executive briefing RESEARCH Advanced Institute of Management Research www.aimresearch.org Racing For Radical Innovation How motorsport companies harness network diversity for discontinuous innovation Written by: Rick Delbridge, AIM Senior Fellow, Cardiff Business School Francesca Mariotti, AIM Associate, University of Stirling AIM – the UK’s research initiative on management The Advanced Institute of Management Research (AIM) develops UK-based world-class management research. AIM seeks to identify ways to enhance the competitiveness of the UK economy and its infrastructure through research into management and organisational performance in both the private and public sectors. Written by: Rick Delbridge, AIM Senior Fellow, Cardiff Business School Francesca Mariotti, AIM Associate, University of Stirling 2 about AIM AIM consists of: ■ Over 250 AIM Fellows and Scholars – all leading academics in their fields… ■ Working in cooperation with leading international academics and specialists as well as UK policymakers and business leaders… ■ Undertaking a wide range of collaborative research projects on management… ■ Disseminating ideas and shared learning through publications, reports, workshops and events… ■ Fostering new ways of working more effectively with managers and policymakers… ■ To enhance UK competitiveness and productivity. AIM’s Objectives Our mission is to significantly increase the contribution of and future capacity for world class UK management research. Our more specific objectives are to: ■ Conduct research that will identify actions to enhance the UK’s international competitiveness ■ Raise the quality and international standing of UK research on management ■ Expand the size and capacity of the active UK research base on management ■ Engage with practitioners and other users of research within and beyond the UK as co-producers of knowledge about management contents AIM – the UK’s research initiative on management 2 About AIM 3 AIM research themes 4 Executive summary 5 Introduction: the UK motorsport industry 7 Section one: lining up on the innovation grid 10 Section two: routes to radical innovation 11 Section three: what do successful innovators look like? 13 Section four: innovation potholes 16 Conclusion: maintaining pole position 19 3 AIM research themes Current AIM research projects focus on: UK productivity and performance for the 21st century. How can UK policymakers evaluate and address concerns surrounding the UK’s performance in relation to other countries? National productivity has been the concern of economists, government policymakers, and corporate decision-makers for some time. Further research by scholars from a range of disciplines is bringing new voices to the debates about how the productivity gap can be measured, and what the UK can do to improve the effectiveness of UK industry and its supporting public services. Sustaining innovation to achieve competitive advantage and high quality public services. How can UK managers capture the benefits of innovation while meeting other demands of a competitive and social environment? Innovation is a key source of competitive advantage and public value through new strategies, products, services and organisational processes. The UK has outstanding exemplars of innovative private and public sector organisations and is investing significantly in its science and skills base to underpin future innovative capacity. Adapting promising practices to enhance performance across varied organisational contexts. How can UK managers disseminate their experience whilst learning from others? Improved management practices are identified as important for enhancing productivity and performance. The main focus is on how evidence behind good or promising practices can be systematically assessed, creatively adapted, successfully implemented and knowledge diffused to other organisations that will benefit. 4 executive summary This report summarises the research findings from a study into how the successful introduction of innovation in motorsport is organised and managed. The motorsport industry is a good example of how creativity, engineering, manufacturing and support services can be combined to produce world class innovations. As such it offers potential lessons for other organisations seeking to become more effective at the kind of radical innovation that provides sustainable competitive advantage. The primary focus of the research was the way the motorsport industry harnesses the power of diverse networks – networks outside the usual sphere that a firm operates within – to generate radical innovations. Over 50 in-depth interviews were conducted in motorsport organisations, including seven race car manufacturers, in France, Germany, Italy and the UK. Key findings The research explored specific examples of radical innovation being successfully brought to the race track and identified the key characteristics of how this happened. The findings show the importance of managing a diverse network and seeking to draw on a range of diverse or distant sources of knowledge. Successful innovators: ■ Engage in wide exploratory innovation search activities, looking beyond their own knowledge base and domain of expertise; ■ Identify the advantages offered by new combinations of existing knowledge, through the application of technologies and materials initially developed elsewhere; ■ Often partner with ‘unusual’ firms – firms that operate beyond the usual sphere of collaboration, in the motorsport industry; ■ Collaborate with partner companies to establish a close working relationship – strengthening personal ties and promoting more general reciprocity and trust; ■ Encourage lateral thinking within their existing web of partners. 5 The research also identified a number of obstacles that motorsport firms struggle to overcome and that prevent them from building and increasing the network diversity that our research shows contributes to discontinuous innovation: ■ Limited time and resources to try new things or build new relationships; ■ Lack of dedicated staff to carry out exploratory activities; ■ Existing relationships that dominate the network and restrict diversity and novelty; ■ The restricting effect of the high risks, high uncertainty, and high costs involved, which act to limit engagement with new partners; ■ Concerns about the leakage of intellectual property breeding an inward looking conservatism amongst firms; ■ A parent firm strategy to use the race team for ‘in-house’ research and development; ■ FIA regulations which are intended to promote stability of design to reduce costs but can also restrict innovativeness. Some specific priorities for the UK motorsport industry identified by our research include: ■ Promoting lateral thinking within the industry; ■ Building search capability in the identification of technological opportunities and the development of activities that span the boundaries of the motorsport industry; ■ Building collaborative capability in the development of inter-sector relationships, such as those between the aerospace and motorsport industries; ■ Developing network management capabilities both in terms of search and collaboration building; ■ Working to ensure regulatory changes do not undermine innovative activity. Finally, we have a number of recommendations for policymakers: ■ Widen the focus of policy intervention to related sectors in order to promote connectedness and sustain radical innovation in motorsport and the spillover of innovations across sectors; ■ Support firms in network development activities, both along the supply chain and horizontally, through the provision of information on successful innovation and network building practices; ■ Assist firms in the identification and mapping of suppliers and institutional expertise; ■ Assist firms in the identification of potential technological opportunities both within the motorsport industry and in other sectors; ■ Promote the development of skills through the provision of a dedicated infrastructure. 6 introduction: the UK motorsport industry The motorsport industry is a significant part of the UK economy. According to industry estimates approximately 4,500 companies are involved in the UK Motorsport and Performance Engineering Industry and its wide-ranging support activities. The industry has an annual turnover of £6.0 billion, and contributes £3.6 billion worth of exports. The Motorsport Industry Association estimates that the support side of the sector alone – involving events management, public relations, marketing, sponsorship and a host of other support functions – accounts for approximately £1.7 billion of the yearly industry total. And in terms of employment, UK Motorsport supports 38,500 full and part-time jobs, including 25,000 engineers. The sector’s influence and significance extends beyond its scale. Motorsports and performance engineering also has a significant place in the UK as a best practice example of how creativity, engineering, manufacturing and support services, can be combined to produce world class innovations. Carbon fibre wheel-chairs, non-slip boots, hi-tech fishing line and the influence of pit-stop crews on the efficient transferral of patients from the operating theatre to intensive care, are all innovations which have their origins in the motorsport industry. Moreover, the sector in general, and the Motorsport Valley in particular, have long been regarded as a beacon of the UK’s creativity, engineering and innovation capabilities. This makes the industry an ideal focus