A promotion, winning his first race for Red Bull Racing and one of the most impressive drives Formula 1 has ever witnessed; 2016 represented the transition from a huge talent to international superstar for Max Verstappen. The Netherlands is currently gripped by 'Max Mania'. But what can we learn from him and his Red Bull Racing team?
Lesson 1: the CFO as Race Engineer
"Yes, my heart rate went up a little bit," was the rather dry response from Max Verstappen on keeping his car under control during the spin in Brazil. While the whole world held its breath, he remained cool and in control. And that sums him up. After the race, Max was asked how he was able to keep his car under control. 50% was luck, while the other 50% was his skill. Even at top speed and in a fraction of a second he knew what he had to do to get his car back on the track.
While Max makes these swift decisions in his car, a team of 100 people (primarily located in the English town of Milton Keynes) work behind the scenes on the race in a scientific way: analysing all of the data. In the paddock the analysts read out all the data from the 1500 sensors the car is equipped with. During the race, Max stays in contact with that army of data analysts via his race engineer. Each decision, from pit stop to tyre changes and many more unseen adjustments, is supported by the data and the race engineer passes these decisions to Max. Each race starts with a clear plan. However, as soon as something unpredictable happens, they can take the right decision based on the data.
This race engineer role is identical to the role the CFO plays in an organisation. The link between the data and the racer: between the data and the company, the CFO being the navigator. When market analyses and company decisions are constantly based on real time data, you can respond quickly and accurately when something unexpected occurs. The CFO is the basis to stay ahead of the competition with the driver (CEO) and the data.
Lesson 2: Create a winning team
Red Bull Racing’s philosophy is to give young talent a chance. That is precisely why they chose to promote Max Verstappen after he performed so well in the first races in the ‘second team’ Scuderia Toro Rosso. The media response was huge and subsequently there was enormous pressure on Max to prove himself. How do you get used to a new car within a week and become acquainted with a new team? Max achieved this by being confident. About himself, his knowledge and skills, but also by having confidence in the team behind him.
As a CFO you must also have the confidence that the individual team members are the right kind of people to make the translation from the data to relevant information with which strategic decisions can be made.
Moreover, it is interesting how, despite his young age, Max is able to outdrive a large number of seasoned drivers. His technological ability and insights perhaps give him an advantage over the older generation of drivers. He leaves the beaten track and this brings him success. This is certainly food for thought. Shouldn't we also use this type of young talent more in the financial departments (and companies) to create ‘winning’ teams?
Lesson 3: Continue to plan ahead
Once Max puts his foot on the pedal, his team is already busy preparing for the next race. In fact, the team is also hard at work building next season’s car. If things are going well, it is tempting to be satisfied with the current situation. However, not having a plan for tomorrow is damaging in the long term.
Max is the disruptor in Formula 1. He is successful because he does things differently. Watch his overtaking manoeuvres this previous racing season. They are unconventional and on the cutting edge of what the regulations allow. That is why they often lead to protest and admiration. But the people in Formula 1 must also accept that this is the future. Ditto for companies who continue to walk the beaten path. If you keep doing this, you will be overtaken by fast young companies who have the courage to deviate from the norm.
If you work in an ad hoc and reactive way, you are actually always 1-0 down already. Making plans must have a prominent role in your daily work tasks. This means that the team must have the tools capable of providing extensive and real time information about the organisation. At the same time, you must continue to work in an agile way to be able to respond quickly to new opportunities, markets and possibilities. You never know what is around the corner. The ability to adapt is crucial for companies and Formula 1 teams. The combination of real time data driven insight with the flexibility to actually respond to it, is the key to success.
Lesson 4: Ensure the correct contribution to a change process
A Formula 1 car is never finished. Each Grand Prix sees over 1,000 adjustments made; this is a total of around 30,000 a season. After all, each circuit has different characteristics, to which the car is adjusted with scientific precision. Data from the previous race is also included to implement improvements.
If a Formula 1 team fails to invest in new technology, they are guaranteed the fastest route to the last position on the grid.
Change is also the only constant in companies. Digital transformation, the optimisation of business processes and constantly working on the company and the employee of the future, are the keys to success. In order to be able to stay agile as an organisation, it is imperative that the most accurate information of all business units is available. Knowing how every euro is spent helps to achieve the company objectives, and an accurate allocation of resources is essential.
It is really important that during change processes the CFO creates a stable basis. The collaboration and the communication between the organisation and finance department must be optimal. Each discipline within the company has different interests, and it is up to the CFO to ensure that those interests are aligned.
Formula 1 teams are among the most agile business units of all. They are constantly looking for ways to develop and improve what they do. Things we can learn from them are: ensure that you get the best people in your team, ensure that you have access to real time data and that you can translate this to the business. This is how to get your business into pole position.