- 11/28/2023
Zak Brown, Chief Executive Officer, McLaren Racing Paul Hudson, Chief Executive Officer, Sanofi In conversation with: Alyson Shontell, Editor-in-Chief, FORTUNE; Co-chair, Fortune Global Forum
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TechTranscript
00:00 Well, the Fortune Global Forum is not the only exciting event taking place here in Abu Dhabi.
00:06 Formula One Racing held the 2023 season finale at the Yaz Marina Circuit just yesterday,
00:15 last evening. McLaren Racing is one of the leading teams in F1. Both McLaren F1 drivers
00:22 placed in the top 10 this season. And overall, McLaren has more than 180 F1 Grand Prix wins,
00:32 20 F1 World Championships, and it has won the Indianapolis 500 three times.
00:40 Much of that success comes from the team's digital and analytical expertise and a collaborative
00:47 spirit. Now, the team is taking that spirit and partnering with the pharmaceutical and
00:54 healthcare giant, Sanofi. The goal is for Sanofi to use McLaren's competitive mindset
01:02 and expert data analytics to accelerate improvements to sharpen its industrial performance
01:10 and manufacturing efforts. We're excited to have McLaren Racing CEO, Zach Brown, here with us.
01:18 The Fortune Global Forum and Sanofi CEO, Paul Hudson, joining us virtually. They're speaking
01:25 with Fortune's Editor-in-Chief and Global Forum Co-Chair, Alison Chantel,
01:31 for more on this innovative partnership.
01:35 [Music]
01:50 All right, it is great to see all of you here at Global Forum. Paul, thank you for joining us
01:54 virtually. Zach, thank you for being here as well. Congratulations are in store for both of you.
01:59 Zach, you just wrapped a great season for Formula One, McLaren Racing. And then, Paul,
02:05 you were number 64 on our inaugural Fortune 500 Europe list, so congratulations to both.
02:10 Zach, I have to start with you. Since the last race of the season was yesterday, how are you
02:15 feeling about the season, and what happened between the first half of the season and the
02:18 second half of the season that made it a nice, strong win? Absolutely. Good afternoon, everyone,
02:23 and good afternoon, Paul, or good morning, I should say, I think, assuming you're in Europe.
02:29 It's been a fantastic year for us. It's really a tale of two halves of the season. The start of the
02:36 season was pretty bad. I'd even say terrible. Started off kind of the ninth quickest team. We'd
02:44 not successfully developed our race car. I made some changes over the winter on leadership
02:50 within the team, and the new leadership did a wonderful job in getting on top of identifying
02:57 what our issues were, and more importantly, how to fix them. Our data had told us our car was not
03:02 going to be very strong at the beginning of the year, and our data was correct. And then,
03:06 fortunately, our data told us our car was going to be pretty quick come Austria, right before the
03:12 middle of the season, and we were the second quickest team in the second half of the year.
03:16 And so what looked to be on course for an eighth, ninth place finish in the championship at the
03:22 start of the year ended up being a very strong fourth, and finished us last weekend in Abu Dhabi
03:27 with a pretty strong result, and a team with the second most amount of podiums, nine podiums,
03:33 a couple of poles. So a fantastic end to the season, and already excited for 2024.
03:38 Yeah, amazing. Well, way to go on that turnaround, and I want to ask you all about the data and how
03:43 you use it to signal change and winning in the end. But first, Paul, I was hoping maybe you could
03:50 talk a little bit more about why you're both here on stage today, because a drug maker and a race car
03:55 CEO does not seem like a match naturally. However, you guys have an innovative partnership, as Jeff
04:00 discussed, to speed up manufacturing. So could you discuss the partnership and the results? Why is it
04:05 significant? Well, firstly, thank you. Good afternoon to everybody that's there. Secondly,
04:13 Zach, not had a chance to message you to stay strong end to the season, and congrats to all
04:18 the team. It's an absolute privilege to be working with you and everybody back at the
04:22 McClellan Technology Center. I ran into Zach in Davos a few years back, and we were chatting about,
04:29 amongst other things, sustainability and our commitment to the environment. And we started
04:35 talking about some of the technical issues we faced in healthcare and developing new and innovative
04:39 medicines, some of the challenges that they overcome routinely. And I'll be frank, I got a
04:43 little bit inspired about entering a technical partnership with McClellan to try and help us
04:49 raise our game. We're a highly technical, highly specialized industry doing very important,
04:54 heavily regulated work, and so are they. And so Zach and I sort of plotted a long-range way to
05:03 try and build a collaboration to raise our game and to, if you like, bring Sanofi back to the top,
05:10 launching 25 new medicines over the next half decade. And where Zach will be running for world
05:16 championships right ahead of us, we're running to be one of the most important innovation-led
05:21 companies on the planet. And we didn't want our name on a car, I know that's important,
05:25 but we really wanted help. We really wanted to work with the best of the best. We wanted to have
05:31 people who would come into our manufacturing sites with credibility, with real engineering
05:36 expertise, real understanding of data, and closing the delta to make you more effective.
