How to stay in pole position: hire a boss who has worked on the floor
20 July 2012
When the German Grand Prix is held this weekend, don't be surprised if a former racing driver heads the winning team.
New research shows that Formula One teams led by bosses who started out as drivers or mechanics win twice as many races as their rivals.
Researchers say the key to success is hiring so-called 'expert leaders' - individuals who have built up years of experience on the floor - instead of general managers. The pattern applies not just in Formula One but across other public and private sector organisations too.
The findings come from Cass Business School and the University of Sheffield where academics analysed every Formula One race - involving almost 18,000 cars - staged in the last 60-years.
They found that the most successful team leaders are more likely to have started their careers as drivers or mechanics compared with Formula One leaders who are professional managers or engineers with degrees.
"Former top drivers, like Jean Todt, consistently turn into successful Formula One bosses, even when accounting for factors such as the resources available to each team," said co-author of the study, Dr Amanda Goodall of Cass Business School.
The authors argue their findings show that organisations headed by 'expert leaders' - individuals with deep technical knowledge and experience in the firm's core business, coupled with strong leadership ability - perform better than firms where general managers are at the helm.
"Is it important that the CEO of McKinsey was an outstanding consultant first? Should the BMW boss be an engineer? Are doctors better at running NHS hospitals? We would argue, 'yes'," said Dr Goodall.
"Over the last three decades, managerialism has become pervasive. Major blue chip firms have shifted away from hiring CEOs with technical expertise, towards the selection of professional managers and generalists.
"The swing of the pendulum has gone too far - leaders should first be experts in the core business of their organisations, whether they are bankers, hospital administrators, restaurateurs or technology innovators. Being a capable general manager alone is not sufficient."
The authors claim that former drivers - and 'expert leaders' in general - make better managers because of their deeply ingrained technical knowledge, which helps them to formulate more effective tactics and intuitive strategies.
They also suggest that 'expert leaders' command greater credibility among teammates, having worked on the floor themselves. Their reputation and track record can also help in luring other talented personnel to join them.
"We can see why comparative newcomers like Red Bull, led by ex-driver Christian Horner, and Sauber, run by former mechanic Peter Sauber, are doing so well in Formula One. These teams may not have a 50-year history like Ferrari but they are led by hands-on experts with deep intuition," Goodall said.
The authors tested their theory on Formula One as the similarities in size and capabilities of the teams allowed more precise comparisons to be made. The small teams also made it easy to assess the influence of leaders.
The study results held true even when the authors accounted for the type of circuit, the fame of the constructor team, the year of the race, and the number of cars in each competition.
Dr Goodall conducted a previous study of 300 hospitals in the US which found that hospitals run by doctors outperform those run by managers.