WHY FERRARI’S GAMBLE WAS A SENSELESS, UNNECESSARY, AND STRATEGICALLY WRONG DECISION

by Paolo Aversa

Once again Ferrari, one the wealthiest, most experienced, and most awarded teams took a wrong decision during a critical situation, and paid an outrageously high price for it.

Fact. Alonso nudged Sebastian Vettel’s Red Bull at turn 2 on the opening lap, damaging the Ferrari’s front wing. The team left Alonso out, waiting for the chance to change to dry tyres, but the wing failed completely at the start of lap two, putting the Spaniard out (source: Autosport). Result: since Massa could not do better than 5th place, Ferrari lost its first position in the classification and it is in second position with 40 points (same as Lotus) while Red Bull leads with 66. Concerning the Driver Ranking, Vetter leads with 40 points, while Alonso – only 6th – has gained to date only 18 points. Claudio Domenicali, the number one at Ferrari’s pit wall, takes responsibility for the “unfortunate” decision and says it was a team’s choice not to call Fernando Alonso in to repair a damaged car early in the Malaysian Grand Prix. “We took a risk that didn’t pay off (…) The ‘kiss’ [on Vettel’s car] was unfortunate because we could have taken good points from this race” (source BBC).

Domenicali diplomatically called this decision “unfortunate”. I prefer calling is with its proper name “a gamble: senseless, unnecessary, and strategically wrong.” One might argue that this is the kind of situation that, in case of a lucky strike, a F1 amateur would consider as a brilliant strategic decision. As an academic strategist though, I will try to define why this decision was objectively a hazard, as it was based on wrong basis and scientifically failing reasoning. By explaining this, I will point out the paramount difference between strategy and tactic, and why the former in this case should have been a priority compare to the latter.

Decision making is not a matter of scientific certainties, but still strategists should follow a scientific approach through their analysis and decisions to the best of their possibilities. This means analyzing the available data and not taking the the decision with the most likely positive result, rather than an unlikely decision with the highest possible outcome. It is a fact that, despite the terrific amount of information from telemetry, in F1 there is no way to objectively assess the gravity of crashes on parts of the chassis. The only thing that the people from the pits can do is checking the speed, looking at the videos running on their screens, and trying to figure out how bad the crash was and how long the vehicle could hold. Asking the driver for his sensations might be on the one hand a good decision, but it might be highly misleading too since – as for the front wing – the driver cannot see that section of the car from his seated position. As soon as Alonso hit Vettel it was clearly visible that one front wing pillar was broken and the front wing was dragging along the ground on the left-hand side. There was no way to measure how long that precarious situation would have hold, but even from a semi-layperson standpoint I can affirm it looked pretty bad, and as Ferrari thinking heads had no way to get better measures than this on its resistance. Hence, it would have been the right decision just to tell Alonso to stop and change the front wing as soon as possible. No data means no information, and taking decisions without any proper and reliable measurement is nothing better than gambling. There can be situations – such as the final race of a still unresolved seasonal battle – where strategist might need to go for a “all or nothing” decision in order to finish the season ahead of the rival, but this is not the case of the Malaysia grand prix, the second race of the 2013 season. At this point having Alonso finishing the race and avoiding the risk of scoring a miserable “0” – as he did later  – offer a lot of advantages that needed to be taken into consideration.

First, at the beginning of a season cars are still in development process. Teams know little about their vehicles, and since testing is now capped for all teams, each additional mile raced brings an added value derived from the data the teams collect and the technological insights they can derive from this. Having Ferrari’s best driver out at the second lap is a situation to be avoided at any cost at the beginning of the year. Second, Ferrari has recently proved to be a strong but emotional team, which suffers having to chase competitors’ performances rather than defending a leading position in the ranking. For this reason it is important to keep the gap between Red Bull at a minimum, and thus avoid the psychological pressure for results that negatively affected Ferrari at the end of the last few F1 seasons, thus probably contributing to unsatisfactory results for a team whose ambitious cannot be satisfied with a silver medal.

Finally, leading strategists should have clear in mind that strategies are related to long term results, while tactics are for short term goals. When aiming for a short term result might affect the long term achievement, leaders should know that strategy needs to be prioritized, as tactic might create myopic behaviors, and ultimately failure. I agree with Gary Anderson from BBC saying that “Ferrari have made a string of strategy errors in the last few years and you have to say there is a wider problem there that needs to be addressed. It wasn’t as if it was a snap decision – it happened at the start and the first lap is nearly two minutes long.” I notice how Ferrari is now minimizing such outrageous mistakes, which I believe makes the decision to replace Chris Dyer as head of race track engineering for his mistake which cost Alonso the 2010 drivers title in favour of Sebastian Vettel look like a scapegoat execution, rather than a serious (and necessary) attempt of honestly assessing Ferrari’s current strategy skills, and working hard for a significant improvement.

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THREE STRATEGY LESSONS FROM THE #F1 GRAN PRIX OF AUSTRALIA 2013

(By Paolo Aversa, Ph.D.)

Last weekend the Australian Grand Prix has officially started the 2013 Formula One season. Raikkonen won the gran prix with an unexpected two stop strategy, while the others main competitors opted for three. After one race, Raikkonen (Lotus) leads the drivers’ world championship with 25 points from Alonso (Ferrari) on 18, Vettel (RedBull) on 15, Massa (Ferrari) on 12, Hamilton (Mercedes) on 10, Webber (RedBull) on 8, Sutil (Force India) on 6, Di Resta (Force India) on 4, Button (McLaren) on 2 and Grosjean (Lotus) on 1. Ferrari leads the constructors’ points with 30 to Lotus’s 26, Red Bull’s 23, Mercedes and Force India’s 10 and McLaren’s 2. It is, of course, far too early to draw any conclusion on what is going to happen in the remaining 18 races. Still, if taken alone, the Australian GP does give us some general lessons – or at least hints – on motorsport strategy we could discuss.

