EMBA-MCI Case Study

Alinghi: Leadership
What happened on 2 March 2003 in the waters off New Zealand's Hauraki Gulf? History was made when the Swiss racing yacht Alinghi swept to a 5-0 victory to win the 31st America's cup, the most prestigious sailing competition in the world.

At a ceremony in Auckland on 3 March, the Commodore of the Royal New Zealand Yacht Squadron handed over the silver Cup to Ernesto Bertarelli, head of the racing syndicate Alinghi Swiss Challenge. For the first time since 1851, the fabled trophy would return to Europe. Never before in the history of the Cup had a first-time challenger won. Alinghi opened a new chapter in America's Cup racing. The ESPN media network hailed the win as a "remarkable victory for a country without an ocean" and issued the headline, "Swiss, powered by Kiwis, breeze to a sweep." Bertarelli, who acted as navigator, stated: "For me, the fact that Switzerland won the America's Cup is a sign of hope for a lot of people. It says to the world the impossible doesn't exist."

1 History
The originally named Royal Yacht Squadron Cup became known as the America's Cup after the first schooner America won the trophy in 1851. The America's Cup remained in New York for 132 years and 25 challenges from the international yacht racing community. In 1970, multiple entrants were allowed to compete for the title of Challenger. In 1983, Louis Vuitton of France presented a trophy cup to the winner of the Challenger Selection Series, the qualifying precursor race to the America's Cup. This series became known as the Louis Vuitton Cup (LVC). Its objective was to eliminate all challengers but one, the most worthy, who would then meet the defender of the America's Cup.

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2 The Quest for the Cup

Ernesto Bertarelli at the age of 37 was the CEO of Serona International SA, Europe's leading biotechnology firm based in Switzerland. Serona employed 4'600 people in 45 countries. Bertarelli learnt to sail at an early age and participated in many competitions including two world championships as helmsman. He always called his boats Alinghi, a word he had created to represent joy, dreamy lightness, speed and action.

In February 2000 Bertarelli and Coutts were introduced to one another just before the race of the 30th America's Cup. Bertarelli and a close personal friend Michel Bonnefous, had gone to observe the competition with an idea already in mind. Based on what they saw as Team New Zealand proceeded to win the cup, they concluded that the key to success was the team.

3 Assembling the Core Team.

In February 2000, Bertarelli and Russell Coutts were introduced to one another just
th

Fig. 1: America's Cup

Source: Bob Covarrubias Photography

before the first race of the 30 America's Cup. Bertarelli and a close friend, Michel Bonnefous had gone to observe the competition with an idea already in mind. Soon after the race ended, Bertarelli sent word to Coutts that he was interested in buying one of the TNZ racing yachts. Coutts travelled to Switzerland expecting to go over details for transfer of the boat, and the two hit it off. Bertarelli and Coutts discovered they shared the same passion on many levels. Two weeks later, Coutts and TNZ tactician Brad Butterworth accepted an invitation to meet Bertarelli and Bonnefous in New York. Bertarelli recalled the meeting: "We met in a hotel room in New York soon after the 2000 defense. Russell was there with Brad, and I brought along Michel Bonnefous. I explained my view of how the challenge could be organized and the role I saw for the skipper and myself. We quickly came to an agreement that resulted in Russell joining the Alinghi consortium." According to Russell Coutts, several parties had been trying to buy the TNZ enterprise. The team's employment contracts were set to expire on March 31, 2000. Just before that date, word of the negotiation became public. Negotiations had been progressing slowly, the trustees did not move quickly enough to protect TNZ assets, and the contracts expired. Other teams began approaching TNZ people, resulting in a dramatic effect on the team and the budget. By May 2000, TNZ had already been severely damaged. Coutts and Butterworth had not contracted with Bertarelli. In April 2000, Coutts had met with Bertarelli in an attempt to generate funds for TNZ. Finally Coutts and Butterworth decided to look at alternatives.

