SURVIVAL OF THE FITTEST

EPISODE #179 TRANSCRIPT

While enjoying my holiday Netflix binge, I came across a documentary series that was recommended to me called Formula 1: Drive to Survive. Now I'm not really a fan of Motorsports, but I found the series incredibly compelling. There are lots of lessons to be taken about leadership, high performing teams, organisational culture, and of course, the consequences of the extreme pressure that comes with performing at the highest levels. 

Not long after being totally absorbed by all three seasons of the documentary, I came across an article in the Australian Financial Review that made reference to it. In this article, a number of CEOs had been asked to name their favourite streaming series of the moment. Good light holiday fare, right Interestingly, not one CEO named the Formula 1 documentary as being their favourite and the journalist, depending on the article, offered a reason for this. He was quite scathing about the culture and behaviours that were showcased in the Formula 1 documentary. Me, on the other hand? Well, I think Drive to Survive offers a number of important lessons for leaders in any industry and at all levels. 

Today I'm going to take a look at some of these. Just remember: we learn as much, if not more from the examples of poor leadership behaviour as we do from our positive role models. 

• I'll start with a quick fly over the top of Formula 1 racing and the Netflix series.

• I'll simply take a look at some of the more notable lessons from the documentary and how they translate to the corporate context. 

So let's get into it.

What's all the fuss about the Drive to Survive documentary? Well, the AFR article mentioned two shows in particular that had inspired the Australian CEOs who were polled. The first was The Beatles: Get Back. This three part docu-series chronicles the 1970 recording of The Beatles album Let It Be. The series was made by Peter Jackson, the New Zealand director of Lord of the Rings fame. The second series was Ted Lasso. I haven't watched either, but Ted Lasso has long been on my list.

One CEO quoted in the AFR article said “Ted reminds me that successful leaders have empathy, focus on the strengths, invest in relationships and are good-humoured, first and foremost.”

Another CEO said, “I think it provides great insights into leadership and what it takes to lead effectively in challenging circumstances. The show also addresses serious issues like mental wellbeing and workplace culture, in addition to its humorous spin on the navigating cultural differences.”

Okay, I get that, but let's remember: Ted Lasso is fiction and it's easy for anyone's leadership style to be wildly successful when scriptwriters make it the whole premise of the series. But like I said, I haven't watched Ted Lasso yet. It's on my binge list though, so I'll save any comments for a future episode of No Bullsh!t Leadership.

FORMULA 1: THE BASICS

Let's look at the offending documentary - which I've watched in its entirety to see what lessons we can take from it. Each season of this documentary neatly follows the drivers and teams through a single Formula 1 racing season. The first season follows the 2018 competition and each season follows the next year's racing. Now I'm not a fan of moto-racing, nor did I really understand the context of Formula 1, but what I took from this doco confirmed a bunch of stuff that I've observed about high performance leadership and teams. F1 is the most highly evolved form of Motorsport. It attracts the crème de la crème of drivers, engineers, vehicle constructors, and support crew. It also attracts the most capital and it's the most aspirational form of Motorsport for participants and fans alike.

Let's start with some educational basics, which I picked up in the first couple of episodes. In F1, there are 10 teams each with two cars in the competition: so that's 20 cars, 20 drivers. Pretty much every racing car driver wants to drive in Formula 1 - it’s where challenge is the greatest, not to mention the money, fame and glamour. But with only 20 Formula 1 drivers from around the world able to compete at any one time, it’s no wonder it's so competitive. In a standard racing year, there are 21 or more races. Although in COVID-ridden 2020, there were only 17 - pretty much all driven without the benefit of having fans at the track. In 2022, there will be 23 races. Points are rewarded to both drivers and teams for placing in the top 10 of each race, and accumulative total is kept. At the end of the year, there are two awards:

• the Driver's Championship: which is for the driver with the most points. 

• the Constructors’ Championship: which is for the team with the most points. 

The season starts in March and ends in November. Races are only a week or two apart, and at times the team has to pack everything up from one race and turn up in a different part of the world, ready to race again, only five days later. In June this year, there'll only be five days between the races in Azerbaijan and Canada; and in November, there'll only be five days between the races in Brazil and Abu Dhabi. You have to marvel at the sheer logistics exercise that has to be accomplished to make this global sport work. 

