to try to achieve with these new engine regulations, and quite honestly when I went back to Cosworth Engineering and presented what we had to come up with by 2014, most of the engineers said it’s just not possible.” 

Not possible, it was thought, in slightly more than two years to create a hybrid turbocharged engine that would maintain the then-current power output (of around 800hp) yet save 40 per cent on its fuel economy, and on top of that use engineering solutions – such as harvesting waste heat for electric power – that had never been tested under racing conditions. 

Yet in March 2014 every team rolled up to the grid in Melbourne for the first race of the season with an engine in the back. That, says Gallagher, is testament to the creative thinking of F1 teams and engineers.

“Look at what Mercedes and Ferrari and Renault and Honda did. They created a pretty amazing piece of kit. So I think industry as a whole is fascinated with the mindset and the agility that drives that kind of performance.

“So there’s a management and a leadership perspective that people are really hungry to hear about. You know; how do you get people unified and pulling together around a difficult project in a really small space of time. Really rapidly prototyping solutions and bringing them to market – how do you create a culture that can do that.”

National doorstep

The pity of it all, says Gallagher, is that Ireland seems to too often ignore what’s happening right on our national doorstep.

“I’ve done a couple of events for Enterprise Ireland over the past couple of years, and one of the things that slightly irritates me – being as I’m Irish, I was born and raised in Belfast – is that we haven’t taken advantage of this kind of tech, this kind of thinking.

“I have spent my entire career working in F1’s equivalent of Silicon Valley, that M40 motorway corridor running from Birmingham to London. You’ve got eight F1 teams, which provide 10,000 direct jobs. You’ve got another 22,000 jobs in the supply chain. And to think that we, Ireland, aren’t really involved in that, we haven’t picked up on that.

“My point being that F1 demonstrates what happens when you create a technology cluster. It becomes self-fulfilling. It just self-perpetuates. Engineers and technology and suppliers; they’re all available right there.

“So when Mercedes-Benz wanted its own F1 team it didn’t set one up in Stuttgart. It bought what was the old Brawn team in Brackley and they employ 1,000 people there. Now, I happen to live just outside Brackley, and I can tell you it basically drives the local economy, those 1,000 employees and they money they spend.” 

His message for Irish business is to take those golden nuggets of ideas, rapidly prototype the solutions that come from them, and create technology solutions that are going to have a meaningful impact on business or on society.

“You’ve got to take it to market. Don’t play around with your idea for three years. In three years the world will have moved on. You’ve got to be more agile in your thinking. If you’ve got clever people working for you that’s great, but it’s no good if all the ideas just stay in the R&D lab. It’s meaningless unless something is actually produced.”

Smart people

Having the right people on board is critically important.

“You’ve got to get your smart people to focus on creating things that people want, and getting them to market in a timely fashion. But the interesting bit is that the thing you thought you were going to make your money from, the thing that you’ve been focusing on all this time, might not be the thing that actually sells. It may be that in focusing on one thing you create an expertise in a process or in something else that can be applied elsewhere, and that ends up being the thing that makes you money.”

He sees real potential in this approach.

“There is a world of opportunity out there for those who play to their strengths, and who sell agile and fast to market solutions, which a lot of big businesses struggle with. For me that’s the big gap in the market.”