05:43 And they did just that. And even started this collaboration during the pandemic,
05:48 we managed to raise in 10 of our most important manufacturing sites worldwide,
05:53 our productivity by 8%, almost entirely attributed to our partnership with McClellan. And that is
06:01 a significant output of medicines leaving our manufacturing lines to the highest possible
06:07 standards because of the inspired and incredibly impressive work led by McClellan. It's an
06:14 absolute pleasure and we have the proof now that it worked and it works really well.
06:20 8% Zach, good job. Not bad guys, that's great. And just so people know the size and scale of
06:25 Sanofi, you guys manufacture 4.8 billion units of medicine, vaccines, products annually.
06:30 So that's the kind of scale we're talking about and ramping that up. That's significant.
06:34 So Zach, first off, how many people have, you know F1, you're a fan of F1, maybe you've even
06:42 seen Drive to Survive on Netflix. Can I just get a show of hands, F1 fans here? Okay. Oh,
06:46 look at this. You don't have to win a ton of people over. We've got some fans. So you may know
06:51 a bit about the company and how it works, but like give me a little bit of the size and scale of
06:55 McLaren Racing. There's 800 people who work for it. How many engineers and data analysts? It's
07:00 not just the drivers, not just the car. No, the racing teams are a lot larger than people would
07:06 maybe think for two race cars traveling the world. We're actually about 1200 people in total. About
07:14 800 of those are on the racing team. And when you break those down, you have about 350 in
07:20 manufacturing, about 250 in design concepts, and then the balance would be around operations
07:30 and data. And we have data scientists around every piece of our race cars. So some interesting data
07:39 points. We have 300 sensors on our race car. We pull down one and a half terabytes of data
07:45 a weekend. And I once asked someone, give me, what does that mean? And for those that do know,
07:50 they'll know what that means. For those that don't, that's about 10 million documents. That's
07:55 about 400 movies is what we're capturing every weekend. And we then work with our data partners.
08:03 It's one thing to get a lot of data, but then to be able to some data we have long lead time on,
08:09 other data requires us making split second decisions. So we run 50 million simulations
08:14 over a race weekend because we will often literally have to make split second decisions.
08:20 And so we have to rely on data. The good old fashioned motor sports, you used to have a racer
08:26 instinct because you didn't have the amount of data we have today. Back when I was driving. And
08:32 now we rely on it. It's data first. Ultimately, people need to make decisions, understand what
08:39 data to look at. But then you have, we have technology partners that help us cipher through
08:44 the important data because you can end up getting lost in data. But it's a very important part. And
08:51 without it, we couldn't be making decisions on race strategy. We couldn't be making decisions
08:56 on design and upgrade of our race cars. So it's definitely a data first environment for us.
09:01 And has AI infiltrated and helped you make sense of all the boatloads of data you're getting every
09:07 weekend? We're getting there. I think like everyone, AI, everyone is understanding how it
09:13 applies to their business. I think it definitely is starting to play an important role for us,
09:19 both on the car development side, manufacturing, but also with fan engagement. Because at the end
09:25 of the day, it all starts with our fan base. That's why our partners in the media and countries
09:30 want to host races. So we have a lot of engagement and you can use AI quite productively. And in that
09:37 manner. And that's something that again, when you look at the various partners that we have in our
09:42 racing team, we have those that help us work with our fans. And then those that help us,
09:48 you know, run our business more efficiently, help us produce faster race cars, protect
09:53 our business, you know, with what's going on these days with bad actors around the world,
09:58 protecting our IP and our data is very important. So cybersecurity is something that is always top
10:05 of our list. Yeah, on the plane over, I flew with dark trace who helps you with cybersecurity. And
10:10 quite a bit. We were talking about that quite a bit. Nepal, every healthcare CEO I've talked to
10:15 says this is the golden age. So exciting what's happening in the field. AI and data are changing
10:21 it all. We can produce more drugs than ever before. They can be more targeted than ever before.
