High-Tech Companies and Formula One Racing
Nov 27, 2004 5:00 AM PT
As a guest of AMD, I went to Indianapolis to watch the top Ferrari team once again whomp the other nine teams in what remains one of the most expensive sports in the world. This racing team has been winning for so long and is so dominant in this sport that I often wonder why anyone watches these races anymore. The outcome often seems preordained.
There are four major tech companies that back Formula One racing: AMD, HP, Intel and Siemens. I've studied tech companies for several years and can see parallels between the companies that do well in racing and in the tech industry. I also was able to see how the team relationships with the sponsors make a huge difference when the relationship goes beyond just the name.
Working for a poorly run company -- or a losing team -- can be a waste of your time. If you think of it, time is the one thing you have that you can't get more of. What follows are my observations of the things we can learn from the winners.
The Superstar Problem
On the flight home after the race, I watched a 60 Minutes interview of Oracle's Larry Ellison. They focused on his competitive nature and used another short interview with Ray Lane, who used to run Oracle for Larry, to showcase the reasons why Larry would likely always strive to be number one but never actually reach that goal. Part of the subtext was that Larry's focus on beating Bill Gates and his lack of respect for 90 percent of his employees was the reason for his failure.
In looking at Formula One, the winning team has mutual respect for all team members, and they seemed to focus more on excellence than on beating the other teams. If there was a problem, the drivers worked with the technicians to identify and correct it. I got the sense that while the drivers were superstars on the track, they were regular people in the pits.
I also observed another team perform in a different way. The drivers clearly treated the technicians as servants and acted like interacting with technicians was beneath them. When off the track, they spent their time posturing against the drivers that were winning. The race seemed to be more about how they fed their egos, and they seemed to take every opportunity to blame their inability to win on their support crew.
If I were a technician, I would want these egotistical drivers to lose the race or get fired. I've worked at several companies where some of the top folks were so full of themselves and so disliked that they were actually set up by their staff for failure. The Gartner Group's ex-CEO was like this, and you have to believe that had a lot to do with Gartner's long-term problems and the eventual catastrophic departure of that CEO.
Microsoft often is viewed in the technology market much like the winning Formula One team -- as virtually unbeatable. While there is often internal competition between groups at Microsoft, there is less competition within groups than I've seen in most firms. They also tend to focus on the game and force others to focus on them. It is a strategy that has generally been disastrous for competitors like Sun. Microsoft's biggest recent mistake was to focus on Netscape and to lose focus on the customers who define the game that Microsoft plays.
Having superstars is OK. Having superstars that think and act like a bad parody of Marie Antoinette's French royalty is not particularly good if they are always posturing but almost never executing. Poorly treated support staff has a tendency to find creative ways to make royal executives fail. Being one of these serfs isn't particularly fun either, and you will certainly enjoy life more in a firm where all the employees put respect for each other first -- regardless of their level.
Remember, if you are depending on a big project, your project could be collateral damage when the hated executive is shot by his or her own staff.
Partnerships That Work
The AMD-Ferrari and HP-BMW teams are closely wedded. Both companies contribute substantially to their team's successes. From assisting with how the telemetry is collected to analyzing that telemetry to the application of the related information, the tech firms are part of the team. This creates a symbiotic relationship where the company can showcase its brand and its capabilities. For HP, that includes the logistics and operations inside of BMW. And for AMD, it includes the massive real-time analysis of critical data leading to a competitive advantage.
This kind of partnership takes the investment and turns the result into a valid reference point, visibly showcasing the capabilities of the firm doing the investment. Compare this to the investment Intel has made in the number-seven team. Not only is Toyota doing poorly, but that poor performance reflects badly on the Intel processor line. All Intel is doing is providing money, but if I were Intel, I'd be asking how much it would cost to get my brand name off of that car.
One of the exciting moments in the preliminary trials was when the Toyota car broke down. The AMD team rushed madly to capture a picture of the clearly broken Intel Itanium car being manually pushed out of the infield. Fortunately for Intel, the brand was so poorly placed that AMD's PR folks couldn't get a clear shot of it. Unfortunately for Intel, the Toyota evidently breaks down so much that it is likely they will get plenty of additional opportunities.
Partnerships must have both parties invested in the outcome, particularly where brands are shared because a company's brand reflects on that company. HP and AMD seemed to get this. Others clearly don't. It is interesting to note that Ferrari does an incredible job husbanding its brand with beautiful Ferrari-branded Acer laptops and Olympus Cameras that, although premium-priced, consistently sell out. I think most professionals in the branding space could learn a lot from how Ferrari manages its brand.
Most of the technology vendors missed a lot of opportunities to showcase their technology at the race. They should have looked to Ferrari, Michelin and Honda for examples of how to do that more effectively. The depth of the partnerships that HP and AMD showcased brought vastly more value to their investment in the race than others received with just a bill and a sticker on the car.
Changes in the Wind
With the market recovery well under way, several companies are staffing up with qualified marketing resources and moving sharply away from the way we once knew them. AMD and HP are two of the companies worth watching closely in this regard, going forward.
In closing, I'd like to leave you with the two key points I've made. Companies that respect all of their employees and focus on the market are worth favoring. Also, if you're going to do a partnership, put some real effort in picking the partners and in making the effort successful. Too many are entering into shallow relationships that generate little more than press releases. The outcomes are not pretty.
The companies that follow these two simple rules will undoubtedly do better than those who do not.
Rob Enderle, a TechNewsWorld columnist, is the Principal Analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.
This story was originally published on June 28, 2004, and is brought to you today as part of our Best of ECT News series.