Bernie-Ecclestone-1One of the topics Mark Gallagher is frequently asked to talk about is Change Management; the challenge facing business and organisations as the result of changes, be they internal or external factors which can include technology, people, systems, compliance or business models.

“It’s interesting how often people talk to me about the fear of change,” says Mark. “In reality people are not afraid of change, they simply fear being worse off. If the change is that you are going to win the lottery, then you like it. If your job is going to be automated, then naturally you’ll fear it. Where Formula One is relevant in relation to this topic is that it’s a fast moving sport in every way, whether through our use of latest technologies or the fact that the regulatory environment within which we work is constantly changing. We have new regulations every year, and compliance is vital to our operations, so change is not only something we are used to, we learn to embrace it and seek the opportunities it creates.”

Examples of the profound changes in Formula One in the last 20 years include;

  • Business Models; The banning of tobacco sponsorship & advertising in 2005, ending a key 40-year old revenue stream for Formula One teams.
  • Legislation; New rules, laws and corporate governance in multiple jurisdictions which limit the use of corporate hospitality at sporting events.
  • Climate Change; Environmental sustainability requirements for a sport that traditionally burns large amounts of fossil fuel and transports people and freight by air to 20 events per year.
  • Diversification; Ever tighter margins on corporate sponsorships driving a requirement for Formula One teams to diversify their business models and generate new revenue streams.
  • Risk Management; The requirement to put Safety at the centre of Formula One’s technical regulations and to change the culture of the sport to ensure that injuries and fatalities are eliminated.

“Some of these changes came from within our sport, but many were changes over which we had little or no control such as the EU Directive on Tobacco Sponsorship and Advertising,” explains Mark. “The interesting thing is that, after we got over the initial hand-wringing and fear, arguably the sport moved to a better place and is much stronger for having rebuilt its business model around a new set of requirements.”

Current changes facing the sport include a change of ownership of Formula One which saw the recent replacement of CEO Bernie Ecclestone after a near-40 year tenure. There are also profound changes occurring to the way fans enjoy sports events as traditional television broadcasting gives way to streaming, on-demand services and content packaged specifically for social media.

“The next ten years will be as challenging as the last ten. Digital disruption alone will see to that, ” continues Mark. “ If we have learned one thing about managing change it is the importance of being prepared to experiment, question established ways of doing things, and communicating what lies ahead. Even if we don’t have all the answers!

“In fact, by ensuring everyone knows that we are eager to meet challenges head on it encourages innovation and alternative ways of approaching the problem. Ten years ago it would have been unimaginable that the McLaren Formula One team would have spawned a data-analytics business, or that Red Bull Racing would be designing the next Aston Martin road car, but such are the results of Formula One organisations faced with disruption to existing business models. It turns out to be a catalyst for growth.”