How McLaren is spinning off into a technology giant

Much has recently been written about Ron Dennis, and not always in complimentary terms, but there is no denying that whatever his undoings as an individual may be, it was his relentless entrepreneurial drive and vision that turned a declining McLaren race team from the end of the 1970s into a record-setting, championship-winning operation - and one of Britain's great technology groups, to boot.

While the F1 operation may currently be experiencing a barren period - fingers pointed unwaveringly at engine partner Honda - Ferrari and Mercedes inadvertently paid Woking compliments of the highest order by refusing to supply McLaren with power units for fear of being beaten by an identically-powered team. Such is McLaren's reputation, even 10 years after the team last won a title.

McLaren road cars regularly top shoot-outs against the likes of Ferrari and Porsche, and such is demand for Woking's products that 2016 featured a doubling of sales (3200 units) over the previous year, while four straight years of growth (and, crucially, profitability) mean it is on track to hit a target of 4500 units by 2022 - 10 years after McLaren Automotive was revitalised.

To put that in perspective, consider that after 70 years Ferrari moves just double that, while VW Group-owned Lamborghini (established in 1963) in 2016 sold 3400 units. There is no denying McLaren's successes on road and track despite McLaren Automotive and McLaren Technology Group, last-named the holding company for McLaren Racing, being separate legal entities. However, the plan is to merge the companies.

Also currently falling within MTG is an operation that is equally successful (and profitable) in its own right, despite largely sailing below the radar due to the nature of its activities: McLaren Applied Technologies, first visited by Autosport in 2013 when its total headcount numbered 40.

McLaren Applied Technologies then operated as a sister company to McLaren Electronics Systems Limited, which had its roots in race car soft- and hardware, and in upmarket hi-fi (marketed under the now-defunct McLaren Audio brand). In 2014 the decision was taken to merge the two under a common brand and banner.

In the four years since, staff complement has increased to 450 - an indicator of how much the combined business has grown. Ian Rhodes, a mechanical engineer who "moved out of the aerospace industry [Rolls-Royce], and into healthcare, life sciences, medical devices and pharmaceutical, taking med-tech services into big, global companies", has been appointed as CEO.

"The first challenge was to bring those legacy groups together, then identify where the underlying technical strengths were that would differentiate it in the market, in particular, which markets to focus on beyond motorsport. Motorsport is the DNA, the heritage, the background; McLaren and all its technologies were born on the race track," explains Rhodes, pictured above.

If F1 is viewed as a data-driven activity pinned on technologies developed to operate at lightning speeds, the potential exists to transfer the processes that have been honed to other environments and industries

Having been invited to "have a chat with Ron Dennis" Rhodes immediately grasped the potential of the then-nascent MAT, and accepted the challenge to restructure the companies. However, he is quick to add that MAT is not a McKinsey. That biography alone suggests that MAT is far from being auto-obsessed - although, as we shall see, Rhodes and his team do not shy away from McLaren's proud motor racing history.

On the contrary: a recent appointment is Rodi Basso, a former Ferrari/Red Bull Racing and simulator engineer before joining Magneti Marelli Motorsport's executive team, from where he was recruited as MAT motorsport director.

"McLaren had mastered some technologies that are absolutely fundamental to what we need to sort out health," says Rhodes, "or one of the technologies needed to sort out healthcare, because we're all slowly being bankrupted by the healthcare system, [it] doesn't matter what country you live in around the world."

That makes MAT's activities even more intriguing: healthcare and motor racing - these are surely polar opposites that meet only through grave misfortune? If one adopts a narrow view, and considers Formula 1 to be purely a high-speed sporting contest between drivers and teams, then, yes, they are.

If, though, F1 is viewed clinically as a data-driven activity driven by technologies developed to operate under the harshest conditions at lightning speeds, then the potential exists to transfer the processes that have been honed and perfected in F1 to other environments and industries.