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Coutts recalled how he felt about the discussions with Bertarelli in New York: "He immediately gave us complete freedom. From the beginning, he said it would be our challenge to take up. After negotiating with the administrators in New Zealand this was like a breath of fresh air."

Butterworth described his take on Bertarelli: "What impressed me the most about Ernesto was that he was ready to throw himself into this adventure with all the necessary determination. He was ready to take on Russell and me, in spite of all the adverse publicity that our departure from Team New Zealand would generate. He had the guts to go for it. Right away I got the impression that he was a guy who really understands people"

Bertarelli explained what had captured the interest of these two champion sailors: It's the idea that there are neither limits nor frontiers when you seek the best to reach your objective. It's the same lesson for business, for sports, for anyone who is trying to realize a project. I think this is what convinced Russell. It's not about a challenge delivered by a great maritime nation; it's about challenging pre-existing ideas and established dogma.

Former TNZ members quickly followed Coutts and Butterworth: Murray Jones, Warwick Fleury, Simon Daubney, and Dean Phipps. Only a few months after the end of the 2000 America's Cup, they moved to Switzerland to fulfil the residence requirement and set up a training and recruitment program. The Alinghi Swiss Challenge syndicate brought on four-time Olympic sailing medallist (three golds and one silver) Jochen Schmann of Germany as strategist and held training and selection sessions on the Mediterranean Sea and Lake Geneva to pick the rest of the crew. Schmann led training. Bertarelli commented on this choice: "I had known Jochen for some time, and I was convinced he could be of tremendous value for the Alinghi team. Russell and Jochen had never worked together. I saw my role in getting the two together, but I could not force the issue."

4 Bertarelli's Management Style

On 15 November 2002, Ernesto Bertarelli answered questions in Auckland at a press conference after race 3 of the LVC quarter finals. Alinghi had just this match competing with Prada. Barterelli spoke in his role as syndicate president and navigator on board.

Q: Do you think the pressure of having you on board has had an effect on the team? EB: It's been fine so far. I am pleased with my performance and the performance of the team. I'm really enjoying the experience. I'm really enjoying the experience. I am pleased with how I've fit on the boat and with our results.

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Q: We have seen three team owners on board boats for the races. How do you approach the role of being an owner and a crew member? EB: I've delegated the management of the team to Russell and Michel and they are doing an excellent job running the team. As a regular member of the team, I get told off when I make a mistake and I'm please when I do something right. Q: We haven't seen you very often in the media, can you tell us why? EB: There is an entire team behind Alinghi. They have done much more than I have, and they certainly deserve to be seen in the limelight more than I do. How do you split your responsibilities of running a business in Switzerland and sailing on the boat every day in New Zealand? EB: My management style is about delegating responsibilities. At Serono, I have a team of senior people who have worked with me for more than 10 years. They know exactly what to do so I don't have to be there. Also, pharmaceuticals is a business that moves very slowly. It can take up to 10 years to bring a new product out, so there is time to get involved in other projects. It gives me the opportunity to go sailing. Bertarelli, an accomplished sailor unlike some syndicate heads, also spoke with ESPN sailing analyst Gary Jobson, who as tactician for Ted Turner had won the America's Cup in 1977. Bertarelli: "Racing with Russell Coutts, Brad Butterworth, Murray Jones, Warwick Fleury, Simon Daubney, myself as helmsman, we won the Farr 40. Having Simon Daubney and Warwick Fleury trim for you is something else, I mean they basically drive the boat for you. They are the best crew in the world. Being in the middle of all this is the best experience of my life." Jobson: "In every interview we've done with Russell Coutts, he always mentions Jochen Schmann so he must have a big influence." Bertarelli: "There is mutual respect. Obviously everyone was wondering. You bring two big figures of sailing together in the same boat, what's going to happen? They're so different that they really work well together. It's nice often to see Russell turn around and say 'Jochen, what do you think?' And Jochen launches the debate and Brad follows through and the whole thing comes together and you get the best sailing you can have."

