Imperial researchers outline how businesses can learn from the America's Cup

Businesses can learn lessons from the America's Cup, one of the most prestigious sporting competitions in the world, say Imperial researchers.

The America’s Cup is a trophy awarded to the winner of a sailing competition between two yachts. One yacht, known as the defender, is from the club that currently holds the America’s Cup.  The second yacht, known as the challenger, is from the club that competes for the cup. The competition has been running for more than 150 years.

According to researchers from Imperial College Business School, the America’s Cup can provide businesses with ideas for developing technologies. It can also offer business leaders examples about how to improve their strategic and tactical decision making. 

Ahead of the launch event for the 35th America’s Cup, which happens on 9 September, Maxine Myers caught up with researchers from Imperial College Business School: Dr Jan Michael Ross, Assistant Professor in the Management Department, and Dr Dmitry Sharapov, Post-Doctoral Research Fellow in the Innovation & Entrepreneurship Department. They discussed the innovation and strategy lessons that businesses can learn from the yachting race.

From an innovation perspective, what can businesses learn from the America’s Cup?

DS: Like many other sports, the America’s Cup provides various learning opportunities. The parallels between business and sport are strong: both involve selecting the right people to form teams, and getting them to develop their leadership and motivational skills, and learning how to allocate resources effectively. Just like business, the captain and crew need to make good strategic and tactical decisions while rivals are trying to get ahead of them. The America’s Cup is particularly interesting because the participating teams, which often involve more than 100 people, are faced with a competition that involves both sport and technological development. This means that crews have to both improve the design of their yacht, and then launch it and compete in the race. In a similar way, businesses develop or acquire technologies, design their products, and launch them on to the market in the hope that their products are better selling than their competitors.

JMR: Generally, businesses can learn from these crews how to effectively cope with the various challenges they face. For example, consider the learning journey of Team Oracle, the American team who won the 34th America’s cup in 2013.  They were eight races behind the challenger, Team New Zealand, and they came from behind to win the Cup by nine races to eight. What a comeback! Leadership, team selection, use of technologies, and decision-making skills in highly dynamic environments were very effectively implemented to achieve their win.  

According to an article in Reuters, technological advances made in preparation for last year’s competition are being felt across many industries. Do you agree?

JMR: We don’t have the data that would allow us to evaluate how technological advances have transferred into industry. However, what is publically known from previous America’s Cups is that the technology competition has influenced the development of boat-building industry clusters around the world.

We can also assume that the extensive use of carbon-fibre in the construction of various components such as the wing, which replaced the mainsail on these boats, provides useful insights for the design of components in aerospace and the efficient design of blades for wind turbines.

DS: As crews generate huge amounts of real-time data, produced by various sensors on the boats and in the broader environment of the race, we wouldn’t be surprised if some of the teams developed IT systems to efficiently process and analyse data. Those insights and technologies could be very beneficial for businesses, such as software companies offering ‘big data’ solutions.

JMR: In terms of broadcast innovations, the America’s Cup has won Emmy Awards for sports broadcasting because of its revolutionary graphics package and its mobile app, which allowed fans to follow the competition in real time from anywhere in the world.

What can businesses learn from competitive interactions in sailing competitions?

DS: The decisions that these teams are making are similar to those facing businesses. What makes the analogy of sailing so fascinating is that these teams, similar to businesses developing and launching products, have to make decisions under different types of uncertainty. Some of the uncertainties in the design of a yacht can be lowered by repeating tests in computer labs or through experimentation with prototypes. Others are independent of any actions taken by the teams, such as the uncertainty that arises from the unpredictability of wind conditions in sailing or uncertainty about the customer preferences in businesses.

JMR: Similar to the America’s Cup teams, businesses are forced to make short-term and long-term decisions under exactly those challenging conditions. Market environments can be highly uncertain. You never know what the next move of the competitor is going to be. Businesses have to make decisions considering the moves of the competitor and their own abilities to use given technologies. There is often no time for waiting until uncertainties are resolved. The strategic and tactical moves the leader of a sailing race chooses to avoid losing can provide valuable insights for companies about how we think and teach about the intense battle for market leadership taking place in different industries.

Can you tell me about your upcoming work around this topic?

DS: We have been looking at the effectiveness of a “follow the follower” imitation strategy, in which the leading boat imitates the moves and positioning of the follower in order to stay ahead, under different environmental and competitive conditions. To do this, we analysed data from head-to-head races in the 2011-2012 America’s Cup World Series (ACWS), which is the competition where the teams vie to be the “challenger” to compete in the America’s Cup against the defending team.

JMR: We believe that this work has relevance for a broader management audience. The theoretical insights from this study help to explain, for example, why Apple decided to imitate Samsung’s decision to release phones with larger screens. Since imitation strategies often have the negative image of being a ‘copycat’, we hope that the insights from the study and the analogy to sailing competitions in general provide managers with new arguments to illustrate the benefits of imitation strategies in board-room discussions.

Our findings will be published soon in the Academy of Management Journal.