[MUSIC PLAYING]
NICK FRY: Hello.
I entitled this talk
Survive Drive Win, which
is the title of a book I've
just written with a guy
from "The Times" newspaper--
lessons from Formula
One, how to win.
What I'm going to talk
you through a little bit
is, firstly, a little
bit about Formula One.
I don't know how much
each of you know about it,
but I think that's kind
of useful background.
So I'll talk to you a little
bit about how a Formula One
team works and the
amounts of money involved.
Then I'm going to
tell you a little bit
about the team
that I used to run,
which went through a whole
bunch of different iterations.
It started owned by
a tobacco company,
and then by Honda Motor Company,
and then myself and another guy
called Ross Brawn ended
up owning the team.
And then we sold it to Mercedes.
It's recently become
the most successful team
in Formula One history.
So the story really is of a
team that was, I have to say,
pretty mediocre at one stage,
if not worse than last,
and how it got to really
incredible success.
And I think the really
interesting part
which, hopefully there's some
takeaway for each of you,
is what did we
learn out of that.
And in fact, I did
see that Google
had done a survey
recently, I think,
of lots of businesses about
what made them successful.
And I've been sort of
pitching this story probably
for about the last decade.
But I think that if you've
seen the work that you've done
and what I'm going
to talk about,
there is a huge
amount of crossover.
Which when I
actually read that, I
was kind of gratified
that I'd been pedaling
some of the right messages.
So backgrounds-- this is a slide
that my mother insisted I make.
She's one of the people in
the world who hates sports.
So whatever I
achieved in sports,
she completely discards.
So she says, tell them
you had a proper job once.
So this is for mom.
Mom, I did have a
proper job once.
So I worked for Ford Motor
Company for about 25 years
in a lot of
different activities.
I was in sales.
I was in marketing.
I ran a big manufacturing plant.
I was, for my sins, director
of customer service.
I ran Aston Martin
for a few years.
So lots and lots of
different things.
And then had my mid-life
crisis at about 40 years old,
and decided that I wanted
to do something different,
and went to run what might
be called an outsourced
engineering company--
a much smaller company that
provided engineering services
to the car industry, which was
involved in off road rallying.
Did a lot of work for
the Subaru rally team.
For reasons I-- it's
too lengthy to go into.
We ended up managing a not
very successful Formula One
team in around late
2001, early 2002.
And then I was in Formula One
for about the next 12 or 13
years with the same team, but
through various iterations
and various ownerships.
So now, just to
sort of finish off,
I invest in lots of small
companies, some of which
you may be familiar with.
I'm chairman of an e-sports
team called Fnatic,
which is probably the biggest
European team of about
a dozen teams of
gamers-- players
who have done incredibly well
around the world in games
like League of
Legends and the like.
So I'm sure some of you
will be familiar with that.
So what happens when this
young lad with this blue chip
corporate background goes
to a sport like Formula One?
Well, for those of you who are
not familiar, this is the--
I don't know how to say
this-- the archangel, maybe,
but the person who really
put Formula One on the map.
I mean, Formula One,
prior to the advent
of Bernie Ecclestone,
was something
that a bunch of mainly
English sort of eccentrics,
almost, got involved with.
Very, very amateur,
and Bernie is the man
who really took it
from very little
into one of the biggest
sports in the world.
And even today, although it's
had a few more difficulties
and leveled our due to
competition with other sports,
Formula One is
invariably up there
in the top three nationally.
So if you go to the
Nordic countries,
you might get skiing at the
top or tennis in others,
but Formula One is
invariably there.
So this is the man that did it.
I put the title,
actually, of another book,
which was written in the 1970s.
It's called Welcome
to the Piranha Club.
Because for someone who
works for a big company--
and I'm the biggest admirer of
what big corporations can do.
But when you go into
something like this,
you learn a completely
different set of skills.
At Ford, I was probably
at the entrepreneurial end
of the spectrum in terms of the
management there at that time.
You go to something
like Formula One,
and you find you're
a beginner at that.
These people take huge
decisions, usually
involving their own money.
And you learn a lot from
working with people like Bernie.
And of course,
there's another side.
He's had various
difficulties, if you like,
with the authorities
over the years.
But it almost comes
with the territory,
that people who are making
those sort of decisions
and working very
quickly sometimes
trip over from time to time.
But I think if you can have the
balance of both sets of skills
to some extent or another,
then it equips you
for a great career.
So just a little bit about
what does a Formula One team
look like.
Well, I'm talking here
about the big teams.
And really, part of the problem
that Formula One has got
is that there are three teams
which have completely dominated
for the last five or so years.
So that's Mercedes, principally.
That's Ferrari and the
team owned by Red Bull,
or the two teams
owned by Red Bull.
But these teams
are big businesses.
The operating budget would be
about $500 million per annum.
And that's your annual
operating budget.
Before you get that
far, you've got
to invest in
significant facilities.
So at Mercedes and some
of the other big teams,
you'll find state of the art
aerodynamic wind tunnels, which
probably cost about 50 million
of any currency, sterling
or dollars, to build
in the first place--
two or three year program.