Although it might seem obvious, it's worth mentioning that the sport is incredibly dangerous. The cars can travel at speeds of over 360 kilometres per hour - that’s 250 miles per hour. They take corners at 300 kilometres, which is almost 200 miles per hour. Now, if that sounds scary, it's because it totally is! And despite the advances in driver safety made over the years, there's still a realistic possibility of serious injury or death. This creates a high adrenaline atmosphere - I’ve got to tell you, I had sweaty palms during more than one episode. 

WHAT’S WRONG WITH FORMULA 1?

So what's wrong with the sport? Well, let's get back to the AFR article. Apparently when asked the open ended question, there wasn't a single CEO who said that they'd been inspired by the Formula 1 series, even though in the author's words, “it is the ultimate high performance, capital-intensive business.” His assessment as to why it failed to impress the CEOs who were polled is that Formula 1 racing is predicated on a winner-takes-all mentality. It fosters a culture of cutthroat competitiveness. As I said, there are two drivers on each team and they're racing against each other, first and foremost. If you don't manage to beat the drivers from other teams, you can always blame the difference in cars - which by the way, is a genuine factor, the car is probably the single most important factor in performance overall. 

But those in the same team have the same cars - and of course the same pit-crew, the same leadership and the same conditions in every race. That's why it's much harder for the second place driver in a two-car team to blame external factors - that's accountability. The author of the article sums it up by saying that F1 is characterised by - and I quote, “the drivers wanting to win and make as much money as possible. The bosses want to play the drivers off against each other to make them go faster and win more often. Nepotism is fine because it can bring in more dollars, and the system tolerates mediocrity to fill the lower ranks." All of which - having seen it, is a pretty fair summary.

FROM THE RACE TRACK TO THE CORPORATE WORLD

Let's take a look at some of the more notable lessons from the series and how they translate - or don't - into the corporate context:

Investment constraints 

Until recently there was no limit to how much money a team could spend in pursuit of Formula 1 dominance. So, you have rich teams and you have poor teams. As the series opened, you had three teams on top: Mercedes, Ferrari and RedBull. The other seven teams were battling out the minor places: fourth, fifth, and sixth. It reminds me of Michael Lewis's book, Moneyball. Like Formula 1 racing, there is no limit to the amount of money that can be spent by the owner of a Major League baseball team. So the three biggest spending teams have total roster salaries of over 200 million dollars a year, whereas the lowest spending teams have a total roster salary of around 30 million dollars a year. That's an unbelievable difference! The average spend: 115 million dollars on the player roster each year. And all these teams have to compete against each other - hardly what you call a level playing field. 

That's why Moneyball is my favourite book on strategy because the General Manager of the Oakland A’s, Billy Beane, had to find a way to be competitive with only a fraction of the budget of the New York Yankees, the LA Dodgers, and of course the Boston Red Sox. So, you always get teams that punch above their weight, teams that learn to become incredibly efficient by necessity, and you also have teams with loads of money being more wasteful and inefficient. My first observation is: anyone can manage with a blank cheque, but it takes real talent to be competitive when you have significant financial constraints.

Investor demand for performance 

Now, the companies and individuals who own these Formula 1 teams are in it for a few things. They typically want to be the best, they want to win - but they also want to grow their brands. Now, RedBull doesn't even sell cars, but it has two Formula 1 teams: RedBull and its feeder team Toro Rosso. The RedBull brand is synonymous with high performance, which is why they do things like sponsoring the X Games and initiating brand collaborations with companies in adjacent markets like GoPro. Most of all, the people who invest in Formula 1 want to win and they don't appear to be too patient about it either.

 The influence we see the team owners exert is probably more than most large publicly traded companies. It seems to operate more like a large private firm that has a rugged individualist for a founder, but lacks the same level of scrutiny and oversight imposed by market listing rules and the regulators who enforce them. But at the end of the day, boards and CEOs come and go based on the performance of the business, and Formula 1 is no different. My second observation is: performance is critical. And if you don't perform, don't expect to have the endless support of the people who are footing the bill.

The team is critically important

Each weekend, a successful race is determined by how well every individual and department (for want of a better word) carries out their role. There is:

• Of course, the car design and construction: these are tweaked with continuous improvement, right through the season, to ensure the best car possible is put on the track every week. 

• The pit crew: they are unbelievable to watch - like a well-oiled machine. They can change the tyres of the car and have it back out on the track in about two seconds. But when they don't do their job, when things aren't done properly in the pits, cars don't make it to the finish line.

