How Ferrari Stopped Dominating: Lessons in Work Culture and Leadership from Formula 1

May 12th, 20207 min read

Today, Formula 1 nerds like myself woke up to some pretty crazy news: 4 time world champion Sebastian Vettel and Ferrari decided to part ways after they couldn't come to terms for a new contract.

Vettel @ Singapore 2019
Sebastian Vettel wins the Singapore GP in 2019. Photo Credit: Formula 1 / Getty

For those unfamiliar with Formula 1, it may be surprising to hear Ferrari hasn't won a world championship since 2007. This is in spite of having not one, but three proven World Drivers Championship winners - Fernando Alonso, Kimi Raikonnen, and Sebastian Vettel all drive for them in the past decade.

What gives? This is the team that gets a $100 milion bonus each year just for participating and has veto power on any new regulations. Even when the odds are stacked in their favor, how can the name most associated with Formula 1 not win?

Let me preface and say: Ferrari still has a lot going for it. There's a reason why engineers and drivers alike still covet working for them. Many talented people still work there and are fighting a good fight.

But for an outsider looking in, it appears like it comes down to an issue of leadership and culture. Here's some casual observations:

Build (and Shield) Your Team

Let's take a step back to the early 2000s when Ferrari was a dominating force. What was the defining factor then? Just prior, in the early 90s, Jean Todt was brought in by Luca di Montezemolo to Ferarri to re-build the team. His first big hire? Michael Schumacher.

Schumacher was not only an insanely good racing talent. He knew how to rally the troops and build a team around him. He convinced technical director Ross Brawn and aerodynamicist Rory Byrne to jump from Benetton to Ferrari alongside him.

Schumacher's 7th World Title
Michael Schumacher's 7th World Title. Source: Ferrari

It was the start of a dream team. But a team doesn't survive purely on talent. You need to have the origanizational support too.

Working or driving for the Ferrari Formula 1 team is a huge pressure. The pride of a company, a country and even the worldwide tifosi rides on the teams shoulders. There's so much politicking, misinformation, and demoralizers that can distract a team with that type of pressure.

You need to have good managers to shield your team from those external pressures so that they can focus on the job at hand. Jean Todt did just that at Ferrari. He dealt with the rest of the company and the media while the engineers and drivers did what they do best: come up with a race winning formula.

That environment paid off. They started to attract more exceptionally talented engineers. The team had a string of dominating years from 2000 to 2004 where no one else could come close.

After Jean Todt left, there was a marked change in the company culture. Those amazing team members were poached by other teams. It's no surprise that the same people came together to create Brawn GP and later on the dominating Mercedes F1 team.

Ferrari has struggled ever since then. Since the dream team separated, they've hurriedly hired team principals and technical directors. And the moment there's any real pressure or without the time to nurture and build talent, those very same people are fired before their changes can take effect. That constant churn and chaos doesn't give the team the stability to make the lasting change it needs in an environment as competitive and complex as Formula 1.

Anticipate the Wave (and Don't Stagnate)

Brawn won in 2009, Red Bull dominated from 2010 to 2013 (incidentally with Sebastian Vettel driving), and then Mercedes has crushed ever since (2014 to 2019 at the time of writing).

All three were well positioned to take advantage of sporting and technical rule changes. While others were hanging on to former glory, they were asking questions and testing the limits of the regulations. It was a new opportunity each time to reinvent and find what others had overlooked. They found gray areas in the rules that no one had thought to explore and had a year or so head start on their competition.

Brawn GP
Brawn GP born from the ashes of Honda Racing. Credit: Goodwood FOS

Each of those three examples innovated and dominated during their respective periods. Brawn GP won 2009 with their crazy double diffuser concept. Red Bull was untouchable with their blown diffusers and aggressive aero concepts for 2010 - 2013. Mercedes innovation in their turbo hybrid engines and chassis alongside world class drivers has kept them dominating ever since.

But how did Mercedes achieve such long term success? They didn't get complacent with their victory. Each race and season has its learnings to build on. They win, they briefly celebrate, and then they are back to work dreaming up new ways to improve their racecraft, their car, etc. You see it in their debriefs and in the way they communicate to the outside world. Their current success is only a stepping stone for the future.

Contrast this with Ferrari after their dominating run. New leadership was brought in and their approach to development had changed. They used the threat of veto to new regulations and constantly dragged their heels when it came to new rule changes. And as before, team members started looking to greener pastures where they could use their talent to take on new and exciting challenges.

No Blame Culture

We Win and Lose as a Team

It's part of the new culture instilled at McLaren and similarly the culture that has pervaded through Mercedes' dominance. At McLaren, you can see them beginning to shake off the toxic structures and environment that were plaguing them for years.

Zak Brown and Andreas Seidl
McLaren's Zak Brown (left) and Andreas Seidl (right). Credit: Motor ES

McLaren took a hard look at themselves to see what was wrong. The matrix structure with work silos no longer worked in Formula 1. The finger pointing wasn't productive either. Instead, management like Andreas Seidl and Zak Brown have let their teams be honest about their current performance and new ways to operate towards a common goal.

People are more willing to come forward and risk new ideas if they know there isn't a penalty for failing. Things have already started to turn around: McLaren went from occupying the back row with Williams in 2018 to best of rest in 2019.

The same has been the case at Mercedes. When things do go wrong, they ask the tough questions in a no blame manner. People can openly assume responsibility for both success and failures. When things go wrong, it's easy to get emotional and start pointing fingers. Instead, they took a look back and the things that worked and finds areas to improve. Their culture supports that type of internal growth.

Mercedes 6x WDC / WCC
Mercedes wins their 6th WDC and WCC in spite of horrors of Germany 2019. Credit: TIBCO

However, when things go bad at the prancing horse, heads roll. Whomever is the target of ire, they're vilified from all sides. On the driver side, we've already mentioned Alonso and Vettel. But other successful drivers like Felipe Massa and Kimi Raikkonen have also endured that.

People look to their leaders for direction but if all they hear is bad news from the outside, it causes a rift. Team members, drivers, and leadership all have to be on the same page however difficult the topic might be.

Invest in People

As I mentioned at the top, there's still a lot of amazing things happening at a company like Ferrari. However, I think that a lot of that amazing is in spite of the leadership there.

The same happens everywhere from early stage startups to large corporations. I've experienced it first hand in both environments. Good leaders step up and give their teams a reason and the environment to put out their best work. Bad leaders will work almost at odds with their team in the name of showing themselves or their management in the best light.

It's not enough to have amazing talent on your team. You've got to nurture it to make it count.