"It doesn't matter whether it's a race driver or a Formula 1 car in the pitlane or at [F1] mission control back here," explains Rhodes, "whether it's a surgeon in an operating theatre or an air traffic controller at Heathrow, we've worked in those environments.

"We've helped oil drilling rig engineers, we're helping in the public transport field, we're helping to get public vehicles better connected - a train, for example, so you can push much more information more reliably to and from trains as they travel at over 100 miles an hour down the track.

"Once you've got that connectivity you can provide better Wi-Fi services to customers, and so on. You can start enabling drivers to do more intelligent things, and the way they communicate back with central operational centres, or recover from disruption better. You can inform maintenance staff, get into predictive maintenance in a more intelligent and informed way."

"This connectivity - in Formula 1 we call it 'telemetry' - enables a lot of functions that we can provide in terms of solutions," explains Basso. "Like predictive maintenance, so ticketing systems and understanding in a dynamic way [of] how [many] seats will be free or busy will all improve massively the customer's efficiency, and the business of the customer."

Rhodes explains that it is a three-step process: "You've got real-time, right-time and design-time. That's essentially using the processes we've perfected over a number of years as to how to design and continually refine and perfect a Formula 1 car. It's a very data-driven process. We're taking that, and applying it to other industries."

However, such has McLaren Applied Technologies grown that it is no longer solely reliant on race-developed technologies, having, in the words of Rhodes, "developed our own technologies, and obviously some of those technologies are feeding back the other way. We've starting to get a full cycle going. That doesn't mean we're not still also harvesting from Racing and Automotive, but technologies are feeding both ways now."

Which industries, for example?

"The more public ones that we can talk about at the moment are all in sports goods. So we've moved into sports equipment, rackets, bats, sticks and boards, and footwear. We like to be the technology inside our partners' products," explains Rhodes. "Sometimes it's talked about, like Specialized, high-end bikes. That's part of the business model outside of motorsport."

Healthcare is another area MAT is more than happy to "talk about", so how is that side of the business developing?

"It's coming on very well," says Rhodes. "If I had to make a prediction, I'd say [healthcare] and motorsport make up 50% of our revenues today, and motorsport is going to continue to grow very strongly. If I had to make a prediction in somewhere between five and 10 years' time, health will be the biggest sector for McLaren Applied Technologies.

Alongside its contracts to supply ECUs in F1, Formula E and NASCAR, MAT also supplies sensors, loggers, data analytics, simulation equipment, high voltage power unit, inverters and batteries for other series

"There's really three things we're doing there: the original work we did for GSK [GlaxoSmithKline, McLaren F1's former human performance/marketing partner], besides biotelemetry to support and enhance clinical trials, was in the production facilities where we were helping drive efficiencies and different mind-set and culture in a production environment, so operational performance improvements.

"We're now [also] working in what we call 'digital therapeutics'. A lot of people in the health industry are now talking about how to go 'beyond the pill and around the pill'."

In short, MAT drives commerciality by working within the industry to develop digital platforms to ensure that practitioners and patients use medical devices and/or products at the right time, and to accumulate data that enable patients to be coached into changing their lifestyles.

Rhodes estimates that "80% of the diseases we all suffer from and soak up our healthcare budgets are all self-inflicted, they're lifestyle disease.

"The motorsport business is driving battery technologies at the moment for us. Well, the health business, if you start thinking about some of these wearables, and some of the devices you need to collect data to feed the system, you've got power issues."

This comment not only illustrates the perfect match between the two divisions, but enables a neat switch to the activities of the motorsport division - the largest single contributor to MAT's turnover of approximately £100m per annum.

Impressively, beside contracts to supply standard ECUs for F1, Formula E and NASCAR, the division supplies sensors, loggers, data analytics, simulation equipment, high voltage power unit, inverters and batteries for other series. Plus, from Formula E's 2018/19 season, MAT batteries will enable the series to complete a full race distance without the need for car swaps. Not bad for a company that was spun off from an F1 team...

