HANNAH BATES: Welcome to HBR on Leadership, case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock the best in those around you. Managing a team in good times is one skill set. But how do you motivate people when things aren’t going well? Today, we bring you a conversation about leading through big wins AND big losses — with one of the most successful leaders in F1 racing. Toto Wolff is the team principle and CEO of the Mercedes team. But when their 8-year winning streak unexpectedly ended, Wolff had to adjust his leadership style to get them back on track. No matter what industry you’re in, you’ll learn about the difference between directing and leading, AND how to help a team learn from mistakes and move forward. This episode originally aired as part of the HBR Quick Study video series in November 2022. Here it is.
ANITA ELBERSE: I’m Anita Elberse. I’m a professor at the Harvard Business School. And I’m here with Toto Wolff, the team principal behind the Mercedes team, the team behind, arguably, one of the greatest winning streaks in all of sports with eight consecutive team-based championships, the Constructors Championship. And we’re going to be talking about what it takes to build a winning culture. You’ve shown that you can do that. But I actually want to start by looking at this season, because this season the winning streak came to an end. How did you experience this season?
TOTO WOLFF: Yeah, Anita. Good to be back. Actually, remember, we talked about it last February when it was we were here? About eight consecutive world championships. And I said to you, let’s hope this is not the start of us losing. And here we go, end of the year. And we’ve lost that championship.
ANITA ELBERSE: Have you changed your approach? Were there areas where you said, now, what we’ve been doing all this time, we can no longer do? Or has it been still the same kind of leadership approach?
TOTO WOLFF: Over all these years, we really tried to work on our values, the culture, and philosophies how to cope with the day when it comes. We knew there is no sports team in the world that has won every single championship that they entered forever. So that day has come.
ANITA ELBERSE: Yeah, because you’ve talked about this fear of losing all along. And now losing is actually happening. How do you cope with that emotionally?
TOTO WOLFF: It comes in quite an interesting pattern, because at the beginning, you are in disbelief. This can’t possibly be happening. And then comes the phase where you think, OK, this is just a blip. We got things wrong. This is an organization that has been successful in the past. And then you realize, we got this really wrong. And the real risk is that you change your expectations. And this is where it becomes so fundamental to not change your own expectations and not say, well, OK, we’ve lost that one anyway already. Or you get used to a podium and you say, well, it wasn’t so bad. We finished second and third. And in a way, losing doesn’t become as painful anymore as it was before. And that’s real risky. And we’ve lived through this emotion with the team, finishing fifth and sixth or fourth and fifth. And suddenly, you end up on the podium and you think it’s a success. And it’s not. You need to remind yourself how painful it is. If we would have had a fourth and fifth or third and fourth last year, that would have been seen as a defeat. So it’s still seen as a defeat. But you have to remind yourself.
ANITA ELBERSE: To remind yourself that you can’t get used to this not finishing first.
TOTO WOLFF: Yeah. I think it’s how our mind works. It’s almost protecting ourselves from feeling the own mediocrisy. And if you’re not good enough, suddenly you score a result that is better than expected, you’re quite happy about it. But when you scroll back and say, well, how would we have felt six months ago about such a result, you come to the realization, this is not where we expect ourselves to be.
ANITA ELBERSE: Right. Do you have an explanation by now for what has gone wrong?
TOTO WOLFF: Formula One is physics, not mystics. And we can almost trace back to the day we made a decision that sent us on the wrong development path. In simple terms, it’s we continued to develop the car very low ride heights. That means on the floor. And we soon realized, when the car got going, that we weren’t able to run it there. It’s the famous bouncing or [INAUDIBLE] that everybody was talking to. So, our development direction was simply wrong. And to unwind that, undo– you first have to realize, what is it that we got wrong? Because our tools clearly didn’t show us that was a problem. Why didn’t our highly sophisticated instruments not show us that bouncing was a problem? And then you start to scientifically undo this. And it’s almost like you’re peeling layers of an onion off. There’s one problem you think is the essential one, and then there is another layer and another layer. And Formula One is so complex that it takes a while to actually come down to the ground and say, this is what we believe has gone wrong. And then it takes a while to recover.
ANITA ELBERSE: Do you feel everything is in balance again for next season and your chance to win is as great as, say, Red Bull’s chance to win?
TOTO WOLFF: I believe that we have the important pillars in place. We have the right financial structure, the right kit, the right organization, the good drivers, the right engine. Hopefully the management is in a good place. So there is no reason why this team that has won eight consecutive championships suddenly took an idiot pill. That’s certainly not the case. But we can’t really predict when we’re able to come back because if another team has been gotten it right straight from the get-go– and Ferrari and Red Bull have done that pretty well– it can take time to literally catch back up and fight with these guys in the front.