5 Building the Alinghi Team

By February 2003, the full complement of Team Alinghi included 110 people, all specialists in their respective fields: management, sailing, research and design, shore crew, boat builders, internal and legal support, MarCom marketing and communication), weather team and sail makers. All individuals were expected to deliver maximum effort and capability.

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Michel Bonnefous commented: "We had talented people, but so did the other teams. I think we had the best organization."

Forming and consolidating the team and their respective tasks fell into three pre-race time periods. During the first period, from approximately April/May 2000 to the end of that year, the goals were to create structure, develop strategy and hire key people. The predominant concern was to hire key people. During the second period, from January 2001 until the group left for New Zealand in October 2001, the key focus was team building: creating team strength through its people and concentrating on strategy and organization. In Switzerland the group held corporate style meetings and perfected organizational communication using Lotus Notes. During a third period from late 2001 until the onset of racing in 2002, Team Alinghi, now fully organized, focused on improving the crews, the internal processes and how people worked together. All were now in one building at their base in New Zealand. The forth period was the competition, which began in October 2002 with Louis Vuitton Challenger Selection Series and ended in March 2003 with the America's cup finale.

6 Hiring
The first three were Bertarelli (owner and navigator), Bonnefous (management), and Coutts (helmsman), followed by Butterworth (tactician), Daubney (trimmer), and Fleury (trimmer). The next round was Mike Schreiber (sail maker) and Rolf Vrolijk (principal designer). From there the group expanded to 15, with the first seven dictating the next steps in hiring personnel. They recognized that people drive the success of an organization. They believed in getting the very best people, then creating a structure that allowed everyone to work together creatively. Alinghi decided not to let nationality influence decisions. Coutts explained the hiring philosophy: "We looked at past performance for our early appointments, experience with a proven track record, compatibility, and the ability to accept the team culture. The real challenge was to get this group to work together with a common vision. We were putting a large group of people together quickly and it took time to learn about the personalities and their weaknesses and strengths. We had a policy to find the best people, no matter where they came from. We had a philosophy that there's a special magic in keeping our team small." Alinghi spent most of the year 2000 hiring and avoided a strict group structure early on. Most teams were up and running before Alinghi. After the initial five to six choices, the group took time making personnel decisions, sometimes losing potential candidates. They believed early personnel decisions were critical and invested time learning about the candidates. Once core members were in place, any new appointment required a high degree of acceptance by those who would be working closely with the new person. The decision to bring in Australian Grant Simmer as design coordinator came only after most of

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the core team were in place and agreed to his appointment. Some proposals were rejected by various departments.

Jochen Schmann from Germany, Alinghi's strategist and sports director, had known Ernesto Bertarelli and sailed with him before Bertarelli launched his quest for the America's Cup. Schmann was acquainted with Coutts, as both had competed in the same boat class in the Olympics. Schmann remarked that hiring and selecting of team members involved everyone and decisions could be made quickly as there was no "chain of command" hierarchy for final approval. According to Schmann decisions were made by the most competent people. Coutts added: "The security aspect came in too. You bring someone in, try them out, then they see things. We decided to do so anyway, because we thought it was a worse risk to get the wrong members on the team. We brought sailors in, saw how they operated with their group. We brought sailors in, saw how they operated with their group. We had until March 2001 to select our foreigners. By then they had to be residents in Switzerland. So in the early days we focused on the non-Swiss hiring. It was cheaper to hire Swiss nationals because non-Swiss had to be re-housed and obtain work permits." The group put together a sophisticated matrix structure that applied to all activity areas. Everyone understood that Alinghi required a sophisticated structure in order to achieve results, given the complexity of organizing people from 14 nationalities. Michel Bonnefous offered a diagram of his own perception of the matrix:

