In Good Company with Nicolai Tangen - Benedetto Vigna CEO of Ferrari

Episode Date: September 7, 2022

In this episode, Nicolai Tangen talks to Benedetto Vigna CEO of Ferrari. They talk about Enzo Ferrari, electrical vehicles and Formula 1.They also discuss leadership, motivation and work life balance! The production team on this episode were PLAN-B’s Tor-Erik Humlen and Olav Haraldsen Roen. Background research were done by Sigurd Brekke with additional input from our portfolio managers Arnab Seal and Trym Torvund.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

So Benedetto, big thanks for taking the time to be on the program today. I just would love to kick off with a bit of a naive question. So, Benedetto, big thanks for taking the time to be on the program today. I just would love to kick off with a bit of a naive question. Is Ferrari actually a car? No, no, no, no. Ferrari is made of people. And the people made, among other things, also the car. But we are a luxury company.

And we are a family of people that have the passion to make unique things, exclusive things with the continuous and always alive will to progress. This is Ferrari. We sell emotion and experiences. So when the founder Enzo Ferrari said that Ferrari is a dream, what do you think he meant by that? It's the polar stars. I mean, what is the history of humankind?

It's driven by dream that you have to make it happen. Well, this is Ferrari. One year ago, I joined Ferrari, the 1st of September. And I read many things about Ferrari because I was living Ferrari from the outside world. But when you are inside, you deeply understand, I think, the meaning of what I was saying. It helps humankind to make it happen, the dreams that drive the progress of humankind. Have you seen anything similar in the other company? Not so much.

Not so much deep, Nicolai. I have dealt in my life with many, many companies, big and also many startups, but this will to progress, this concept that the things are constantly in motion and you have to materialize and to make it happen and to transform in reality. For example, the startup. What is a startup usually? It's a set of people that have an idea and want to achieve that goal

to make it happen. And most of the time, correct me if I'm wrong, once you get there, you have only one goal, to sell it at the highest price and to materialize in the sense that you monetize. price and to materialize in the sense that you monetize. Few of them have the ambition to scale up like some of the companies that we all know in the Silicon Valley. But I think it's different. It's different because there is a true love, a true passion.

Many people in other companies say that they are driven by passion. But the passion here is a deeper level. There are three kinds of companies, I think. There are companies where the people work for the boss. There are companies where the people work for the company. And there are companies where the people work for the values, for the purpose, for the myth. Here, people work for the prancing horse, for what the prancing horse represents.

And the prancing horse represents this continuous will to progress. I would say that the prancing horse is really, if you want, it is the symbol of a religion. And the religion is the, yeah. I can tell you this. I have several friends in Silicon Valley. So I fully believe you.

I've been to Maranello, and just for the listeners, Maranello is where you are headquartered. All petrolheads, all serious petrolheads make the pilgrimage to Maranello to visit your factory. So I can see a point. Tell us about the town and how Ferrari is just completely dominating the city. You can really see when you go around in the town, the people that are dressing the red suit,

the operators that proudly dress it. Usually, when you work in that role for other companies, you get rid of that suit right away. You don't want to go around in that way. And this tells you a lot because this true sense of belonging goes, I think it touches all the level of the company. And this is very important.

And you see that you find the people dressing in this way in all the town, especially when you are under Christmas time, it looks like you are in the city of Santa Claus. So it's not Rovaniemi, it's here. No, you've had a very successful background with micro compressors and so on how is this industry and job different I mean Ferrari is a luxury company in the luxury company the speed of change is different than in high tech and the two goes end in end because the lack of heritage in these high-tech companies allows you to move more freely and with higher speed does the legacy and the

traditional ferrari hold back change you think but i think also if you are in a startup and you may try whatever you want if you do a mistake nothing happens if you are in a company like ferrari with a strong brand well you have to make sure that everything you do is coherent with the brand. Were you chosen because they wanted more technology and electronic content in the car? I think there were several dimensions. Number one, yes, because I know a little bit about technology. I think there is also another dimension was the international experience. I think there is also another dimension was the international experience. There is also a third dimension.

I think we got a good agreement on the leadership style. I mean, my leadership style, I would say, is more transformational, is more to make things happen through the involvement of all the people. Okay. And there is also, think another dimension that is the ability to create entrepreneurial approach because i was able to build some business in a place where the competition is very strong could you elaborate a bit on when you talk about transformational leadership style what does that mean it goes end in end with the sentence of enzo Ferrari, the company is made of people. Today we are living in a period, this decade, I think is characterized more than the previous one, also because of some

other reasons, geopolitical tension, because of the pandemic, is characterized by uncertainty. When you are in a situation of uncertainty, what is important is the way you are able to drive in this situation together with the team so you cannot say today in 2027 i will make this or that you have to define where you want to go yes but the way you make it happen let's say it's going to change what is constant is the way you mobilize the resources and the way you involve the people to achieve that goal what have you done in terms of i think i read somewhere you thought there perhaps was a bit too too much bureaucracy um so what have you done to bureaucracy process and speed okay a few things nicolai i made a leaner organization so inside each function i got rid of some level and then i opened organization then there are some other things that I believe are very important, and it's the way I think I behave.