So before you get to the
stage where you can actually
spend that much money--
why is it so expensive?
Well, it's so expensive because
you need a lot of people.
You need a lot of people
because to be competitive,
you have to design a
new car every year.
Formula One is really the
only motorsport where,
although you're allowed
to buy certain systems--
like, for example,
the brake system,
which are pretty much
standard across the cars--
you have to have the
intellectual property
to your car.
You can't go and buy
one off the shelf.
In almost every other motorsport
formula around the world,
you do have the ability to
buy either the complete thing
and then go racing, or at
least the major parts of it.
So maybe a couple
of thousand people.
Maybe somewhere like
Mercedes, up to 1,200 people
on the chassis and
maybe another 800 people
or so on the engine side.
And they're very early
technology adopters.
I mean, you've got
to keep improving.
So they're companies
that in all areas--
whether it be the software,
whether it be energy recovery
systems, whether it be
the body structures--
they are absolutely
top of their game.
And I would argue in lots of
areas possibly 20 or 25 years
ahead of things like
aerospace, certainly
in the use of things
like composite materials.
So as I said, very
rapid development.
A Formula One car has
got about the same number
of parts as a road car, so
maybe 4,000 designed parts.
And you've got to
design those every year
in a very short window.
So you might start in,
say, July with the gearbox,
which is very complicated.
And it also sets
up the aerodynamics
at the back of the car.
So that's one of the first
things, maybe, you think about.
And you've got to have
the thing on wheels
ready to go in
January, February time.
Ready to go testing, and then
you start racing in March.
And you race through to
beginning of November,
by which time you've
started again.
So you've got to design
a huge number of parts.
And that's a cycle
that a Formula One team
might do in six months,
whereas a regular car
company might take three to
five years to do the same job.
Now you might
think, well, they're
only making three or four cars
a year, so they can do that.
But it is done in
exactly the same way.
So if you went to Mercedes, or
McLaren, or a lot of the bigger
top Formula One teams, they'd
be using CATIA, the IBM/Dassault
software which you'd find to
any big engineering business.
The Mercedes teams
runs completely
on SAP, which you
might associate
with a very large company
that's making a lot of products.
But it controls the
material flow system,
and a lot of the big teams
use just regular facilities.
And that goes through
the whole piece.
I know some of you here
may be lawyers, or finance,
or from other functions.
I guarantee you that if you went
into one of the bigger Formula
One teams, behind
the scenes you would
recognize exactly what goes on.
I mean, the end results you
know might be very glamorous,
and you got to Monaco and all
the nice things that you go to.
But underneath that,
it's fundamentally
a very well-run, very
strong engineering business.
And you need a
significant amount
of performance
improvement every year.
If you don't guess
sort of 12% or 15%
performance improvement
taking aside
from any change in the
rules, you will go backwards.
So it is absolutely inevitable,
absolutely just continuous
pressure.
And if you look at
things like aerodynamics,
you say, well, how
can you continue
to evolve the
aerodynamics of a car?
But even with no
regulation change--
so everything exactly the
same in terms of the rules
you've got to meet--
if you look at a graph of
aerodynamic improvements,
literally it's a--
the relationship of the hours
spent in the wind tunnel
to the amount of improvement
is almost linear.
So the inventiveness of the
engineers is almost continuous,
and you've just
got to keep going.
And that's not just
between seasons,
but you have to keep improving
the car during the season,
as well.
So I thought I'd
tell you a tiny bit
about the team that
I was involved with,
which is now Mercedes.
Before Mercedes and before
Ross and I owned the team,
we were owned by the
Honda Motor Company--
great engineering company.
And we were extremely
well prepared, we thought,
for the 2009 season.
I just managed to get this
guy Ross Brawn involved.
I mean, in Formula One,
really over the last couple
of decades, there have been two
people on the engineering side
who have been the most
successful people--
a guy called Adrian Newey, who
has worked for the Red Bull
team for a long,
long time, and Ross,
who worked with Michael
Schumacher at Ferrari
for a long period of time.
Incredibly agile and
successful automotive engineers
and good engineering
managers, as well as
being as great engineers.
And 2008 when Ross started
with us, we thought 2009 maybe
we could come in the top
three of the championship.
I mean, that was our aspiration.
As is usual--
I think Napoleon may have
originally said this,
or-- he probably didn't say it
like I've got here, actually.
He probably said it in French
and in a different, more
elegant way.
But the literal
translation is, everyone
has a plan until they
get punched in the face.
And the financial
crisis came along.
We were very well prepared.
And Honda decided to pull out.
And I think with good
reason, in many ways.
I mean, as you all remember,
when Lehman Brothers went down,
the world went to
hell in a hand-basket.
Car dealer stopped refusing--
they refused to take cars.
The Swindon plant, which was
the main UK facility of Honda,
was originally intended to
be shut down for a few weeks.
I think in the end, it was
shut down for about six months.
But Honda decided they needed
to stick to their knitting
and worry about
their main business.
And they decided Christmas
of 2008 to pull out.
And we looked for
someone to buy the team.
Now as you can imagine, and
as you will read in the book
if you care to do
so, the only people
who wanted to buy a Formula
One team at the end of 2008
were certainly people you
would not wish to deal with.