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Alinghi considered pride a psychological aspect that contributed towards performance. To influence the sailors positively, Alinghi aimed to build the best base, have the best dressed team, and host the best parties. According to Hodara, the more individualistic sailors objected at first to some things. To balance this pressure on those not used to behaving as a group, team members were expected to follow the common code only when "at work" or in public. They were able to live at home with their families, where they could resume their common own styles. By contrast other teams such as Prada lived continuously in the same hotel, making it harder to assume a private lifestyle. Alinghi developed a program for family members. Boat builder Bertrand Cardis in Lausanne provided contact information for newly arrived families to help with questions regarding schools, doctors, apartments, and more. Families could follow the competition on a big screen TV in a family lounge, or out on the water in a special boat. Children were invited to all activities and parties, and space was arranged for them. Hodara noted: "We felt that a team member who returned home every night to a happy family would in the end deliver a better performance."

7 Alinghi's Design Strategy

Grant Simmer led the design team, who viewed the sailing team as their customers. The design team comprised of 12 men and women from Australia, France, Germany, Holland, Italy, New Zealand, and the United States. Only two had known each other previously, and the rest had never worked together. They included naval architects, structural engineers, material scientists, mathematicians, modellers, and mechanical engineers. Simmer spent much time interviewing candidates and speaking to previous employers, seeking people who would work well together and hoping to avoid prima donnas. In early 2002, the build team in Switzerland began work on SUI-75, later to be transported by cargo ship to New Zealand. Modifications came in by fax and email from Auckland. Grant Simmer, coordinator of the design team, and Rolf Vrolijk, main architect, led the project. According to Vrolijk, SUI-75 dimensions were similar to those of SUI-64 but slightly modified for a different performance profile. Twelve Alinghi designers and the Ecole Polytechnique Fdrale de Lausanne (EPFL) developed the boat. Thirty boat builders at Dcision SA boatyard in Corsier-sur-Vevey, Switzerland, contributed 18,000 work hours. Simmer described the effort: "This is a great moment for our team. This boat is the result of two years work, for the boat builders as well as for the designers, the sailors, and all those who brought their knowledge to the project from the first stages of conceiving the boat's design."

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8 Role Shifting
Alinghi debated initially whether to assign titles and specific positions to individuals. It was not certain that individuals would keep the same roles, and it was desirable to be able to shift people around. Bonnefous observed, "You have to solve human issues, and sometimes you have to revise decisions made at the beginning." The risk was to make a quick decision, placing someone in the wrong position, then find it necessary to change, a situation Coutts termed "catastrophic." "We also had an objective to remain as small as possible, particularly in the early days, and multi-task rather than risk being over-staffed. This was partly driven by the belief that within reason, people are happier when they are kept busy. We heard that when Prada sailors got off the boat, they were not involved in maintenance at all. They didn't even carry their sails off. Our sailors had a secondary function; it was even described in their contract. You need to multi-task because you have a lot of downtime and people get bored. We also had a disciplined time off approach. We had time scheduled as time off. We saw it as a stimulus, as time away from the program, so people could come back and take a fresh look at the program."

Bonnefous commented on the organizational structure: "You have a group of people who meet for the first time on day one, then work closely together for six months. By the time we arrived in New Zealand, most roles in the organization had been identified. In New Zealand, we were all in one building, so we were less formal with one another, but the organization was in place."

9 Vision Building
In August 2000, a base group of 20 met for two weekends in Geneva to discuss how to form Team Alinghi. They spent time developing their vision, taking special care so that it would frame their effort. Bertarelli commented, "We were doing something a little special, and that's what motivated all of us." Using a blackboard, Bertarelli, Bonnefous, and Coutts defined their dream. The founding principles were: 1. To build a team of which they could all be proud 2. That the team would be capable of winning the America's Cup 3. To serve as an inspiration for other teams in other endeavours to aspire to great challenges The team crafted a statement that did not place winning as a must, that allowed success to be achieved even without a win, as long as they could be proud of the team and its effort. They wanted their vision to be worded so that it could inspire other teams. Bertarelli explained: "We were a collection of different nationalities, bringing connections to previous teams, clubs, and sailors. We needed something to provide a common identity, regardless of previous affiliations. We did not want to impose an identity of another nation, such as Switzerland. When we began developing our vision, 28 December 2010 8

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everyone thought we would talk about sailing, boats, competition, winning. Instead we chose a different approach."