I go to talk with all the people from first to last. What does it mean? That I can go to talk with operators, I can talk with engineers, I can talk with the people working in communication or whatever, because usually what happens, and this is a mistake that I always try to avoid, that usually the CEO end up talking with a limited set of people and they see the reality through the lenses and the eyes of these people. And I don't believe it's good. I've been trained and I always been doing this in my professional life to talk with all the people independent on the level.

So my biggest satisfaction was just before summer when there was an operator waiting for me downstairs and he wanted to tell me something he was pleased because i took some initiative and i told him come here come upstairs let's take a coffee together and he was very very he liked a lot because they see me very close at different levels and this is for me very important because they I see them very let's say free to speak and this is for me is important if you want the people to talk you have to give them first of all you have to give them the opportunity second you have to listen to

them so when I came here one year ago I ended up i mean i talked with more or less 300 people one to one before to take some decision that bring brought me to this new organization and some initiative that i put in place now are consequence of the suggestion i got from these people you know we had the people in ferrari nicolai that never had the opportunity to be in a Ferrari. So we had the people that were working in the company for 20 years, never were in Ferrari. So I said, OK, let's start. So we organized during the test drive of the car, we have the people that are going in Ferrari. And I remember that I was talking with the people of the company.

There was a lady that was working in the on manufacturing she was very pleased she told me benedetta i understand that after 20 years i'm working i understand why it's important this detail and you see i mean one when other was crying another was crying because of the experience she had going in ferrari first time in in the life so i think when i say transformational i think that you have to start from the feeling and the emotion of the people i mean the brain is important yes no doubt but before the brain there is the feeling in the heart that is powering the brain absolutely you mentioned um that uh you were lifting up internal talents how do you find the internal talents that you were lifting up internal talents.

How do you find the internal talents? There is a process, pretty good. We select talent that attend some MBA, Master in Business Administration. We have a deal with a company in Bologna, with Bologna Business School. We have different kind of MBA. We select these people that attend over there.

And this is really good. This is working very well. So we have people attending this for more than one year if they also go in to see different companies they go in other place in the world to have this experience and then there is another thing in Nikolai I mean I keep talking I mean I talk to them for me there is the best way to know people is to talk to them and to listen do you think mba is a good thing doesn't it just mean that people get a bit full of themselves and want higher i think the mba is good in the sense that is telling you the basic okay it's telling you the at the end of the story story is and some experience that is making a difference but when in in MBA for me what is good is that you know you you know the things that you don't know

and then you work on it changing tax um a bit here who is the Ferrari client? We have many. We have the passionate and then the pilot. Different way to use the cars. And I think we are well covering the needs and the experience they want to try. We have customers whose average age is in the range of 50. And I can tell you that 40% of the new customers are younger than 40 years so if you if you go to see the data for me it's impressive to see also that the if you want average age of the customers of Ferrari customers is relatively young and then you also a distribution of the

age is such that around 35% of the customers of Ferrari is between 35 and 50 years old. And what about women? What's the female client base? We see a strong, especially in the new customer base, we see a strong interest by female. by female i do not remember exactly the the the numbers but i would say that one over five one over five one over six is female on your new customer base which one do you drive i drive the roma on the road but i can tell you that every month i like to go on the track e or or with 488 or 296. but it's not like the average joe can just walk in and buy your top models right it's a waiting list for a lot of things ah yes i mean yeah for for icona there is for sure you have to be selected for all the car also there is a waiting list yeah and how do you select people i mean who are the

happy few i i can tell you yes i am one of the happy few but I can tell you, yes, I am one of the happy few, but I can also tell you that we have a well-certified, let me say, model and algorithm by which, for example, we assign the cars, the special edition, limited edition, and Icona. So we have some special codified procedures that we are following. While for the normal car, if you want, well, we have also there, we follow the time, the clear criteria.

I mean, it depends when the customer are placing the order, which is the time also for the homologation of the car in different countries, because different countries have different kind of homologation criteria. So we are respecting the order, the insertion order date. Changing tax there. Some people think one of the biggest challenges for Ferrari could be the transition to electric cars.

How do you intend to do this? I believe it's because people don't know that our electrification journey started already 13 years ago. I mean, it was 2009 when we started to put the engine on Formula One. And then after Formula One, we moved to LaFerrari, to the supercars. And then after LaFerrari, we went with SF90 and then 296. We went with SF90 and then a 296. So today we have four cars on the road, let me say in high volume,

for what high volume means obviously in Ferrari, no? A few thousand cars per year that are hybrid and are using already all the electric traction. So we are not starting the journey now. The journey started 13 years ago, and we are not starting the journey now the journey started 13 years ago and we are aiming and we will unveil our electric car in a full electric car in 2025. What do you do with the sound? I mean isn't part of the fun of having a Ferrari the sound and tell people here I come? The sound is a way to, let me say, to enhance the driving trails. It's part of the experience of driving a Ferrari.