I can guarantee that.
And the book talks about, rather
amusingly, some of the people
that we briefly
got involved with.
And I think Honda were very
gracious and very honorable,
because what they didn't want
was to hand the team to someone
who they didn't know.
And the thing would
reflect very badly on them
if it went poorly.
And they decided
probably that the best
of a bunch of worse
alternatives was
to give the team
to Ross and myself.
The good news was that
we paid a pound for it.
The bad news was that we
took on all the liabilities.
So we had 719, to
be exact, employees.
We had a salary bill of
about $2 million a month.
At this point, I have to
say, Mrs. Fry and Mrs. Brawn
had a sense of humor failure.
They were very correct in
observing that this probably
wasn't going to
work out very well
and that possibly
we would end up
sleeping in a tent or a caravan
for the rest of our lives,
because this is not a
place for the fainthearted.
We took on all the
liabilities, and off we went.
Maybe you'll ask afterwards
why on earth we did that,
and I probably still
can't explain it.
But off we went.
And we had the first
challenge in that Honda
said if we're out, we're out.
So we had a car designed
for a Honda engine.
Formula One engine
cars are bespoke.
So if you took your Ford outside
or in your garage at home
and tried to put a
BMW engine in it,
it probably wouldn't fit
very well, because they're
designed to go together.
We had the same problem,
but exacerbated probably
several hundred percent.
These things are
very, very specific.
So very nicely Ferrari
and Mercedes Benz
offered to sell us an engine.
So one of my first
tasks as CEO was
to write a check
for 8 million euros,
because they rightly said, you
got two private individuals.
We don't know if you're
going to be around,
so you'll have to pay
for the season upfront.
So that was kind of
a moment of truth.
So we paid our
engine bill, and we
tried to get a Mercedes engine
into a car designed for Honda,
which was a bit tricky.
Now this is not going to
sound very much, probably,
but we ended up with a
powertrain and an engine
gearbox which was
about half an inch
higher than it should have been.
Which in Formula One terms,
center of gravity and that,
was--
we were not expecting
to do very well.
We thought instead of third,
maybe if we could be midfield.
The chance of us not going
bust by the end of the year
was pretty high.
So we bunged our lovely Mercedes
engine into our Honda car.
And hey, presto, we were
fastest, which was remarkable.
Why were we fastest?
For two reasons, principally.
I mean we'd done a
lot of things right,
but the reason we were fastest
was for two principal reasons.
One is that the Mercedes engine
was, and is now, probably
the best.
I think just maybe now
Ferrari may be slightly ahead,
but that's probably the
first time in the last decade
where the Mercedes engine has
not been the engine to have.
So the Honda engine
wasn't great.
That's improved a hell of a
lot in recent years, as well.
But at that time we went from
a relatively poor Formula One
engine to the best
Formula One engine.
We'd also discovered something--
an innovation with
the aerodynamics
at the back of the car.
I want to talk about
it briefly later,
but something called
a double diffuser,
which two other teams,
actually, also thought of.
But our execution was
a hell of a lot better.
So we were fastest in testing.
Now in those days,
you didn't have
to test the car which was in
accordance with the rules.
And for those of you who
[INAUDIBLE] engineering bias
or remember your physics
or maths from school,
the easiest way to
make something go fast
is just take a lot
of weight out of it.
So the Formula One car, because
there's so light in the first
place-- in those days,
about 600 kilos--
if you can take a
bit of weight out.
And everyone assumes that
we were testing the car
under weight and we were
kind of showboating,
because as you'll observe
from the pictures,
we didn't have anything
in the way of sponsorship.
So a good way of attracting
sponsors is to go very quickly.
And everyone thinks
that's great.
So everyone assumed that we
were showboating, as it were.
In fact, we were
doing the opposite.
We were weighing the
thing down as much
as we could to go
as slow as we could,
and we were still more than a
second faster than anyone else.
I mean it was--
in Formula One
terms, a second is--
you die for a second.
I mean, it's a--
a couple of tenths would
be a brilliant advantage.
You can do the maths.
A race is a 90 second lap.
A race might be 60 or 70 laps.
If you're a second a lap
faster than anyone else, then
at the end of the race,
assuming you keep going,
you're going to be a
country mile in the lead.
So we had a huge,
huge advantage.
We started to attract a
little bit of sponsorship.
Richard Branson, who knows a
good thing when he sees it,
realized that we were going
to be pretty good at this.
And they'd been trying to--
people had been been trying
to get Virgin into Formula One
for about 10 years
unsuccessfully.
Richard came along, and this is
a shot from the Melbourne Grand
Prix, which was the
first Grand Prix where we
announced Virgin sponsorship.
Certainly at that time,
probably even now, Richard
attracted more publicity.
So he paid a relatively
small amount of money
for the sponsorship in
the scheme of things.
But the amount of
global coverage
he gave us was a
huge benefit to us.
So we started to
raise a bit of money.
And hey, presto, Melbourne--
we were first and second.
And then we went to the next
race, and we won that one.
And then went to the
third race in Bahrain,
and we won that one.