10:24 How is AI and data transforming your business?
10:30 Well, I think we've declared quite early that outside of tech, we anticipate being
10:35 the first AI at scale healthcare company. You know, we are we break it down into a couple of
10:40 areas critically expert AI, we call it, which is really structural biology, heavily intellectually,
10:47 the property protected, doing things, very bespoke supercomputing to design new medicines,
10:55 new target to try and drug undrugable diseases, and to do it at scale and speed with a higher
11:01 probability of success. And we're really having starting to have success with that.
11:05 And then on the second part, it's what we call snackable AI, which is how do we enable our 90
11:11 plus 1000 people get better decision intelligence getting nudged, if you like, by AI to make a
11:18 better decision every day. And we're doing that right now. For most people, they may not understand
11:23 that. But imagine, if you're watching Netflix, you enjoy a TV show, and then Netflix recommends a
11:28 show you might want to watch next, and you enjoy it. And people are always surprised by that. Well,
11:34 that's of course, algorithmic calculation. And we're doing the same every day to help people
11:39 understand real time with reels, a little bit like Instagram, how to make a better decision today
11:45 that can get a medicine to patients faster, develop one faster, do it more efficiently.
11:50 And, you know, we're proud to say we have over 23,000 people in the company have access to AI
11:56 on a daily basis, about 10,000 using it every single day. And we think it gives us an advantage
12:02 longer term. And it's very important that we become very efficient. One of the magical things
12:08 about working with McLaren is, is how data driven they are, how they make these critical decisions,
12:15 and how often they make a decision in a split second. And, you know, that is great learning
12:20 for us. And Zach may have a view on it, but we took our senior leaders to McLaren to see and
12:27 listen to how people operate in a time sensitive environment to make critical decisions dispassionately,
12:34 and then how they provide each other feedback afterwards. And, you know, you know, it's been
12:39 quite incredible, the cultural impact, using data objectively, trusting each other, debriefing,
12:46 and going all in on AI. And, you know, thanks again to McLaren for enabling that.
12:51 So part of what you all do together is manufacturing and efficiencies. I'm not sure how many of you are
12:59 aware of this, but a lot goes into making an F1 car. I mean, there's like 80,000 parts and 90%
13:06 of the car changes over the course of a race season. Now there are a cost cap, which prohibits
13:12 you from just trying a bunch of things and failing. So you have to be hyper efficient.
13:16 Zach, I'm wondering if you could just talk a little bit about how you have made the process
13:20 hyper efficient and low waste given the cost cap and just how often these things need to change over.
13:25 Yeah, you're exactly right. Before our cost cap era, which started a few years ago, you could
13:30 deploy all the resources you had to try and get to the solution as quickly as possible. Now with
13:36 a cost cap, we're limited on what we can spend. So we need to make sure whatever we're spending
13:41 has maximum impact. So it's our technology tools, our data. So you start in design, then you go into
13:49 CAD, and then you go into simulation, then you go into the wind tunnel, then you put it on the
13:54 simulator, then you put it on the race car, but sometimes you're going back and forth. And so
13:58 your correlation as it goes down through the development chain has to be spot on. So we have
14:05 about a 96, 97% correlation rate. So if we try something and it says it works and it goes to the
14:11 next phase, it's highly likely it will continue to work. So that's critically important. As you
14:16 mentioned, our pace of development, if you take the car that won at the first race of the year and
14:23 you didn't touch it, it would be last by the end of the year. So we're in a sport that literally
14:28 if you're standing still, you're going backwards because of the pace of development. And it's
14:33 interesting, the mindset of a racing team is constant incremental improvement. They're not
14:41 big improvements. We talk about milliseconds when it comes to improvement. So that all adds up to be
14:47 a significant amount of lap time. And so you need to have the whole organization and everyone is
14:53 broken down by their area of expertise. And you need to give them total trust of who the subject
14:59 matter expertise is. And then it passes up through the communication chain that to ultimately make
15:05 the various decisions you make over a race weekend and the development of a race car.