First Lesson: strategy is about consistency. In the end, paraphrasing what Fernando Alonso said, it is more important to have a perfect weekend rather than being the fastest car on track on Sunday race. Success comes from a consistent path of development and results that starts on Thursday and gets its climax on Sunday. One can win one race because of chance, but to win a championship teams need consistency and continuous improvement throughout the season, for both drivers. Also, in causality terms, the best way to be the fastest on Sunday is being consistently performative during the previous days.

Second lesson: strategy is about surprising. After so much talking of the quicker degradation of the new Pirelli tyres, it seemed obvious that there was an opportunity for better grip, and thus developing faster cars compared to 2012. So all the teams – but Lotus – gave for granted that the magic formula was getting car performance to the limit, changing tyres 3 times per race. However, Lotus surprisingly proved that it is possible to reach the highest podium with a fast-but-not-so-fast car if this features a “tyre preserving” set up. Even the lords of speed Alonso and Vettel racing on the renown prancing horse or the red bull could not do much about it. After the surprise of discovering that Lotus can do pretty well changing tyres only twice, I wonder if Ferrari and Red Bull will try to imitate the two stop strategy, of push toward a even faster car.

Third lesson: strategy has different measures of performance. Apart from the unexpected Raikkonen’s fastest lap just before the end, Lotus was on average not the fastest car of the weekend, and the successful results is due to the golden arrow’s two stops strategy, rather than a series of exceptional lap times. “It was the best start we could have had to the season,” said Lotus Team Principal Eric Boullier. “Not only is it a win, but the strategy we chose also worked. Reduced tyre wear was one of the strengths of the car that we inherited from last season and it was useful because during Kimi’s second stint the other cars were starting to challenge a bit more.” (source Bloomberg). Somehow, reliability paid-off more than speed, and Raikkonen’s posted the fastest lap on the second-last circuit, when we could expect his tyres to be pretty much worn out, demonstrates that Lotus has also potential to further improve its average lap time as well. When teams look at performance, speed is not the only – and not even the main – measure to keep under control. Reliability can be a great performance measure, if combined with the right strategy.

These are three lessons I have learned, but I am curious to see what the teams have learned next weekend in Kuala Lumpur, Malaysia.

Too much innovation can hold F1 teams back, says research (The Engineer)

“The Engineer” talking about the results of one of my studies on F1 Strategy

Formula 1 racing teams that relentlessly focus on new technology could damage their chances of winning, according to a new study. Teams introducing innovations that go further than new technical regulations require tend to perform worse on average than those who simply meet the requirements, researchers at City University London found. This suggests that constantly striving to introduce new technology as quickly as possible is not as strong a strategy as optimising existing systems, the researchers said, particularly in years when there are major regulation changes.

‘Innovation is very important for Formula 1 but the problem is too much innovation and most of all too much exploration,’ lead researcher Dr Paolo Aversa of City’s Cass Business School told The Engineer.

‘Technology works as architecture and a modular item has to combine with all the other elements in the car. If the technology adopted is too raw it might actually increase complexity over a certain point that causes more problems than benefits.’

The researchers studied car performance for different F1 teams between 1981 and 2010, analysing how much their cars were altered each year, comparing that to the minimum technological requirements of changing regulations, and factoring in other strategic decisions that could affect the seasons’ results.

‘When the complexity of the technological update of the regulation increases, the performance of the car on average decreased and the more the regulation changed the more trouble the cars had,’ said Aversa.

‘You would think that the people who did more innovation would do better because the car would do more than the regulation asked, but they actually performed worse.’

The researchers used the example of the 2009 seasons when two relatively new and inexperienced teams, Brawn GP and Red Bull, won first and second place in the Constructor Championship, respectively, together taking 14 of that season’s 17 races.

Both teams used cars that complied with the latest F1 technical updates but avoided the new kinetic energy recovery system (KERS), which wasn’t mandatory but was trialled by more experienced teams – Ferrari, Renault, BMW and McLaren – during the season.

Aversa said he thought that some F1 teams put an over-emphasis on innovation and that, despite other benefits such as prestige or the development of new technology for the mainstream automotive industry, they would sometimes perform better if they took a slower approach.‘Sometimes you have a lot of things in your technological assets that you can further exploit that are still not optimised and that would give you a much better result than trying to do something new to prove that you are an innovator,’ he said.

Read more: http://www.theengineer.co.uk/automotive/news/too-much-innovation-can-hold-f1-teams-back-says-research/1015762.article#ixzz2NXFABwzc

whatshappeninginmanufacturing talking about the results of my of my studies on F1 Strategy

whatshappeninginmanufacturing

redbull300A new study from a leading business school shows excessive innovation in Formula 1 technology isn’t always a good thing. Formula 1 racing teams that continually explore new innovations in an attempt to gain a competitive advantage may actually be damaging their chances of success.

According to Cass Business School researchers, a focus on improving existing F1 technology, rather than trying to invent the next best thing, yields greater success.

At Cass, part of City University London, Dr Paolo Aversa led a research team which statistically examined all the strategic factors influencing Formula 1 competitions between the 1981 and 2010 seasons.

They found that adapting car technology to regulation changes is more beneficial than pioneering new innovative solutions. This is particularly prevalent in years when the FIA forces teams to implement major changes to their cars’ technology.

Exploring new technological solutions push the already high level of complexity beyond the…

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