Dossier: Secrets From the Fast Lane
Everyone talks about doing business at breakneck speed. Few mean it quite so literally as Eddie Cheever Jr.
Cheever, winner of the 1998 Indianapolis 500, has been whipping through life ever since, as a teenager, he won the go-cart championship of Europe. Born in Phoenix and raised in Italy, the 44-year-old racer has driven in more Formula One competitions than any other American and in 1996 clocked the fastest race lap in the 500's history: 236.103 miles an hour. He is also an entrepreneur, the only Indy Racing League driver who owns a majority stake in his own team and manages its business side. And in 2001 he founded Alleanza Marketing Group, a seven-person company that handles $10 million in sponsorship campaigns for his team, Red Bull Cheever Racing, and for the league as a whole. "The actual racing part is only about 50% of the equation," says Cheever, describing his unusual straddling of marketer and marketed. "The racing is a reason to talk about a sponsor's product."
Although Cheever has had no formal business education, Alleanza is his third entrepreneurial venture. Moreover, he says, maneuvering a state-of-the-art machine over 500 miles of asphalt faster than the competition teaches you a lot about, of all things, management. As he prepared for what he hoped would be his second Indy victory, Cheever shared his insights with Inc.
How is running a racing team like running a business?
The most important thing for both a race team and a company is to know what the goal is. In racing, everybody understands that the goal is to win races. If you start a race team and think first about how you're going to profit from it, you won't win races. The same is true in a business. The primary goal of our marketing company is whatever our sponsors are trying to achieve. If we look at an account and think first about how we're going to make money, we won't be successful.
Is there something like a corporate structure within the team? Say, on the pit crew?
The public sees the driver come in for 35 gallons of highly explosive methanol. They see the pit crew changing four tires and making adjustments to the car in 13 seconds. It looks very fast and furious. But there is a hierarchy. There's the crew chief, who tells the driver where to stop the car. Ten people answer to the crew chief. Every mechanic who comes over the wall has responsibility for a corner of the car, to change a certain tire in about 11 seconds. The fueler hooks up the nozzle and pours the fuel in the car, also in about 11 seconds. Another guy does the air jack. All these things have a sequence. So if we have a fast guy who doesn't watch when to lift the car on the air jack, it can hurt performance.
What makes a pit crew excel?
Consistency. Practice. And not feeling pressure. Pressure is the biggest impediment to anyone trying to reach a defined goal in a certain time. At a race like the Indy 500, where the average speed is around 220 miles per hour, for every second you lose in the pit you're going to lose about 108 yards in the competition. So if you multiply that by eight -- on average you have about eight pit stops -- you've lost the race, even if you have the best car, the best engine, the best tires.
How can a leader, a race-team leader in this case, protect the team from the pressure?
I believe knowledge is power. On a racetrack, you can analyze how your car is running in minute detail. That gives you information you can act on to become more efficient, thereby reducing the time pressure. After every event, we have long technical debriefings. We get data from 34 sensors in the car. Every sensor measures one thing -- the suspension, the air flow, the fuel consumption. We're constantly measuring and remeasuring all those things to make sure we don't lose any time on the track. It's like trying to pick fly shit out of pepper, but you're always trying to find things that will make a difference. We also debrief the team on performance. Even if we win, we analyze where we could have done better. You enter a debriefing with limited knowledge, and you leave with more. The teams that win make the best use of that knowledge.
Do you do that kind of measurement with your marketing company?
Absolutely. There are ways to say that an article in USA Today with a headline that reads "Red Bull Team Wins Indy 500" is worth a certain amount of money. An article in a paper in Des Moines might have a different value. There's a company called Joyce Julius & Associates -- an independent sponsorship-evaluation firm -- that measures that for us. It's not an exact science, but it's a tool we use to gauge our media success. We spend tens of thousands of dollars to measure things just so we understand that we're doing the right thing. And often we'll adjust our tactics in a certain city because what we did the year before didn't work.
Do you see marketing campaigns as races?
Yes. In racing, you're going to a war, which is the whole season. And you have a variety of battles, which are the races. For our marketing company, each campaign is also a battle. You have to get the right celebrities to drive traffic to an auto store, for example, or you have to get samples of the sponsor's products out to fans at a racetrack. Our marketing people have to be ready to execute a marketing plan at a racetrack in whatever city we're going to. Things have to go off at a specific time. You can't just say, "We'll wait another week." A clock is ticking.
Which great businesspeople do you think would make great race-team leaders?
I think Ted Turner would have been a great race-team leader. He's very ambitious, and he doesn't blindly follow the current thinking on management. He's always willing to do something different if it will achieve success. Jack Welch would have been great. There's a lot of motivation that goes into this. Often the team is having a hard time with something, and you have to have a leader who is capable of having everybody refocus on what they're doing.
How has your racing experience affected your management style?
I am constantly studying ways to remotivate my people or to set a new direction. I'm always looking for a more efficient way to use resources. In racing, if you sit back for even two weeks and don't make changes to your car or your approach, you start slipping back in the standings. The biggest fear I have is that our company could grow stagnant. I've been called paranoid, and it's true. I always think there's something really bad around the next turn, and I'd better find out what it is.
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