By this stage, good old Richard
had become a permanent fixture.
He was around more
than the mechanics.
I mean, in his mind, we were
the Virgin team, which--
but it was great.
We had a great time,
and we won that race.
And by the end of the season, as
Chris kindly said at the start,
we won the world championship--
not only the driver's
championship,
but also the constructor's
championship.
We won eight races.
We were first and second in four
of them, and it was all great.
Hurrah.
Then it got serious.
Formula One is not a place
for two private individuals,
frankly.
And lightning rarely strikes
twice in the same place.
So we took a big investment
from Mercedes Benz, who bought
the majority of the team.
At this stage, things got
kind of a bit more serious.
The shot there is
our two new drivers,
Jenson Button the
Rubens Barrichello,
who had been very successful
with us the previous year
in 2009, 2010.
For various reasons, we had a
complete change in driver line
up, with the great Michael
Schumacher came out
of retirement.
Nico Rosberg, who subsequently
also became a world champion,
joined us.
The other people
in the picture--
the guy with the fancy
mustaches is Dieter Zetsche,
who is the long time very
successful chief executive
of Mercedes Benz.
So it suddenly got serious.
We went from a Japanese team,
to a privately owned sort
of English-y team, to
owned by a Mercedes Benz--
at that time, I think 12th
best known brand in the world.
So things changed
pretty quickly,
which gave us a lot
of challenges with--
internally with the
culture of the team.
But it was a really great
start to a new relationship.
And it took us a bit of time
to get our act together.
I mean, sadly to
stay alive in 2009,
we had to let go a huge
number of the staff.
So we let go several
hundred people,
which meant that whilst we
could do very well in 2009,
we had no investment in
the future whatsoever.
So it got a bit tough
for a few years.
And sadly, we never
won with Michael,
which was, I'd say, a
huge disappointment.
But the team have
been champions--
not only constructors, but
also driver's champions
with principally Lewis
Hamilton seven times
in the last 10 years.
So yeah, this is a
massively successful team.
And on to the meat of this,
where hopefully you'll get
some value, is what it takes.
So how does this team continue
to win year after year?
I'd say the first thing is
they've got the best people.
And I think I could probably
stop talking to you here
and just talk about this one
subject for the next hour.
But unless you have
the Lewis Hamilton's,
or the Valentino Ross's if
you're in motorcycle racing--
unless you have the best
chief engineer, the best body
engineers, the best right
through the organization--
attracting and retaining
the best people
and actually getting to work
together and do the best job
is by far and away the
most important thing.
Why does Lewis Hamilton
earn the mega big bucks?
And the reason is that he can
take a car which possibly isn't
quite a winning car, and through
sheer skill, and determination,
and great teamwork, and
all the other attributes
that he brings to bear, he'll
get it to a winning level.
And the drivers are not
just there to drive the car.
I mean, they are really
the team leaders.
Now why was Michael
Schumacher many times--
7 times world champion?
I would argue it's because
he was the best team player.
He motivated the whole
team by demonstrating
incredible hard work and
incredible dedication.
And that just rubs off on
the whole organization.
And someone like Lewis
does the same thing.
I mean, when you
watch a Grand Prix,
if you watch Grand
Prix's, you're--
on the slowing down
lap, if he's won,
invariably Lewis will
come on the radio
and say, thanks to
everyone involved.
Thanks to the people back
at Brackley in the factory.
And that's not a PR stunt.
I mean, he realizes that the
person who is working away
diligently in the
gearbox shop is just
as import to his success
as he is behind the wheel.
And actually most of
acing all those people,
and thanking them, and
being that great team player
is the most important thing.
So number one-- will you ever
have the 11th best players
in a football team altogether?
Probably not.
But you can aspire to have
you got the best goalkeeper,
have you got the best center
forward, et cetera, et cetera.
And do your best to get
that sort of team of people.
I would say number
two, to me, is along
same theme of best
people is diversity
being such a huge advantage.
This shot, which is a
couple of years old now--
these young people here are
some of the best and brightest
young engineers from Petronas,
which is the Malaysian state
oil company.
It's the biggest sponsor
of the Mercedes team.
And what Petronas has
done for many years
is send to the
Formula One team some
of their brightest
youngest petrochemical
engineers who are expected
to provide performance
to the team.
As the oil and
lubricant supplier,
they would be expected
to probably provide five
performance upgrades a year--
so lower friction,
better performance
of the fuels and oils.
And most of the audiences,
sadly, that I speak to
are principally white,
middle aged male.
And I point out to them that
that's not the world anymore,
as you'll observe.
You can see for yourself that
this is a much broader base.
And in my experience,
having people
with different backgrounds
successfully working together
is hugely powerful.
And if you go to
Mercedes, you'll
find a design office
full of people
from all around the world.
And I can see from your
audience here that Google would
subscribe to the same idea.
You just need the best
people, wherever they're from.
And they're from every
corner of the world.
If you've got the
best people, you
need to give them
the best tools.
There is no point in hiring
the best surgeon in the world
and then giving them
a knife and fork,
and say, please, do
great operations.
