Image courtesy of @McLarenF1
F1 is a high-stakes sport with hundreds of millions of dollars at risk. While developing new technologies is inherently a high risk endeavor, F1 teams typically favor risk adverse business strategies in order to get a positive return on their investment. Millions of dollars can be spent on technologies, that while promising, may be too far ahead of their time, never making their way to the race track. Most teams simply can’t afford to make such a business mistake.
Yet, these bold engineering strategies are where the big lap-time gains hide. In theory. And that’s the problem. And that’s why F1 is typically a “monkey-see-monkey-do” business. One team develops a new technology, and the following teams incorporate the new technology into their car, reaping the benefits of not having to fund the painful engineering development process.
But. There’s always a “but”. Playing the “monkey-see-monkey-do” game translates to the following teams remaining following teams. The teams (or maybe team) generating the innovations have the advantages of fielding them first and them being able to mature them before anyone else even gets them to the track. In other words, you can’t unseat a dominate team by playing this game.
With the renewed partnership of McLaren and Honda, this very conservation likely occurred ad nauseam. This conversation led to a few brave people making a very brave decision – there would be no “monkey-see-monkey-do” for McLaren-Honda. Instead of playing copycat on current F1 design technologies, they have chosen to forge their own path. Currently, that path has led them to the back of the grid, with one of the premier F1 teams yet to make it out of Q1 with two former-champion drivers.
And it’s not just the leadership at McLaren-Honda who have staked their careers (or at least their reputations) on this strategy. Fernando Alonso chose McLaren-Honda over staying at Ferrari, well understanding the high risk strategy at Woking. Well, we hope he understood, but we think he did. With Vettel’s win in Malaysia in a Ferrari, Alonso has been hounded with questions of his regret at abandoning Maranello. Alonso contends, unless Ferrari wins the championship, he made the correct decision.
It’s welcoming to see such a high level of commitment to this high risk strategy. Yet, maximum commitment doesn’t assure success. So far, the success hasn’t come. In fact, the only team McLaren-Honda can outpace in qualifying is Manor, who are running a 2014 car and powerunit. There will become a time when the bold decision makers at McLaren-Honda can no longer hold the weight of the risk if the strategy doesn’t bear success. There is more at risk for the stakeholders than we might initially suspect.
Honda
Honda is a publicly traded company whose goal is to generate profit. Unfortunately, that’s the simple truth for any public company. Honda have invested untold hordes of money into R&D for their partnership with McLaren. While some of this technology may translate to their road cars, this partnership is largely to generate brand recognition. That strategy works, only if they’re competitive. Outpacing only the Manors is a massive embarrassment to Honda. Much as Red Bull have recently brought attention to their ROI (return on investment) concerns, Honda need to win in F1 to justify the R&D investment. They must win. We can’t forget, Honda have pulled the plug in the past on their works F1 team, prior to the 2009 season, despite having developed a car that Ross Brawn was able to carry to a championship.
Ron Dennis
While Eric Boullier appears to make the day-to-day decisions for the race team, a decision of this magnitude surely would have come to Ron. Even though the majority of discussion has been around McLaren’s performance on track, it’s easy to forget the business side of the team. For instance, McLaren have not had a title sponsor for several seasons. Ron says he refuses to undervalue his team. Another way of interpreting this statement is that companies no longer value McLaren as highly. Yet another interpretation is that Ron feels he gains more value from branding the McLaren name. Just recently, a partnership was announced in the medical field with the McLaren Technology Centre. This business partnership is likely lucrative for McLaren, but it is title-sponsor lucrative? Like Honda, Ron has gambled on success. Without a title sponsor, Ron will struggle to convince other industries that McLaren technologies are worth the large investment.
Fernando Alonso
Despite not having a won a championship since 2006, Fernando Alonso is, nearly universally, hailed as the driver of his generation. The question becomes, when does his generation end? Recently, Alonso has expressed that he intends to end his career at McLaren. Well, he said the same thing about Ferrari. Yet, something seems different this time. One, he’s older, and he accepts that. Two, with most drivers at top teams tied to multiyear contracts, where could he go? In all likelihood, McLaren-Honda is it for Alonso. To this point, he’s yet to make it out of Q1. If McLaren-Honda can’t deliver, Alonso’s career will punctuated by the driver of his generation whose career went out with an embarrassing whimper at McLaren-Honda.
How long can the McLaren-Honda partnership survive going out in Q1? The evidence suggests they are improving, but certainly by the third race, they had hoped for more. In addition, is making it to Q2 truly success for McLaren-Honda? No. Definitively no. They must win. As of today, there is no evidence that this high risk strategy will produce wins. Only time will tell. But, as time passes, patience wears thinner. Can McLaren-Honda sacrifice the entire 2015 season for the hope of success in 2016? The last time a Honda car sacrificed an entire season, in 2008, the next season, the car had a different logo on the nose.