15:10 We spend, which in Paul's world is not a lot of R&D money, but for us, we spend about $60 million
15:20 just developing the race car. That's before we've actually manufactured anything. And then we spend
15:24 a few hundred million on racing around the world. We have quite a bit of exquisite materials and
15:32 ultimately how we came about working with the Sanofis and the Unilevers and countries. And
15:39 we knew our technologies were applicable in other businesses. And so ultimately we have a business
15:47 that's called Accelerator where we work with some of our partners on deploying our technology,
15:52 our know-how. So we've had everything from materials in prosthetics because we know
15:57 light weighting, we know shock absorption. We've had information on the Mars Lander. We work with
16:02 Sanofi through big data and operational excellence. We do some aerodynamic work with Unilever around
16:09 their ice cream factories. So areas that you would not think a Formula One team would somehow be
16:15 involved in the pharmaceutical or the consumer goods business. And then that for us all falls
16:20 under the sustainability umbrella of how can we take our knowledge and know-how and share that
16:27 leading edge technology to make the world a better place. And a good example of that is when
16:31 COVID hit and the UK ran out of ventilators, a handful of Formula One teams and a few other
16:39 industries came together and we manufactured, designed and manufactured 10 years worth of
16:44 ventilators in 10 weeks. And so I always used to walk around the shop floor saying we're here
16:49 to entertain people, we're not saving lives. And I'm actually now proud to say I would think between
16:54 the work that we've done with the UK government or the work that we've done with Sanofi that we
17:00 actually have hopefully helped contribute to saving lives and making the world a better place,
17:04 not just a more entertaining place. Amazing. So Paul, with the high volume that you're doing,
17:12 Zach's over here making cars that maybe go for 2000 miles. You need a little bit more longevity
17:17 to what you're doing for your drugs. What have you been imparting on Zach over here?
17:21 What's your manufacturing process and how do you make it hyper-efficient?
17:25 Well, just to close up, we spend about 7 billion euros a year on research and development and it'll
17:35 increase next year to take advantage of our incredible pipeline. We work incredibly hard
17:41 to bring breakthrough medicines through, particularly as 90 plus percent of our pipeline
17:45 are medicines that are first in class, meaning there is no drug to treat that disease with that
17:52 weight. And so we're very proud of all of that. What have I imparted on Zach? Probably very little,
17:58 to be honest, because he is at the top of his game. It's why we chose to work with McLaren in
18:05 the first place. But I think, and hopefully I'm OK saying this, I think the teams have worked so
18:10 well together. There's been so many opportunities. You think about it. It's so important. We have
18:18 more than 25,000 people in manufacturing. And when McLaren picked up and are helping you understand
18:25 how you can use data better to be more effective. I'll give you an example. I was in Brazil a few
18:31 months back. I'm at one of our manufacturing lines about an hour out of Sao Paulo. And we've got a
18:37 wonderfully high producing site. And we have an entire line actually that's run by people who have
18:44 a hearing disability and they're only signing. And they're proud to show me that over the time since
18:51 we've been partnering with McLaren, they've gone from just trying to do better than they did,
18:56 say, the day before or the week before, to looking at 30 or 40 variables on large screens at the end
19:03 of the line real time to try and make in the moment decisions to improve their productivity.
19:09 So effective have they been, by the way, that they set themselves a challenge to make that line the
19:14 most efficient line in the whole of the country, which then allowed us to do our jobs even better
19:20 and avoid spending multi-millions of dollars in building a second line because they just were
19:26 empowered as the expert, as Zak said in his own group, to make, I think what you call it, Zak,
19:32 make the decision at the highest point of knowledge, I think you call it, which we learned
19:36 from McLaren. And it's just taken us to another level. I don't want to miss a last point on that.
19:42 When you're in Brazil, this is one of the beauties of Formula One and McLaren, it's a worldwide
19:48 phenomenon. So when you're in Brazil, there is a love for the sport that goes back perhaps beyond
19:54 Senna and everything else that is deeply ingrained. And we took the ladies, because they were ladies,
20:01 from this manufacturing line with Zak's help, we took them to meet Orlando Norris, one of the
20:07 drivers at the Brazilian Grand Prix, to thank them properly for their work. And it was a sort of
20:13 intangible and emotional benefit culturally that they told me they will never forget. So we get
20:20 technical, we get some of the glamour, I guess, sprinkled on top, we get great camaraderie,
20:26 and it's been a real privilege because Tenope is moving at speed. And the real question is,
20:31 will Zak win a world championship before Tenope is one of the most important healthcare companies
20:36 on the planet? And it's maybe a friendly bet, but I think we chose to work with each other
20:42 because we're both on a similar journey of transformation.
