Grapevine: McLaren to sell business software

One of McLaren Group's companies, McLaren Applied Technologies, in a joint venture with British start-up firm SmithBayes, have designed a system based on McLaren F1's analytics technology which they hope will help steer company executives and managers towards making strategic decisions.

Before, during and after races, Formula One teams plug in and stream vast amounts of test and real-time data into highly complex modelling software which, on average, analyses eight million possible scenarios per race.

Based on Bayesian probability, the technology then calculates the best strategy for the team to adopt to win the race or finish as high up as possible.

It then recalibrates and reassesses that information every few seconds based on the live data feed from the car and the race track, which is then used to work out what effect strategy changes, such as pitting early or putting in more fuel, would have on the outcome of the race.

The two firms are hoping that by plugging in data about a company, its market and its proposed strategy decisions into an adapted version of the same software, the management of a company will be able to predetermine whether their plans are simply a case of Monte Carlo or bust.

"it's about business agility and allows firms to make more informed decisions hopefully," SmithBayes Chief Executive Simon Williams told Reuters.

"It doesn't tell you what decision to take, so to speak, but it tells you how likely you are to succeed in your objective if you take one path as opposed to another," he added.

With many firms' business decisions based on an infinite number of possible factors - such as market strength, oil prices, currency movements or geo-political situations - Williams said there is often not one right answer.

"Sometimes if you choose one strategy you might have 10 percent of first place, but if you choose another you have a 75 percent chance of finishing third or fourth."

"So then you have to make a decision whether you go all out or go for more of a banker (safer option)," he added.

Don Sull, a professor at the London Business School, said companies that fail to keep pace with changing markets typically stall their growth.

"The key to seizing these opportunities (of profitable growth) and mitigating these risks lies in strategic agility."

"Strategic agility is difficult to achieve. Companies that rise to the challenge can reap great rewards. Those that remain inflexible risk extinction," Sull added.