• The drivers 

• The engineers and the technical analysts

• The senior management - we see stark differences in the styles and approaches of the Team Principles. This in itself made for compelling viewing. 

My third observation is that Formula 1 is probably the ultimate expression of teamwork because it's so multifaceted. To be successful on race day, everyone has to do their job and perform in their specialist area. One weak link means failure.

Nepotism

There's more than one example of investors only making capital available if they get to influence driver selection. This is quite different from the corporate world for the most part. These investors aren't stupid - they still want the best result and they want to win. Probably the most obvious example in the series is the Canadian billionaire, Lawrence Stroll. He invests heavily in an F1 team, making his funding contingent upon his son, Lance having one of the two driver seats. Now, initially I thought this was complete folly - but as the series went on, we see that Lance Stroll is every bit as committed, hardworking, and capable as any other driver. Plus, he carries the weight of expectation that his father places on him and has obviously done so all his life. 

My fourth observation is a really interesting one because I'm a huge believer in the fact that nepotism sub-optimises performance for a range of reasons. But this series opened up my thinking to another dimension. If there's a commitment to putting results first, then the trust and dependability that comes with a very close relationship can be extremely valuable. Obviously, the reason that this is a surprise to me at my age is because I've never actually seen this work well, but in the F1 series, I can see the possibility of it working. 

To perform at this level takes something special

It's an unforgiving environment to be sure, but the similarities between Formula 1 racing and some of the most successful sporting teams ever to play are obvious. I recorded a podcast episode a long time ago on another documentary that chronicled the story of Michael Jordan's Chicago Bulls back in the 1990s - they won six NBA championships in a span of only seven years - that was Episode 92 - The Leadership Dance: A Winning Mindset. Then, close to my heart, there’s the most successful NFL team in recent memory: the New England Patriots. 

Now, these teams are in that rarefied air of being at the absolute pinnacle of the most competitive markets on the planet. They only attract the best of the best of the best as participants. In each of these cases, it's apparent the approach to their goals, and the lack of tolerance shown to those who don't perform or behave in accordance with those goals, is brutal and uncompromising. But it's only through imposing these incredibly high standards and stringent demands that these teams can actually win because the competition is so tough. My fifth observation is: every leader in every organisation gets to choose how far they're prepared to go in the quest for high performance. Very few go as far as the Formula 1 teams do. I certainly wouldn't recommend replicating that culture. Everyone who turns up in Formula 1 knows the deal. They willingly subscribe to doing the things that it takes to be the best of the best. It's just not for everyone. 

Accountability

You know how close accountability is to my heart. It's interesting to see the differences in how the accountability model plays out in different Formula 1 teams. One team in particular spends plenty of time making excuses for their under-performance. This starts with the Team Principal and goes all the way down to the drivers and the pit-crew. Eventually the team owner gets sick of it and pulls his funding and support for the team. It's instructive to watch how this team continues to perform below their potential because excuses are allowed to be made in all areas of performance. It's basically the cultural death knell for their winning aspirations.

When all you have at the end of a race is a time on the clock and a place across the finish line, it’s pretty black and white. As unforgiving as that is, it's the only measure of team performance and success in the Formula 1 world. My sixth observation is that even in the high stakes ultra-competitive crucible of Formula 1 racing, human nature is to make excuses when things don't work out. But it's pretty difficult to sell a story that the dog ate my homework, when all the Formula 1 teams face an identical competitive environment - investment seemingly, notwithstanding, of course. Strong accountability is a prerequisite for success in any business. And this is no different.

MANAGING TALENT AND PERFORMANCE IN A HIGH PERFORMANCE CULTURE

There are just two more points that I want to cover: 

• the observation made by the AFR journalist that under-performers are callously discarded.

• bullying and harassment are commonplace in Formula 1. 

So let's talk about the under-performers first. Every driver in Formula 1 - and every driver aspiring to be in Formula 1 - understands that they have to perform every week in every race. “You are only as good as your last race,” reflects one driver who is experiencing the highs and lows of the competition. And yes, drivers who don't perform get dropped. Now, this is no different from any sporting team or indeed any business, but there are certainly times in the documentary that show the way it's done is very poor. So fundamental leadership errors like: 

• not communicating adequately 

• not giving direct, specific, targeted feedback when things aren't working out 

• criticising individuals in public, within earshot of their teams

• having what appears to be an expectation that because these guys are the best in the world, they will know what to do in every circumstance.

