Bernie Ecclestone's Formula for Formula One

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  • Topic: Formula One, Max Mosley, Concorde Agreement
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  • Published : March 7, 2013
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VIRÁG SZOMORA

EXAM NR.: 319595

2013 JANUARY

MANAGEMENT OF TECHNOLOGY ASSIGNMENT #3 BERNIE ECCLESTONE’S FORMULA FOR FORMULA ONE UNIVERSITY OF SOUTHERN DENMARK 2013 JANUARY

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VIRÁG SZOMORA

EXAM NR.: 319595

2013 JANUARY

„They say Formula One is a market which it can’t be, obviously. Our market is independent, it’s a sport.” (Bernie Ecclestone)

Formula One is one of the biggest businesses in the world since the 1980s. The motor racing sport itself is more than a century old, and through these years it carried out, survived and fought lot of changes, innovation and development. Since the first Grand Prix in 1906 in Le Mans (won by the Hungarian-born Ferenc Szisz with Renault) almost everything around the sport was changed. However, cars, drivers and audience stayed. But everything else, like rules, places, teams, and suppliers were changed, added and developed through the years until it reached its format that we all know today. Formula One gathered a huge ecosystem with lots of players and participants like sponsors, promoters, teams and so on. In this paper I will try to analyze this ecosystem and the changes using the tools and frameworks provided by two books: The Wide Lens by Ron Adner and The New Age of Innovation by C.K. Prahalad and M. S. Krishnan.

THE WIDE LENS APPROACH IN THE FORMULA ONE CASE 1. The innovation risk framework As I already mentioned, the original Grand Prix evolved into an extended ecosystem with lot of different participants and lot of different interests, from motor racing to Formula One, from a sport to an empire. This change needed several steps of ecosystem reconfiguration. The original path to market:

Grand Prix

Motor Racing Teams

Viewers

For today this path was extended with other players, thus with other risk factors. Execution risk arises from teams and automakers, without their participation there would be no cars or no drivers. Also the participating countries mean execution risk as well as adoption

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VIRÁG SZOMORA

EXAM NR.: 319595

2013 JANUARY

chain risk, and so does the media, the promoters and corporate sponsors furthermore other supplying businesses that depend on the events and allow the shows to serve for thousands of viewers. Co-innovation risk mostly comes from the automakers and their development capabilities. Co-innovation Risk •Automakers

Execution Risk

Formula One

•Teams •Automakers •Location

Viewers

Adoption Chain Risk
•Promoters •Sponsors •Media •Other

2. Multiplying risks – Co-innovation risk In the ecosystem, Bernie Ecclestone as the innovator had to deal with these risk factors and members. He had to allocate and organize them and had to find everyone’s benefits to participate. The real innovation in the entire ecosystem is how he reconfigured it, I think. Managing execution risk from the side of teams and automakers he had to find out how everyone will find its calculation. They need benefits to participate, because running a team and building and developing cars and technology cost a lot. Managing co-innovation risk depends on the automakers’ willing. Formula One needs them to innovate so it can stay exciting and can renew from time to time, thus it can keep the old viewers and gain new fans. They had to be shown how they can benefit from corporate sponsors and from participating the race, as it offered them a chance to enhance their brands and also an opportunity to develop and test new technologies. Race promoters, so countries and cities participating the Formula One also have to gather profit from the participation, so the will be eager to pay for the privilege of holding one

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VIRÁG SZOMORA

EXAM NR.: 319595

2013 JANUARY

of the 17 annual races. They can gain their incomes from the touristic part of the event as it attracts thousands of people from all around the world, they are willing to travel, pay for hotel accommodation, buy food or rent a car.

3. Broken links – Adoption...
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