And the thing that's
especially Honda brought
to the now Mercedes team
was just a huge investment
in facilities.
This shot is from the
inside a wind tunnel.
Wind tunnels run at real
speed, so this blasts air over
the car at 180
plus miles an hour.
Certainly at that
time, structurally, it
was the best wind
tunnel in Formula One.
And I know it's been kept
up to date with the best
analytical software.
So investing in the right tools.
I've been to lots of companies
over the years who say,
our people are cleverer
than anyone else's.
So they can come up
with smarter ideas,
so we don't need to invest.
I think you've got to do both.
You've got to invest very
heavily in the right tools,
and you've got to have the
best people, because the best
people deserve the best tools.
May seem obvious-- clear
objectives some accountability.
Very, very focused on what
are you trying to achieve.
Sometimes in my corporate
career, I would sit there.
And even for a big company like
Ford in those days, sometimes
we would have 20 or 30
corporate objectives.
And even with large numbers
of people, more than Google
has got, at that time, we would
struggle with lots and lots
of different initiatives.
And I think keeping
it very focused with--
and making clear to every
single person what they're
responsible for delivering.
I guarantee you that if your--
if you have a son
or daughter who
went for an
internship at Mercedes
just for a summer holiday job,
they would get a proper job.
And they would be required
to deliver whatever they
were being employed to deliver.
It would not be learn
a little bit about this
generally or shadow someone.
It would be you are responsible.
This is what you've
got to deliver.
And then I think the
job of management--
and again, I saw this
on the Google survey,
where I think it said
that sort of management
not interfering too much and
not getting into the detail
was very important.
I picked a slide
here of the late Niki
Lauda, who was chairman
of the Mercedes team--
great Formula One world
champion, but a great person
to have as a chairman.
Great at making very,
very crunchy decisions.
When I pitched to Niki when
he arrived as my chairman
that we'd been trying
to get Lewis on board,
his response was,
go higher and we'll
ask for forgiveness later.
It's always
difficult when you're
hiring someone who
is probably going
to be paid more than the
chairman of the company that
owns Mercedes in
this particular case.
But he was just very
black and white.
And being supportive
and being around--
I'm a great supporter
of so-called management
by walking around.
If you're open and
you're accessible--
if you've hired the best people,
and you've given them the best
tools to do the job, then
why look over their shoulder
or keep asking them
what they're up to,
or where they are on a
project, or what have you?
But be around to
answer questions.
Be around to make
decisions where required.
So I think to me managing a team
of very talented individuals
is a very particular exercise,
where all you're going to do
is piss people off if you
start diving into the detail.
Great teamwork--
goes without saying.
I mentioned earlier
about engaging
every single individual.
And with a big team
of hundreds of people,
just making clear to people
what they're supposed to achieve
and making them each of
them feel part of it.
To break this up
just briefly, I guess
the epitome of great
teamwork is the pit stop
that Formula One teams do.
They're capable of changing
all four wheels and tires
in certainly less
than three seconds--
closer to two seconds.
But the secret of this is doing
it in a repeatable fashion.
Doing it once very, very
quickly in two seconds is great,
but if you screw up the next
time and lose 12 seconds,
it's not such a great outcome.
I can tell you, having a Formula
One car coming down a pit
lane each year at 100
kilometers an hour
when the guy's been on the
track doing 180 miles an hour
and he's got eyes as big as
this is a scary experience.
Now if you're going to
ask people to do that--
I mean, I'm using the pit
stop just as an example.
But if you're going to ask
people to push to the limit
all the time when
their engineering,
when they're driving, you've got
to expect things to go wrong.
And I think things
that Formula One teams
are really good at is
developing environments
of what I would call no blame.
I think you've all had
this experience that you're
trying as hard as you
can, something goes wrong,
and then somehow you get
criticized for doing that.
And I think you've got
to accept, especially
in a high performing
environment,
that mistakes, accidents happen.
If you say for Formula
One driver, don't crash,
that's really easy.
I mean, they're going to
break five meters earlier,
they're going to accelerate
five meters later.
They're not going to
crash, but they're
going to win anything, either.
So you don't want them to
crash the whole time clearly,
but you've got to expect
that from time to time,
shit happens.
So be prepared for that.
And I think that the things
that top teams are very good at
is preparing for
something to go wrong,
putting in place an action
plan for when it goes wrong,
and actually reacting
appropriately
with the individuals involved.
And you make a mistake, you
get fired, everyone in the room
says, oh, shit.
I won't do that
again, because I'm not
going to try very hard,
because he got fired.
So I'm going to get fired.
So it's very, very important to
react in the appropriate way.
And the appropriate
way is actually
to help the person as much as
possible and the team as much
as possible not to make
the same mistake again.
Now if the same mistake
keeps being made,
clearly you have got to react.
But obviously, the first port
of call is as much training,
as much support, and as much
help as you can possibly get.
Communication-- incredibly
import in a high performing
environment.
I mean, I guarantee that if
you go to the Mexican Grand
Prix this coming weekend,
even if Mercedes win it,
I guarantee there will be
a list of 20 or 30 things
that went wrong.