The AFR article also makes reference to Jack Welsh and his 70/20/10 approach when he was at GE. This was all about ensuring that you retained and grew the talent in your organisation. Welsh's view was: 20% of your people are the high end - they’re the ones that you support, promote, love, pay. That's your top people that are going to drive the organisation forward. Then, there's the essential rump of the organisation, the 70% that just want to come in, do a good job and go home. There's plenty of those, and they are incredibly valuable. But the bottom 10%, every single year, he turned over. In other words, if you find yourself in that bottom 10%, you better go and find another job. By Welsh's thinking, it was cruel to keep you in a role that you couldn't be successful in, and it was bad for the organisation because it wasn't performing as it needed to.

Now, when Jack passed away in early 2020, I recorded a podcast episode to mark that milestone as he was an incredibly prominent and influential business figure for a decade  - that’s Episode 81 - Jack's Legacy: The Good, The Bad and The Ugly. Now, whereas I don't necessarily agree with the 70/20/10 approach, I absolutely believe that an organisation has to systematically and diligently manage talent and performance if it wants to be successful in the long term. This concept has been challenged over the last several years, as organisations bend over backwards to satisfy their employees’ every desire. That's okay, but just remember: you'll get the performance you demand. If you want long term performance, profitability, and longevity for your business, you need to hold people to account for their performance and behaviour. It's best for everyone in the long run, even the employers who might want their short term desires met now at the expense of the company's long term viability.

So my observation on this is: in a high performing environment, you can't afford to have any passengers on your team. Those who sign up, know the deal: perform or move over. There are only 20 Formula 1 driver seats, and always thousands of capable, driven, ambitious drivers coming up through the ranks. But here's the thing: when someone has to go, you can't necessarily change the outcome, the decision needs to be made. But you can change how it's done, so that it’s not callous and brutal, but rather compassionate and firm. 

KNOW YOUR POWER AND WIELD IT WISELY

Finally, the claims of bullying and harassment. Now the AFR article says that the dog-eat-dog workplace culture of F1 is, and I quote, “One that would likely be ruled illegal under Australia's Fair Work Act and various state industrial laws designed to protect workers from bullying and harassment.” Let me be really clear: there is never a situation in which bullying and harassment is okay. There is no place for it in leadership. However, I didn't actually see evidence of this in the documentary. Robust conversations? Sure. Poorly executed decisions? Sure. 

Now the author cites an autobiography by an ex-World Champion driver, Australian Mark Webber. I haven't read it, but apparently in the autobiography, it details the bullying and harassment in some depth - and just getting a tiny window through the Netflix doco into the Team Principal in question, I can see how that individual might cross the line into bullying. We have to be really careful here. This is not as black and white, as it sounds. 

Bullying is in the eye of the beholder 

I've seen bullying claims made against lower-level leaders purely because they were demanding that a team member do the job that they were being paid to do. That's not bullying, but it's a perfect way to get a manager to back off when they start imposing a minimum acceptable performance standard on their team members. In a culture of entitlement and under-performance, as I've seen liberally in some of the organisations I've worked in, this is a cynical way to preserve the status quo. So, I’ve come to see how many shades of grey there are around this stuff. 

It's incredibly important to consider who you are talking to 

When I gave my senior executives feedback, I was always very direct - fair, respectful, but direct. These were highly capable, experienced, and resilient individuals. I would never be that direct with someone more junior. They would interpret the conversation very, very differently, and the power imbalance that exists purely because of the layers between me and them would give my comments a completely different interpretation. 

My final observation is: there's never any excuse for bullying or harassment. It can have no part in your leadership repertoire, no matter how frustrated you become or how justified you think it might be - but it's not as black and white as you might be led to believe by the pundits out there who have never had to build a high performing team. Think carefully about the power dynamic, the relationship and the intent of every performance-based conversation you have with one of your people. 

Unlike the AFR article, I do recommend the series Formula 1: Drive to Survive. It's a fascinating case study looking at what drives high performance in a business that's at the pointy end of engineering and human excellence. There are so many lessons to take away, even if sometimes it's by counter example. Remember that as a leader, you get to choose the level of performance you demand from your team, but sometimes the organisation or industry you're in makes those choices for you, to a large extent. We all need to work out the level at which we are comfortable. Of course, the F1 protagonists are comfortable in the white-hot, cut and thrust of one of the most competitive work environments on the planet. We all find our level eventually and we’re drawn to the type of culture we feel as though we fit into and that we are comfortable to create as leaders.

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