"We have customers for the power unit [based on hybrid systems of McLaren's P1 hypercar], the motor and inverter," says Basso. "Our ECUs are on almost on every car in Formula E, because that's what happened from the beginning. On top of this we are also working on the Formula E car model for the simulator.

"Today, more than ever, Automotive is keen on using a simulator to understand driveability, challenging the concept. I think the electric [car] in future will be different from a traditional fuelled car, because we need to redesign the gearbox, we need to review how tyres have to be designed. I'm expecting some disruptive innovation in the concept, much more than with fuelled cars."

With access to this electronics arsenal,McLaren Applied Technologies could conceivably field a Roborace project, I venture...

"Of course all the ECUs on Roborace are from McLaren," smiles Basso. "We find it an interesting exercise. We are technology-driven and passionate. I think that motorsport has to contribute back to the rest of the world, which is something that it hasn't done for the last maybe five to 10 years, apart from the Formula E exercise, which we have to [now] acknowledge is a success with all the manufacturers coming in."

Together with Adam Hill, the chief medical officer who heads up MAT's Human Performance division, Basso has developed what he calls "a business line because it's underneath the [motorsport] business unit". Aimed at developing drivers and team for feeder categories, human performance sensors "go beyond the heartbeat, the breath beat. We want to really understand how things work when you have talent.

"Today we ask drivers to understand how to drive; so tactics, the driving line. The simulator is not 100% what you need, but it's a good starting point in order to let drivers practice with pace, consistency, different scenarios, electronics. Some come from manual gearshifts, then need to use paddle shifts.

"So from small things to difficult, complex systems to manage while driving at very high speed. Then you need fitness, both mental and physical. We have the gym downstairs. One important point is technical education. I'm not talking about Formula 1 drivers; I'm talking about 15-year-olds. They need to be technically prepared, be able to read telemetry, understand why they're faster, talk to engineers because the better you talk, the faster you get to the right conclusion.

"They have to market themselves, have to be characters. We have a marketing sister company, and that's a good opportunity to help them to stand in front of a video, to be nice because people have to be willing to pay to see them drive. Learn how to talk to the radio. We have just started, but since it is a multi-disciplinary exercise for athletes, McLaren has got the people, the technical expertise, and the multi-disciplines."

In short, Basso envisages a motor racing "university" with McLaren Applied Technologies providing the campus, and racetracks the work experience in preparation for graduation to F1.

"We have a massive organisation of engineers. They are coming from different fields, not only motorsport where we still have a good core of the group, but also from other fields. And we have people in the business who are very versatile."

"There is a gap in the market place, and there is a big demand," Basso believes, "especially in some areas of the world like the East - China, Japan - and the USA. My vision is to build the format here, then export it: one simulator in the USA, and one in Asia. The gap is big, the cultural gap, about motor racing in general. But McLaren's got such a heritage, such a technical culture, [that] I think we definitely can contribute."

However, apart from bilateral technology transfer, MAT plays another equally important role in feeding the team, and Basso makes no bones about MAT's potential as partner for team sponsors.

"We have a business unit called Strategic Partnership," he says. The real purpose of this unit is to enrich the offer of any company that may wish to partner McLaren [F1], engage in a sponsorship agreement. Today it's not so much about stickers on the car, but the value you can take out of.

"McLaren's got, as you know, a company dedicated to it, and the attention, the focus, the innovation in this respect in terms of activations and what McLaren can offer, is something that I haven't seen elsewhere, and I've been in a few teams."

Basso could continue, but we run out of time: though not before the Italian shares how MAT's technology, telemetry and data could enrich the F1 fan experience. That is a topic for another day, though.

In closing, Rhodes succinctly concludes the interview: "It's what we all talk about, writing the third chapter of McLaren's history. We've had the Bruce McLaren chapter, we've had the Ron Dennis chapter.

"It's time to create that third chapter, which we're all hoping to be part of."