Sunday, April 22, 2012

Formula One Needs a New Formula

The topic of the ethics of sports (see last week's blog) does not want to disappear from the news. Reading this weekend’s news about the death of a protestor during the Formula One race in Bahrain will raise eyebrows with any CSR (Corporate Social Reponsibility) Expert. Now it’s even Formula One, that has to answer questions of social responsibility.

In itself this comes surprisingly late. As a sport, Formula One is not the environmentally friendliest sport. With 527 million viewers global television audience in 2010 it is one of the most powerful advertising platform for global brands making sure that even in the remotest hut in Indonesia or the poorest village in Tanzania consumers receive due induction the world of global (Western) brands.

But be it is it may, Formula One is certainly a business success. Taken from modest beginnings in the 1970s by its current President and CEO Bernie Ecclestone Formula One is now a multibillion dollar industry. Run by – and for – ‘petrol heads’ the company has never been exposed too heavily to demands for wider social responsibility. On its website you find nothing on CSR (and the like), something however insincere you will find most certainly on most multinationals of this size and world status.

The more exciting it is to see that a company which so far has never felt any exposure to live up to societal demands beyond its bare business deliveries has moved into the limelight of expectations beyond its core function.  What happened to Formula One this weekend in some ways is not new, but it reiterates three fundamental lessons which companies such as Shell, Nike or Google had to learn the hard way  years ago.

Lesson 1: Size matters. Just by sheer dominance in the racing sport, the size of the customer base (i.e. TV audiences), as well as the scope and scale of its global visibility have exposed Formula One to a much larger set of expectations. This has incidentally nothing to do with the legitimacy of those expectations (see below on this issue). It is just a simple fact of the CSR trajectory of companies, that just by dint of their sheer size they enter this space. Ecclestone might want to compare notes with Apple on this issue. Their troubles with human rights and labor conditions in their Chinese supply chain only rose to prominence at the time the company became one of the biggest players in term of market capitalization. In some ways, those companies just face a flip side of their admirable success in the marketplace.

Lesson 2: Global communication channels are not a one way street. Formula One thrives on its global visibility and presence. You have to give this to Bernie: the way he moved the business in four decades is hugely impressive. The small problem here though is: If you want millions to watch your product, in the age of the internet global visibility is not a one way street. People talk back. And they use your visibility to be part of the story. The protestors in Bahrain during the ‘Arab Spring’ had some exposure on global media during the earlier riots. But a brand such as Formula One of course provides an unique visibility to their issues which is just too effective to be missed. The ‘one way street’ metaphor not only works the way that people may ‘talk back’ but also in the way that if you employ the leverage of modern media, you can’t just control that it is only you who uses these conduits.

Lesson 3: If you are a Western brand doing business in a opressive political environment, the more successful you are, the more likely you will be used as a conduit for people’s political aspirations. Now this leads to the question whether the ‘piggybacking’ of protestors on the race in Bahrain is legitimate. In other words, is Ecclestone right when he says that the protests ‘have nothing to do with us’? Is a Formula One race just this apolitical, neutral sports event? Well, the most unequivocal answer to this came from the Al Khalifa Family itself, the authoritarian regime of Bahrain: in the built-up to the event they ran posters all over the place with the slogan "UniF1ed – One Nation in Celebration". This  was a quite undisguised use of Formula One to bolster their claim to have taken steps to improve conditions for their people since the first demonstrations last year caused the cancellation of the 2011 grand prix. Certainly Bahrain’s dictators got the message that Formula One can be used as a conduit of a political message - so why not people with different political opinions? Sports and politics are strange, but well groomed bedfellows. So Ecclestone has to do his homework here, and be it only for the protection of his global brand. This is even more a problem in the future as he has already moved into China and Russia, and is planning to expand into Abu Dhabi, Vietnam or Ukraine in the future.

Formula One needs an approach to CSR. What we saw this weekend was a dismal performance. And we are just talking good business strategy here. When people die; when journalists are restricted or even denied entry to the country; when the whole world watches the rules of fair play, fair competition and due process just being applied on the race course; when the personal safety of athletes is jeopardized (as in the case of team Force India) – a company has to act. Bernie’s reactive and – candidly – stupid and ignorant attitude will make things worse. He has to activate the same savvy and strategic thinking which made his company move into this public space to master the new challenges to which this very success has now exposed Formula One. 

Photos by Stu Seeger and Jaffa The Cake, reproduced under the Creative Commons License.

1 comment:

  1. One issue I have always had with Formula one are the cars. These cars are engineering marvels, no doubt, but they consume about 4 mpg. Now, for all the practice runs and actual races accounted for, they consume a collosal amount of fuel. The fuel could alternately have been used for far more worthier purpose than to just showcase driving skills and engineering feats. Maybe, the purpose of formula one will be better served, if the companies start focusing on using alternative or renewable fuels. They could use formula one as a platform to showcase the possibilities of renewable fuels and since it reaches out to a global audience, it will be doing a fabulous PR service for promoting renewable fuels.


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