What Can Businesses Learn from Formula 1 Motor Racing Teams?

By:  Ken Pasternak, Sr. Leadership Consultant & C-Suite Coach, Executive Development Associates, Inc. 

What Can Businesses Learn from Formula One Motor Racing TeamsFinding ways to create and sustain exceptional levels of performance poses challenges for executives in all industries. While not immediately apparent, examining the highly competitive and constantly changing sport and business of Formula 1 racing can provide lessons that are relevant and transferable to all business leaders and their organizations. 

The value of the Formula 1 industry is estimated at over $3 billion. Ten teams crisscross five continents over nine months, competing in 22 races in 22 countries. Team budgets range from $150 million to more than $400 million. The number of employees on each team varies between 250 to 950. And a television audience of 1.9 billion makes Formula 1 the world’s most watched annual sports series.  

Formula 1 racing is considered the pinnacle of motor sport in terms of technology and innovation. How each team plans, designs, develops, and performs at the track and every day in the factory, determines the difference between a podium finish and being at the back of the field. What can we learn from observing how they operate? 

In Formula 1 there is a constant imperative for change and agility. The environment in which any business develops and implements its strategy is never static. Forces that impact the market emanate from the economic situation (need to ‘level the playing field’ between well-funded and smaller teams); regulation (governing rules have changed often, much to dismay of teams and fans); technology (it goes without saying in this sport which has the most advanced technology in all of motor racing); sustainability (F1 has pledged to become carbon neutral by 2030); and of course competition (the slowest competitor being only 5% below the speed of the fastest among the cars on the track). If a business does not continually change and adapt it is doomed to fall behind. 

In order to bring a winning product to market, companies must work cross-functionally. Research and development, product design, marketing and sales, finance, distribution, etc. must all work in harmony in order to provide customers with a product that meets their needs and expectations. In Formula 1 it is not only about the engine, the chassis, the tires, or the driver. Rather, success comes from having all these units within the team working together to create and sustain peak performance on the track where it matters most. This is no place for performance disrupting silos to develop within a team 

More and more companies must engage with external partners who are not their employees, but whose contributions and input are critical to meeting objectives.  Formula 1 teams work collaboratively with and depend on external partners – IT and telecommunications providers, components manufacturers, fuels and lubricants companies, advertising and public relations firms, etc. in order to bring the whole package to a place on the podium. Creating a culture of productive collaboration is crucial to high performance. 

Formula 1 relies on the continual sharing of knowledge to ensure competitive excellence. Performance on the track requires that the whole package i.e. inter-relatedness of engine design (power and reliability) to aerodynamics (chassis design and materials used) to set-up (final configuration of components) to tyres (correct choice for the circuit and the weather conditions) – be optimised. This cannot happen unless there is a clear goal for the entire organization and open sharing of information between the various ‘corporate’ functions. 

Formula 1 teams have a passion and commitment to innovation. Simply put, if you do not continually innovate in a fastmoving market, you are going backwards. Innovations that do not represent a sustainable competitive advantage are copied very quickly by competitors, so the culture of constant design and development is critical. A Formula 1 car has over 30,000 components and one team has estimated that it changes a part on its car every 18 minutes on average during the season. 

In Formula 1 teams we see the importance of continual learning and making quick decisions. All organizations need to demonstrate a bias for action. If one waits too long to change or innovate, the competition will get there first. Creating a culture of innovation requires that a company be prepared to fail from time to time. Learning from failure is crucial. What matters most is how the business incorporates these “learnings” into actions. 

Successful Formula 1 teams place a high value on the importance of communication, both internally and externally, as a means for people to fulfill their job requirements and meet customer/partner expectations. Moreover, open communication must be practiced from the top down, bottom up and sideways by the organisation’s leaders, setting an example for everyone. 

Observing parallels between sports teams and businesses can be edifying and useful. Formula 1 provides an example of a global, competitive industry where high performance must be delivered by each team at the at the limit of their financial, technical and human potential. 


About the Author: Ken Pasternak’s unique background combines experience in training, consulting, institution building and corporate banking in the USA and internationally. As a consultant, facilitator and keynote speaker he focuses on leadership, talent development, team effectiveness, improving communications skills and building cross-cultural understanding. 

Ken has worked with private and public sector leaders across USA, Europe, CIS, China, Africa and the Middle East. His clients have included executives from a wide range of industries including telecommunications, manufacturing, power and energy, transportation, banking, municipal infrastructure, retailing and agribusiness. 

Ken is the co-author of Performance at the Limit, Business Lessons from Formula 1 Motor Racing published by Cambridge University Press which was the inspiration for an 8-part BBC World television series entitled, “Formula for Success.”