McLaren Formula 1 Team: Racing on the Innovation Track

The chief executive officer of McLaren Racing (McLaren), is considering the next strategic investment for the upcoming Formula 1 (F1) 2020 racing season. With goals to win the World Constructors’ Championship and challenge the top three F1 teams, the McLaren team must consider the benefits and challenges of two options: changing engine suppliers for radical improvement, or staying with the current engine supplier for incremental innovation. Adopting a new engine (Mercedes) would offer comparatively more speed than staying with the old engine; however, millions of data points collected from the old engine would no longer be applicable for future iterations. Alternatively, staying with the old engine (Renault) would allow McLaren to incrementally improve upon its existing car, but the fast innovation cycles in F1 mean McLaren must carefully weigh the possibility of diminishing benefits associated with this option.<br><br>In a highly uncertain environment with fast-paced design cycles, F1 offers a unique setting to understand how organizations in an innovation-based industry balance the competition between radical and incremental innovation. The trade-offs offered by these two approaches are further compounded by competitive innovation cycles, high costs, tight timelines, and planning limitations due to a considerable degree of luck on the race tracks.

The case was developed for undergraduate- and graduate-level courses on innovation management, managing in the creative economy, technology management, and new product development in creative industries. Working through the case and assignment questions will give students the opportunity to do the following:<ul><li>Understand and analyze the characteristics and suitability of radical and incremental innovation within the context of a fast-paced and innovation-driven industry.</li><li>Identify various innovation processes and the need for integration among the different processes (e.g., data, designer, and human-driven innovation).</li><li>Differentiate how commitment to an innovation process affects subsequent strategies (e.g., commitment to radical innovation would affect subsequent pit stop and tire strategies).</li><li>Assess the sustainability of the various strategies for overcoming technology obsolescence.</li><li>Identify when to freeze on radical innovation and move to build upon it with incremental iterations.</li><li>Evaluate the phenomenon of diminishing benefits of innovations in a fast-paced industry and the strategies to safeguard organizations against obsolescence.</li></ul>

• innovation strategy
• radical innovation
• incremental innovation
• innovation integration
• extreme uncertainty
• marketing
• decision making