And what they will be doing--
straight after the
race, the drivers
and the people at the
circuit will be spending two,
three plus hours after the race
actually going through what
went wrong, what went right.
The following day, back
at the factory in the UK,
there will be an
all hands meeting
with everyone in the team.
And when I say everyone,
everyone is invited.
And there will be a very
candid review of what went on--
what went wrong,
what went right.
Because you need that short
cut in terms of communication
in order to be able to
react quickly enough.
So in a Formula One environment,
you race on the Sunday,
you'll have the
debrief on the Monday.
If there are problems,
you'll probably
have to have a solution
in place by Thursday.
You'll have to make the parts
over the following weekend,
and then they'll have to
go to wherever they've
got to go in the world probably
on the Monday or the Tuesday
in order to be
ready to start again
on the following Thursday.
So I've never worked
in the armed forces,
but it's a team environment
where you're either in the team
or you're not in the team.
So there are very, very few,
if any, secrets within a team.
It is assumed that the
confidentiality is there,
and everyone is going
to play the game,
and everyone is going
to put the team first.
So that open communication is--
and very quick communication,
which shortcut any bureaucracy--
is very, very important.
Focusing on what gives results--
I mean, there are thousands
of parts in a Formula One car.
There are lots of
things that you can do.
There's lots of interesting
things you can do.
You can work on all sorts of
lovely engineering projects.
But at the end of
the day, there's
three areas which
drive performance,
which is aerodynamics,
performance of the engine,
and how you use the tires.
All the cars have got the same
tires, but how you actually use
those tires to best advantage.
I think the message I want
to take out of this slide
is that don't get diverted
by all the interesting things
which are lovely to work
on but actually don't drive
the performance of the team.
And in Formula
One, it's very easy
to go off into the boonies
worrying about front toe
stiffness or various engineering
esoteric things, which
do bring performance and you
do need to worry about them
a little bit, but keeping
your eye on the ball.
Innovation-- good ideas come
from absolutely anywhere.
And if I come back to
the start of my talk,
the so-called double
diffuser which I spoke about.
I was there when a very junior
Japanese engineer, when we were
talking about this potential--
the aerodynamics of the
following year's car
put up his hand and said,
well, I've got this idea.
And instantly,
most people thought
he was talking about something
which was not within the rules.
And I still to this day believe
that the reason he had the idea
was that he was reading
the rules of the sport
literally because he was--
English was his second language.
Most of the rest of us
were reading the rules
as in we were overlaying it
with the spirit of the rules.
And this young
guy had this idea.
And within a few
seconds, everyone
realized that it was gold dust.
And he'd observed something.
I believe to this
day that if we didn't
have that environment where it
was very open, that everyone
felt confident to
introduce ideas,
possibly we would never
have got that idea,
and we wouldn't have won
a world championship.
So I just think it's a
good example of a good idea
can come from anywhere.
If you observe a great
engineer like Ross Brawn
in a team meeting with
all his engineers,
it's very interesting.
He will say very little.
He will make sure that
everyone has their say.
And invariably, engineering
has a right solution most
of the time.
But if the meeting doesn't
come to a conclusion,
he will make a decision
on the team's behalf.
But he's not
dictating to the team.
He's actually trying to get all
the good ideas on the table.
And as I say, this
car, which won
in 2009, which was really the
start of this trail of success
for the team that
is now Mercedes,
really only had one great idea.
As I say, it had
excellent execution.
The Williams team and the Toyota
team also had the same idea,
but didn't make it work
anything like as well.
Data acquisition-- there
are about 15,000 channels
of data coming off
a Formula One car.
That is going up exponentially.
I mean, if you go back to
when I was a lad, you had--
that was a long time ago.
Thank you for that laugh.
Most of you weren't
alive when I was a lad.
But you know, literally
you had a stopwatch
and you had a clipboard, and
you wrote down a lap time.
I mean, that was about
the only data you had.
You didn't have corner times.
It's now evolving
at enormous rates.
I mean, at the moment you
might have 15,000, 20,000
channels of data.
I think that'll get to a
million plus very shortly.
And the tools you
need to analyze that
are very important.
And the agility of
decision making--
one of the things that the
Mercedes team, especially,
possibly a number of the others,
have invested in very, very
heavily are
strategic tools which
guide during the race
what you should do.
And in fact, the chap who was
instrumental in developing
a lot of this actually came--
he was a brilliant
mathematician--
came from graphic design.
He and his sister worked on
the George Lucas Star Wars
early movies.
And he's someone I bumped into.
And he's still working
within Formula One.
But it's presenting
the right information
in the right way at
the right moment.
So what engineers will be
looking at on the pit wall
is very different data
sets during the race
depending on what's going on.
And they'll be fed huge amounts
of pertinent information,
because if you're going to
make a decision in a couple
of seconds, then you can't
be sitting there looking
through dozens of spreadsheets.
You've got to be presented
with the right stuff
at the right moments.
And the decisions
are so knife edge
that you can look like an
idiot or a hero very easily.
And the person who's
the chief strategist--
in the case of Mercedes, a
clever young guy called James
Vowles--
sometimes he looks
like an absolute hero.
