Formula 1 Reinvents Itself Every Year — It’s time for Procurement to Follow Suit
Last week I attended the Docusign Momentum event in London and was blown away by a presentation former SAP CEO Jim Hagemann Snabe gave entitled “Re-invention from a Position of Strength — Leading through the 4th Industrial Revolution.
He opened the session by linking leadership in F1 to that of business the business world. He’s not the first to do this. The confluence of technology, human performance and commercial concerns so prominent in F1 is often used to describe our common corporate landscape. The way Jim approached the topic however really struck a chord. He firstly spoke about the leadership within in an F1 season.
It’s all about continuous improvement. It’s about cutting a least a half second off the lap time of your car between each race in a season.
Because if you don’t, you may start the season the first race winning, but you probably lose the last race of the season because everyone else is constantly improving their car and cutting half a second off their lap times.
For me, this has been procurements mindset for the last decade or two. It’s about continuous improvements of process & outcomes. I refer to this as ‘10% thinking’. I am not knocking it’s, it is absolutely required it’s what our business have expected & needed.
It was Jim’s second point that provided an ‘ah ha moment’ for me. Jim discussed the second level of leadership that related to what F1 teams did at the end of the season.
“But then comes the second type of leadership, which is the ‘between two seasons’ leadership. That’s the moment that the seasons all over and all the rules have changed completely. You get to rebuild the engine. Rebuild the car. Get some new drivers and they are pretty expensive! And then redo the team and reinvent your company. Kind of starting all over again from scratch. And the fact that you won this season, doesn’t give you any commission to win the next season. Unless you are good at reinventing yourself when you have to.
That is exactly what we need to in business. I think we are pretty good at leading within the season. You know, optimising between races. We call our races financial quarters, as you probably know! But are we good enough at spotting a new season?
I think the biggest difference between F1 and business is exactly that. In F1 it’s easy to spot a new season, you can find it in the calendar. And the new rules are handed out to you. hopefully not in a printed version, but in a Docusign electronic version. So you start reinventing your company based on your new rules. Are we good enough in spotting that season in business? Are we good enough in understanding the new rules or will they take us by surprise?”
How do we know the season has ended?
In my experience, this ‘between the seasons’ leadership is where the 10X thinking happens. Great leaders are asking ‘how can I make a fundamental change to the value & competitive position of my company? How can I move from improving by 10% to improving by a scale of 10 times? Taking 10X approach, it forces us to think differently to about the solution and often the problem we have been trying to solve.
The tricky part in establishing this second stratosphere of strategic leadership is knowing when your season has ended. When do you start stripping everything back and seeing your business through a new lens? To address this Snape shared his Davos World Economic Forum Topic (one of the many board positions he holds is at the World Economic Forum) was the Fourth Industrial Revolution.
The conclusions were very, very simple.
We are in a new season. In every industry. In every country in the world. This not a between season optimisation of the car. This is a complete new season.
And secondly, the speed of that change is unprecedented. In the past, we have had generations to get use to a new season. This time, it’s in ten years, maximum twenty. Within a generation, we have to transform, reinvent the car, the engine and the team.
The prediction that I have from that experience is that we see radical change. New seasons in all industries all over the world. Now it not that this theme is new, we have seen a lot of this already. I guess the music industry was first to experience a radical change in a relatively short period of time.