ANITA ELBERSE: I do want to talk a lot more about what we uncovered when it comes to that winning streak and the winning culture that you built at Mercedes. There was the case which was discussed in the classroom here at Harvard. There’s now also the Harvard Business Review article that describes some key lessons that are emerging. When you look at what we’ve produced and then also the discussions that you’ve had with the students, were there lessons that emerged stronger for you?
TOTO WOLFF: I think the opportunity to sit here with you and you visiting us and the exchange with the students is always a two-way street because it makes you reflect. Sometimes you think you have the answers, but challenged by the right questions, actually. You come to conclusions that you wouldn’t have otherwise had. And that student, I remember exactly well. He wasn’t very friendly with his question. He said, “Let’s see how he reacts, whether he sticks to his values and all the things that you wrote on the blackboard when it goes wrong.” And I think that has stayed in my mind until today.
ANITA ELBERSE: Yeah, there was also some talk about being a micromanager and this attention for detail. That is all fine when we’re winning. But the moment the team starts to lose, then maybe that leadership style is not well received. Is there anything like that happened this season, or was it still well received?
TOTO WOLFF: Definitely yes. And this is the learning on the job. I think because I’m a control freak, in a way, in the past, knowing, for me, was enough. As long as I know what’s going on, I can– mistakes happen. And that’s OK for me, because I see things coming and I like the exchange and sometimes the argument within the group to come to the right solutions. But this time around, at a certain stage, I wanted to take control back. And obviously, that is not always great received by engineers and scientists that have been working on singular topics for a long time. But we’ve talked about it. At certain stages they were like, OK, back off a bit. We’ll solve this. And then things struggled and they continue to be a problem. And at a certain stage, I said, do you give me the benefit of the doubt that I have reason to question? Yes. So OK, this is me questioning here. This is not meaning that I’m suddenly micromanaging every detail of, let’s say, the development of the car or the engine. It’s just about understanding where and when did we got the junction wrong, for me to comprehend intellectually of how to avoid that in the future.
ANITA ELBERSE: That makes sense. Do you feel this last season, has it made you a different leader? Or are your employees, the people on your team, are they experiencing differently as a leader?
TOTO WOLFF: Definitely. I think that I’ve changed personally through the process. I think not always to the better at the beginning, but you need to realize and look at yourself and say, actually, I got that wrong. And self-reflection and introspection is something that I’ve always done. And this year, I got it wrong on several occasions, and probably to an effect where my control freakishness and trying to solve it myself annoyed some of the people that were actually in charge of the science. So I will try to, in a way, take the things out of this learning that I think were good. But definitely, I will be a different person next year, different manager.
ANITA ELBERSE: But still a bit of a control freak?
TOTO WOLFF: The control freak is still within me a lot. The force is big. But there are certain areas where I have to just dial myself back a little bit and trust.
ANITA ELBERSE: Great. When you look back at this season and the way it has unfolded, obviously the article describes six leadership lessons that are emerging from it. But is there now another lesson, one key lesson when you look back at this last season, where you say, well, this is now becoming part of the arsenal of approaches that I have?
TOTO WOLFF: Remember, we have talked about the sentence, “The days we lose are the days that our competitors will regret the most, because these are the days we will learn?” And in the past, in the last 10 years, we were talking about that phenomenon about the race weekend, or a spell of races where it gone wrong, and suddenly everything made sense and we learned and the car was fast again. Now here, we are talking season almost finished and we haven’t won a single race. So it’s been making us tougher all year long because you need to cope not only with a blip of a race, but you need to cope with a season that has actually gone wrong. And I’m sure that this will give us extra power for the years to come. The learnings that we will have, how we’ve undone the various layers of development that have gone wrong, the support within the team that we have– there is no risk of a job being made redundant. We have demonstrated that there’s a safety in our organization, contrary to many other teams that have done that in the past. And from there, we will rise again. And this will make us overall much stronger.
ANITA ELBERSE: Great. Wonderful. Well, thank you so much for taking the time to speak with me.
TOTO WOLFF: Thank you.
HANNAH BATES: That was Toto Wolff, team principle and CEO of the Mercedes F1 racing team – in conversation with Harvard Business School professor Anita Elberse. That conversation is part of the HBR Quick Study YouTube series – short takes on big topics in business and work. It was edited and produced by Scott LaPierre, with video by Dave Di Iulio, Elie Honein, and Tristen Mejias-Thompson. More HBR Quick Study videos can be found on YouTube or HBR.org. We’ll be back next Wednesday with another hand-picked conversation about leadership from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. If you’re looking for another weekly dose of hand-curated business and management expertise, check out HBR On Strategy to help you unlock new ways of doing business. We’re a production of the Harvard Business Review – if you want more articles, case studies, books, and videos like this, be sure to subscribe to HBR at HBR.org. This episode was created and produced by Anne Saini, Ian Fox, and me, Hannah Bates. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.