But unfortunately, occasionally,
he doesn't look too good.
But the complexity of the
decisions and the amount
of information that they're
trying to sift through
to decide what to
do means that it's
something they get
right most of the time.
So in summary-- that's
my wife, by the way.
It's not-- just so there's
no mistaking the picture.
celebration of success,
I think, very important.
I mean, one of the things
that Formula One teams--
I know that when times
are hard, companies
have a tendency to cut
back stuff at the margins.
I would say that
Formula One teams
are very good at having a good
party at the end of the season
and during the
season to celebrate.
And that's not just
for the employees.
That's for every family
member who is associated
with it-- with the kids.
Because that's when everyone
comes together and actually
celebrates the amount of
effort they put into it.
But there are no special
processes in Formula One.
It works very quickly.
It's the same design
tools that you
might find to Airbus
or another big company.
It just made to work
very, very quickly.
Finally, I have written
a book about this.
Why should you buy it?
Well, I think it's
a very good read.
Some of you are holding it here.
Guy called Ed Gorman,
who works for The Times,
has done most of
the actual writing.
And he is a great writer,
so it's quite racy.
Any money I receive
from the book
will go to a couple
of charities--
a charity called
hope for tomorrow,
which provides some mobile
cancer units, a dementia
charity, and another charity
for-- called the HALO
Project for kids
with disabilities
to get them self-sustaining
and have their own lives.
So it's a great
book for Christmas.
It's not just about Formula One.
A lot of it is about
the business aspects.
It's about working
with Bernie Ecclestone,
it's about working with
Michael Schumacher,
it's about the
business processes.
So if Uncle Fred or Aunt Matilda
needs a Christmas present,
this is the place to go.
Buy yours now.
Survive Drive Win.
There it is, and thank
you very much, indeed.
AUDIENCE: So I guess there's
two questions that come to mind.
The first is when you took
on that liability, what
was the upside you saw
in terms of financial?
I mean, you're taking
on a big cost space.
And the second question, I
guess, it's a similar themes.
When Mercedes take
it on and they've
got an operating
cost of $500 mil,
what's the upside
financially for them?
NICK FRY: I think the Mercedes
arguments would be a lot more
logical than our arguments.
I mean, the thing that's--
the thing that you--
the only thing really I miss,
really, from Formula One
is the teamwork.
And when you're part of a
team and you're in trouble,
then you do your best to
get out of that trouble.
And I don't think we were
thinking this way at the time.
But we had 700 employees.
We had 700 families.
It was the middle
of the recession.
And we thought
we'd give it a go.
And in our view--
what we actually did,
we had a bit of money.
Honda did give us a
legacy, if you like.
And we worked out
that if we went bust
at the end of the following
year, how much money would
we need to pay off everybody
to the same extent as we got--
as if they'd been made
redundant the year before.
So we kind of ring fenced
the payoff, if you like.
And then the rest of the money
we had became the budget.
So I guess we just
thought we'd give it a go.
And we came up trumps.
And we never ever had
any reason to believe--
we thought we'd done
a good job, but we
had no aspiration of winning
the world championship.
I mean, I think it was far
more likely that we were going
to go bust the end
of the following year
and probably be very mid-range.
And I think this is the
Leicester City story,
but it's probably even more
incredible than Leicester City
because the amounts of money
and the amounts of technology.
Why would any big company want
to be involved in Formula One,
Mercedes or otherwise, is
because it's one of the very
few truly global sports.
I mean, I know that the
World Cups and the Olympics
happen every four
years or whatever.
But the beauty of Formula One
is that it's visiting physically
20 places around the world.
So if you're a sponsor or
if you're a team owner,
you can bring to life your
product and your investments
around the world.
If you sponsor the Premiership,
clearly most of the games
are here in England.
If you're a truly
global company and you
get involved in something like
Formula One, then actually--
you actually can bring it
to life on a global basis.
Specifically about
Mercedes, they
are among the best
engineers in the world.
And arguably, Formula One is
an incarnation of the highest
engineering skill.
So if they're beating
Ferrari, you're
saying to your customers,
we are the best.
And I have to say, having
seen the facilities somewhere
like Stuttgart, which
is where Mercedes
are based, they invest, as I've
said here, incredibly heavily.
And it's a huge
marketing benefit.
There's also some small
engineering spin offs.
I would argue that a little
bit about hybrid and battery
technology, et cetera, it
helps if you're doing something
as high tech as Formula One.
AUDIENCE: You kind of spoke to
your kind of career progression
of over that time, as
well, and how you moved
around lots of different roles.
How did you go about making
those decisions to effectively
change what you were
doing so frequently,
and how did you
approach new roles
and making sure that you've
kind of got up to speed quickly?
Are there any kind of tips
that you'd have on that?
NICK FRY: I mean, I do have
the talent, I have to say,
for picking things
up pretty quickly.
I mean, I'm not a person
who may be a detail expert,
but I can pick up
what you need to know.
So I think having that
sort of open mindset.
I think listening to people
helps, because you pick up.
Instead of transmitting
how great you are,
listening to other people and
picking up as much as possible.
So I think that's a
skill which I do have.
