Formula One is known for its data-driven approach to managing risk and driving continuous improvement to achieve marginal gains in speed, efficiency and performance.
As part of RBC Investor & Treasury Services' Big Ideas Webinar Series, long-time Formula One executive Mark Gallagher shared his insights into how analytics have enhanced car and driver performance — and how data solutions can drive organizations to winning positions in their industries.
1. Risk management is central to data transformation: A strong focus on risk management as part of the digital transformation journey has enabled Formula One to accelerate performance. The industry is tightly regulated to ensure that participants remain committed to achieving positive outcomes while avoiding catastrophic scenarios on the racetrack. Formula One's digital transformation accelerated when the sport understood the power of a connected environment in enabling risk management, which paved the way for great performance.
2. The competition are also looking for data-driven gains: There is a high degree of respect among Formula One competitors as each team strives to innovate, to find a competitive advantage and optimize the connected environment to achieve marginal gains across a wide range of operations. And the competition is intense. Among the Formula One players, there are car manufacturers, energy drink manufacturers and specialist companies that have been involved for many years. That competitive landscape means constantly striving to stay one step ahead and guard against complacency.
3. Remote working is not a barrier to success: Remote working is not new to Formula One. Over the last 15 years, teams have migrated their strategy engineers back to headquarters. On race day, key strategy calls are not made track-side by data analysts and the leadership team, rather those decisions are made remotely in mission control suites at headquarter operations. There, teams of 35 to 40 engineers, software technicians and scientists monitor data during the race as well as information publicly available from competitors. This allows them to model and strategize during the race in real-time and make high-level decisions based on actual data. It is no longer a journey of hope, but one of knowledge.
Formula One is a deeply analytical environment where data is used to understand the connection between all components, including talent, in order to optimize performance
4. Data can produce a winning strategy: Races are modelled in advance. Teams meet on a Sunday morning to analyze how a race needs to be run by their drivers. Predictive analytics are incredibly accurate these days. Lewis Hamilton, the Mercedes world champion, loves winning, so he inevitably looks at those analytics then delivers the perfect performance, which is why he is now the world's most successful driver of all-time. Mercedes' chief technical officer, James Allison, likened Lewis Hamilton to a piece of software — you plug him into the car, program him with what he has to do in the race and he goes out and delivers. Formula One is a deeply analytical environment where data is used to understand the connection between all components, including talent, in order to optimize performance.
5. A digital strategy leads to more efficient resource allocation: The connected environment helps teams to determine how resources are used. Teams can look across a portfolio of projects and, using analytics, conduct a deep dive to determine where they need to spend money in order to get incremental performance improvements. It may be a small incremental step that can be developed quickly over the next two to three weeks, or a longer-term initiative that may take many months or years to come to fruition. The cars themselves are first created virtually, as digital twins, enabling teams to interrogate, analyze and test to produce efficiencies and performance improvements.
The merging of the virtual and the real is giving Formula One a rich opportunity to offer new products and services around the world
6. Unlocking new markets through data: The world of electronic sports has taken centre stage. Formula One now conducts business online with customers around the world, while engaging with them in a very real and meaningful way. It has had a profound effect on the industry. During the first pandemic lockdown in 2020, over 300,000 gamers were trying to compete within the Formula One virtual series — with a staggering 80 million watching online. A new audience had emerged — not millennials, but Gen Z and even Gen Alpha, children aged 10+ years. While they may not want to observe a sport like Formula One, they do want to participate. The merging of the virtual and the real is giving Formula One a rich opportunity to offer new products and services around the world.
7. Unearthing talent from the digital world: There has been some criticism levelled at Formula One in the past arguing that it is inaccessible and elitist. However, E-sports are democratizing the opportunity for a wider range of people, regardless of background and/or location, to compete in Formula One online. It is enabling the sport to get access to an enormous pool of talent. Virtual drivers are emerging who have the ability to operate the systems on a Formula One car with the requisite speed, dexterity and ability to multitask. The gamer-to-racer path is now a possibility. Within the next five to 10 years, gamers may be stepping into cars, perhaps at the level perhaps below F1, and then migrating into the higher echelons of the sport.
8. Data can help shape a culture of performance: Great technology and great people can do extraordinary things with digital technology solutions. Formula One teams use data to drive the right kind of culture within the business. For example, the culture of sharing information means teams can always be honest about their position — because the truth is in the data. It is factual. This drives openness, honesty and transparency about performance while providing the opportunity to learn from mistakes.
9. Changing the game by embracing the change: Successful teams do not shy away from change — they expect it. The most successful teams in Formula One embrace change in a way that is slightly counter-intuitive. Some may expect that Mercedes would want nothing to change, as they continue to dominate Formula One. But, on the contrary, they embrace a change mentality by looking for the next rule change, the next disruption that they can exploit to maintain a winning team.
They embrace a change mentality by looking for the next rule change, the next disruption that they can exploit to maintain a winning team.
10. Being relentless in the drive for continuous improvement: In Formula One, the championship races represent 23 non-negotiable deadlines. Teams must maintain that relentless focus week in, week out. As deadlines are reached, the teams aim to bring software and hardware upgrades to drive continuous improvement authentically across the entire season. They look for changes to make the car go faster next Sunday but also changes that will make it even faster next season. Then there are some very long-term research and development projects as the sport looks to abandon fossil fuels by 2025 and achieve its carbon-neutral target by 2030.
Final word: As a sport that demands continuous improvement on and off the race-track, Formula One's embrace of data is not only driving performance through technological innovation but also unlocking new markets, unearthing talent and enhancing risk management to boost safety. Digital transformation can help organizations in other industries, including asset servicing, achieve similar benefits where marginal gains can be key to success.