10 Team Communication
Team Alinghi recognized the complexity of having a team made up of many nationalities and addressed this issue from day one, carefully planning both internal and external aspects of communication. The critical areas of internal communication and language management were: encouraging verbal participation by those struggling with what was for them a foreign language environment clawing verbal communication for those who did not understand what was being said, organizing a precise structure for voice communication on board.

Coutts said they explicitly called on those who had difficulty expressing themselves in English to get their input. We'd have a person talking in New Zealand slang, and someone else would be standing there and not understand a word of it. So we used a lot of visuals. This helped because it promoted a lot more discussion. When I compare that to the TNZ process, I actually feel that TNZ would've been better off if they'd had a more structured program. That was an interesting discovery, on my part anyway, to recognize the effects on the team. On board communication could be extremely difficult due to tremendous distractions and background noise from wind and water, sheets moving, and helicopters above, as well as to situations of high tension or physical danger. The team believed most errors could be avoided by better communication. It was agreed which voice tones and word patterns would be used by everyone to communicate level of urgency. Alinghi used communication to create more time to make decisions. The team imagined future events that were likely or probable and thought through options or communication before such events occurred. The objective was to identify the critical pieces of communication, who should transmit them, how to reduce distractions, what to do in an unpredicted emergency such as if a piece of gear broke, and how to communicate vital information to the person who needed to hear it. The team designed a process, then practiced recognizing a situation and changing voice tone. Coutts discussed how specific triggers signalled when a piece of information became important. If it's really important, mention the guy's name first, otherwise not say the name. A slight change in voice level, up the level just a little, to signal something urgent. For example, if the opposition tacks now, then we will also tack. We split the race into specific events and tried to identify the most important pieces of information. We reduced unnecessary communication so that the most important issues were not missed.

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11 Training and Team Activity

Schmann fixed the daily schedule, set crew lists, and assigned crew positions. He summarized team decisions and implemented the consensus. Teamwork was imperative, as everyone depended on someone else. Schmann clarified how tasks linked together: The helmsman can't get the right speed without the trimmers doing their job correctly, and trimmers can't do their job without help from the grinders. Everyone depends on the competency of others.

12 Dealing with Conflict

Bonnefous suggested Alinghi had adopted a more corporate approach than some teams, underlying the attempt to unite individuals from different parts of the world. To avoid culture clashes, Alinghi emphasized values to which everyone could subscribe, including determination, a h e spirit, passion, and being open to the public. Everyone had to help others achieve common goals. The team observed certain rules in order to live and work together productively, such as not to talk about people behind their backs, not to speak negatively about competitors, not to criticize their own organization externally, and not to promote hidden agendas. This policy stopped negativity from festering. Alinghi chose English to be the common language, while at the same time encouraging individuals to respect one another's cultural differences.

13 Ernesto BertarelIi's Role

Bertarelli exerted great influence and leadership at the beginning, particularly with major strategy decisions, and later became more hands-off on a day-to-day basis. Bertarelli controlled the budget, and as Coutts remarked, "It was hard to complain about what was going on when you saw the guy who was paying for it going through the same thing." Everyone knew Bertarelli was prepared to suffer hardship with the team. On the boat, Coutts was clearly the leader. Off the boat, Bertarelli served as an inspirational figure for the team, at the outset with motivational speeches on standards, attitude, and cleanliness, stating no matter what happened, Alinghi would continue on to the next race. Coutts offered words of praise: That was a major guarantee, also the way he said it. It was a lot of motivation. It's important to have an inspirational figure that people can look at and not question their judgment, the guy who has credibility. He used to work out with the team. He did have a few special privileges - he had a special locker. You could disagree with him. For sure there was a little extra respect and diplomacy, but people never felt threatened.