I've always believed--
and I can't tell you
why I've always believed this,
but from a very early age
after uni, I believed that
in order to do a good job,
you needed it to understand
how it all went together.
So I was always interested
in the bigger picture
and then working out
well my little bits.
How could that contribute
towards the bigger picture?
And I was just--
I'm always fascinated
by new things.
So I will not stand
here and claim
I was any good at making cars.
I ran a manufacturing plant.
I would say I was
pretty poor at it.
But I gave it a go, and I
learned one hell of a lot.
And there were a lot
of people around me.
And because I worked
in other functions,
I could then sort
of tie together
how do I help the
marketing guys by what
we're doing in the manufacturing
plant, and vise versa.
So I was always able to
cross fertilize is probably
the best way.
I mean, I didn't have any great
strategic plan, I have to say.
I mean, I'm just sort of an
inquisitive type of person.
And I'm always eager to learn
more and I guess take a risk.
I mean, logically
moving from Ford
to a small engineering company
wasn't the best career move.
But I guess you don't get
to owning a Formula One team
if you just do the
thing that's safe
and the thing that
is predictable,
because everyone does
the safe and predictable.
So I try and encourage
my kids if everyone else
is going right, then have
a look at going left,
because left might
be the right answer.
Just because everyone's gone
that way doesn't mean that--
so I mean, I can't give
you a blueprint for it.
But maybe there's a
few thoughts there.
AUDIENCE: Do you think
that Formula One has become
too complicated in
terms of sort of data
technology-- the inputs?
Or do you think
that these companies
have sort of a great
benefit or a duty
to get to grips with them,
and then looking at the wider
application?
So I'm thinking, for example, of
Williams using wing technology
to improve supermarket
refrigerator cooling--
applying those benefits
to sort of wider society.
NICK FRY: I think that
there are spin offs.
And Williams is a
very good example.
Ironically, they're not
very good at Formula One
at the moment.
But their engineering division
is incredibly successful.
So they are successfully.
But the core reason for a
Formula One team to exist
is to win Formula One races.
Do I think that this technology
and the cost of the technology
is a good investment
for mankind,
if you take it broadly?
No I don't.
I think it's got
completely out of hand.
And the fact the
three teams have
won every race for the last five
years is boringly predictable.
And Formula One, certainly,
has some significant structural
problems.
I mean, most of the money
goes to the top teams.
The teams below the
top three very little.
At the end of the
day, a good big 'un
is always going to
be a good little 'un.
I mean, that's not
to say a good--
a big company-- Toyota were
in Formula One for a while.
BMW were in Formula
One, and they'd never
really were very successful,
despite huge dollops of money.
So it's difficult to say money
is the root of everything
and is going to
bring you success.
But if you deploy
that money well,
you are going to be successful.
I mean I think the
Formula One has
got to decide on a direction.
Clearly cars are going electric.
Formula E, which is the
electric motor sport,
is getting more and
more successful.
For my money,
Formula One has got
to be a lot more entertaining.
And certainly, being involved
in e-sports with Fnatic,
you could see that it's got to
be perpetually entertaining.
An hour and a half's
race where something
might happen at the
start, something
might happen in the middle,
but then not much else.
These days for people's
fast moving lives,
it's not going to be successful.
So I think they've
got some-- personally,
I think they've got some
difficult decisions to make
with distribution of
income and what actually
is this sport, because
although there are spin offs,
you would never ever
spend this much money
to get the relatively small
spin offs that it provides.
AUDIENCE: I'm trying
to think about how
to make the sport
more accessible,
and you mentioned e-sports.
If you were to predict
the role that e-sports
will play in the
future, where do you
think it's going
to take this sport?
Google is about to launch
a major gaming platform
in less than a month, as well.
So I guess Google has an
interest in it, as well.
NICK FRY: Yeah.
I mean, I think there's some--
I think it would be
great if actually--
I think you've got to
do a couple of things
in combination.
I think that Formula
One races need
to be made probably a lot
shorter, a lot more punchy
in terms of short games,
just like in e-sports.
But I guess it would be
fantastic if, actually, you
could race real time against the
real drivers that were racing.
And at the moment,
car race games are--
relatively speaking,
I think there's
about a million people worldwide
who play a car race game,
or all the car race games.
So it's-- and the problem
with the car race games
at the moment is that it's a
perfect replica of the real
thing.
And if the real thing's
boring, a replica of it
is invariably not going
to be any different.
So I think that you've got to
make the real thing much more
entertaining.
And being able to race the
real people, real time.
And I think the
other thing which
I think people make a
mistake is that replication
of the real thing.
The reason that e-sports
are incredibly entertaining
is that it's not the real world.
I mean, if you play a game
league of Legends, or Fortnite,
or whatever it happens
to be, it's fantasy.
And I think trying to
make games a replica
or whatever they might
be of the real thing
is probably missing
the point completely.
And I think you've got to keep
your eye on the entertainment
side, and how do you combine
entertainment and make it just
really quick fire.
I don't think people
haven't got time to watch--
I think even a 90 minute
football match with two 45's
is hard going.
So I think, actually,
making it much more fun.