20:45 So Zak, when you joined McLaren in 2016, it was a bit of a turnaround job. I mean,
20:54 one of the greatest racing companies of all time, one of the greatest car brands in existence,
20:59 and yet you weren't winning. The morale kind of stunk, and you had a hard job, and you weren't
21:06 profitable, but now you are. So things are looking up and up. How did you approach the turnaround
21:12 job? And what are some of the most important moves you've made to change the DNA of the company?
21:17 People and leadership. I think you asked Paul there, what kind of wisdom has he
21:26 parted on me? And he didn't answer the question, but I will because I think it ties into that
21:32 question. When I started, we have 1,200 people, and we weren't focused. Morale was not in a good
21:39 place. And I've always been fascinated to see CEOs of very large companies that have tens of
21:46 thousands of employees. I know how hard it was to kind of turn this little speedboat McLaren of 1,200
21:53 people around to turn a boat the size that Paul is the captain of and get that going in the right
22:01 direction is extremely difficult. So I've learned a lot by watching Paul operate with his leadership
22:08 team when he's kind of led bringing this project to the table. How does he get the organizational
22:15 buy-in and ultimately make impact with tens of thousands of people? So I've had to do that on a
22:22 much smaller scale, and it was extremely difficult. I can't imagine what it's like,
22:26 you know, times 10, times 20. And so I had to rebuild trust. There was a lot of
22:34 guilty until proven innocent type of mindset on the shop floor.
22:40 For you or for the employees?
22:42 Well, for the employees. I came in new, so I felt comfortable, but there had been about four or
22:48 five different leaders running the Formula One team in the last six, seven years. And that's,
22:53 you know, whatever company you're running, if you have that much change at the top,
22:58 then the team below, they don't know who to follow and what they're following and how long
23:02 they're going to be following them for. So I knew I needed to bring stability. I knew I needed to
23:06 bring trust and develop a vision and get everyone to buy into that vision. And that takes time.
23:13 You can't just tell them to do that. They have to believe it. They have to start, as Paul is
23:20 saying, seeing the data and the results, because then people will believe it. You know, when we
23:25 first walk into organizations, some people go, "Whoa, how's McLaren going to help us?" And so
23:30 you have people, and I think this is all walks of life, that, you know, completely buy in right
23:34 away and see the vision. Those that are kind of maybe on the fence, and then those that,
23:40 you know, kind of think it's a crazy idea. And those are the ones that you need to focus on.
23:44 And then if you can kind of shift everyone up through the belief chain, then you can really
23:49 start building a lot of momentum. So I feel like it took two, three years to really get
23:54 the team rowing in the right direction. And then this year we were tested. I think I'm very proud
24:00 of how poor our start of the year was, because I think-
24:04 You're proud of it?
24:05 Well, you know, proud of how we responded, because I now think our momentum trajectory,
24:12 you know, had we started here and finished here, then that would be kind of your trajectory line.
24:17 But because we started here and we finished here, the momentum that we have going into the off
24:22 season, the belief, the energy everyone has, I think is going to carry us forward to a more
24:27 productive 2024. And then you can't do it alone. You know, I think my leadership team, I think,
24:34 is the best in my business. You know, my CFO, my CMO, my head of partnerships, etc. And so getting
24:42 all of us working together. And we have strong debates. We encourage challenging each other.
24:48 I think any good organization, there's no point in having 10 people sitting around
24:52 the table all agreeing with me. I kind of want to get some different opinions, perspectives,
24:59 make a decision. And then it's important that whatever decision is made, all 10 of you are
25:03 rowing in the same direction. But having healthy debate before then, I think, builds trust. And
25:08 I'll go into meetings because I'll want to kind of put something on the table to discuss. I'll
25:12 come into meetings with conviction. And I'll come out of the meeting doing 180 if I'm convinced
25:18 otherwise. I'm just trying to kind of get the ball rolling. So I think that's what
25:22 good leaders should do, surround themselves with great people and get the input,
25:27 drive the vision and build trust. Well, we look forward to continuing watching your momentum.
25:33 Going into next season. Thank you both so much for joining us this afternoon. And
25:38 thanks to all of you for listening. Thank you very much.
25:42 Thank you.
25:43 [BLANK_AUDIO]
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