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Although Bertarelli was the head of the Alinghi Syndicate, he was also a full team member who started his days in the gym with everyone else at 6:30 a.m. Schmann observed: "He followed the rules, wore the team outfit, set a good example, and served as the benchmark. When a team member complained about the sunglasses he had to wear and wanted to wear his own, we could point to Ernesto Bertarelli and say 'he is wearing them, so you can too.' That eliminated discussion.

14 Differentiating Alinghi from the Competition

Most teams ramped up faster than Alinghi. They were quick to hire personnel, purchase old boats, and begin sailing. Alinghi spent more time than most developing a game plan, perhaps involving more people in strategic decisions. Alinghi decided to build the first new boat early but was one of the last teams to begin sailing. Oracle, OneWorld, Prada, Team New Zealand, GBR, Le Defi, and the Swedish all started sailing before Alinghi. Alinghi, Prada, GB, and Sweden went with two different new boats. Oracle, OneWorld, and TNZ went with two identical new boats. Alinghi put into place checking mechanisms early in the program to facilitate confidence in decisions and verify reliability and performance of information. Team values were strongly reinforced on a regular basis. The team did not accept hidden agendas and operated in a transparent manner.

Alinghi combined clear leadership with a high degree of delegation and individual ownership. Ideas could be challenged, and people could develop projects without interference from management. Management intervened only when a cost or personnel issue resulted in targets not being achieved. Team members developed strong mutual respect for each other and recognized that cultural and personality differences were a potential source of creativity. Coutts elaborated: "We did not assume we would win or be better than our opposition. We did not sacrifice internal communication for security purposes, we were very open with internal communication. We did not get paranoid about other teams watching us or learning from us. We were more concerned about learning ourselves and making sure we were sufficiently informed to be able to contribute."

Asked to compare Alinghi to other teams, Coutts said the multinational teams Alinghi, OneWorld and Oracle tended to have greater diversity of nationalities, whereas Prada, TNZ, Mascalzone, and Sweden tended to have more national teams. On personnel changes, Coutts stated Alinghi did have a few but quite early, and that unexpectedly high injury numbers almost created a major problem, due to Alinghi's

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early assumption that there would be fewer injuries. Coutts mentioned Oracle with skipper and major management changes toward the end, TNZ changing the tactician half way through, OneWorld with big personnel changes, Prada changing their helmsman on the last race and losing their chief designer in a public dispute late in the program.

15 Conclusion
Russell Coutts, age 41, completed his third consecutive match unbeaten, winning 14 consecutive AC races. Considered by many to be the best sailor in the world, Coutts was known as calm, single-minded, and capable of intense concentration. Questioned after the race, Coutts replied: I'm a New Zealander. Make no bones about that. But I am immensely proud of what we've achieved at Alinghi. It's been a lot of hard work for me, and as a professional sailor, frankly' I'm proud of what I've done." If you had looked at us in November 2000, you would have said, 'There's no way Alinghi can win the cup' But somehow we managed to come through. We worked very, very hard on this project. In November 2001, nearly a full year before any racing had begun, Coutts offered a thoughtful analysis:

"It is not just a question of having the fastest boat, although that's a positive. But slower boats have won also. It is not technology alone, or the size of one's budget, or simply the amount of time spent preparing. Since 1987, none of the teams who have spent the most money have gone on to win. It seems that often the most crucial decisions are the big ones you make at the start of a campaign.

16 Task
After reading the Alinghi team 2003 case study above, Write a short individual response and provide answers to the following questions: 1. Discuss and suggest reasons Team Alinghi won the 2003 Americas cup? 2. Analyse and discuss the case in terms of leadership styles: Which leadership style did Bertarelli use? 3. Suggest a series of 6 key principles for teams to follow on the basis of this case You should write between 1000 and 2000 words. In a second stage in groups of four present a group solution to the class. As input to your analysis, consider and reflect on leadership theory as well as your own professional experience.

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