Each sound has its own signatures. And we also have to understand that electric engine does not mean silence. There is a sound also coming from it. It's up to us. And that's what we are doing and that's where we are also filing a lot of patent on good and innovative ideas of the team that will make the sound unique and distinctive for our Ferrari. So we profoundly believe that also the electric Ferrari will be a true Ferrari. Is this your biggest worry? I'm not worried. I mean, if I go in the lab and I see the competencies of the team

and I see the way they are creating some interesting features, I feel reassured. I mean, I was here just to give also you, I had an important meeting with a partner, 11th of August. I was here. I was a little bit ahead of time, and then I came in the factory, and I found the two people that are working on electric engine. So they brought me in the laboratory, and they showed something that is very unique. So I'm not worried because I see the progress and the will to progress that people have,

and let's say the continuous strive for excellence this is this is very important here nicolai in ferrari if you give a hint if you need a hint if you give a direction the system moves very fast okay well shifting into the really uh super fast lane here um how important is formula one for the ferrari brand if you ask me what is the impact of Formula One weekend on the sales of the car, basically there is no correlation, no causation, no correlation. Okay. If you ask me instead, what is the impact of Formula One? Well, Formula One has been always part of the DNA. The racing has been always part of our DNA and it will be always part of the DNA because the racing is the manifestation if you want of this will to progress. So for us Formula One is important for

three reasons. Number one, because it remembers us that to excel you have to pay attention to all the detail and it's always there. I mean you can you cannot sit, it's a continuous progress. This is number one more on the if you want on the soft side it remembers the importance to be always competitive and never sit number two it helps also because it helps to develop some technologies that we develop on the track and we move on the road number three is also if want, a good platform to nail down some important partnership, commercial and technology with many partners, because of the visibility that Formula 1 has. Now, clearly, if you want, when we win during the weekend,

the face of the people that I meet in the company on Monday is more smiling than when we don't win. And this is, I would say these are the dimensions why Formula One is important for us. How would you characterize the current season? I would like to say that we have done some mistakes and we have to, with humility, we have to understand them and be able to look forward. And that's what we are doing so we had some engine failures some car failures so when you have a failure there is only one thing you can do you admit you work and you fix we had also some areas of improvement on on the strategy and that's also what we are doing so at the end of the story you know to win the formula one

it's like any business you need the product the cash you need the strategy and you need also the uh the drivers the pilot the three must work all together to bring the we have not been perfect in the current season but we have to improve and uh let's say's say with the will to progress that we have I have no doubt that we will improve Seems like the Netflix series Drive to Survive

has really given a lot of extra focus on the sport that seems like pretty good news Yeah, that's true especially in the USA especially in the USA I mean the growth of the people watching Formula one has been growing

a lot and i think next year we've also las vegas coming on on the circus is going to be even much more because next year we will we will have 24 race track las vegas also because it's las vegas will attract even more what we see, I was looking at the data, we see also a strong attraction of Formula One among the girls, the teenagers, customer and partners often asking me some video, some comment by the two pilots for their daughters or nephew or those things.

So, yeah, this is true. If I think the requests are coming mostly from girls or women no men asking for a video or interview with charles or carlos sounds good um um but leto you are um also about to launch um what some people call an suv i think you call it something else you call it a sports car, I think, or something like that, a Purosangue. Tell us about that. First of all, it's not an SUV

for a simple reason, Nicolai. Usually when you are in an SUV, I don't know, but when you are in an SUV, a lot of people take an SUV because of the way you sit. A lot of times in many SUVs, you sit like when you drive a drive a truck well this is not the case for our prosang you will see the way you sit the way you feel the way you can go on on turns

it's completely different so there are some technology in terms of vehicle dynamics, some technology in terms of traction. Some you will see. I mean, this is not at all an SUV because it's not a utility vehicle. It's a vehicle that is enhancing the performance and the emotion, the driving thrills of the drivers. And when exactly will we see it? You will see in December in December there will be on the road next year

moving on to just lastly here on your your personal thing so what what drives you why are you going to work every day hey this is a nice question maybe is the most important one the one I like the most. There are several reasons, but the most important one, Nikolai, is here to make, together with the team, to make a difference and to show, together with the team, to show that we can make a difference. We can make things in a different way I liked a lot for example one article that was published in them a few weeks a few months ago the title was Ferrari want to show that in luxury space you can make things that other people cannot do I mean I would like if I have to summarize I like to show to the world with the team and we with the stakeholders

we can make a difference this is important the story of the stakeholders because if a company can make a difference it's because also of all the partners it has and when i talk about partners i mean the suppliers the customers the owners of our goods or what we sell, and also the academic players. So it's a way I feel that I can contribute to a kind of shared prosperity of all the stakeholders. I never came to work here or the previous life to make an object. No, this has not been the driver. Sometimes it's funny because people look at my background and they think that what is driving me is the technology.

No, and instead what is driving me is what you can do with that technology, but always starting from the human the people because you have because you have personally been involved with some what is it 100 technology patterns yeah yeah but this is a this is story yes i've been using uh the technology to achieve uh only one objective to delight the people that are using what we are doing. I mean, Nicola, I was studying at the university physics, and then I left that world to make something that is helped to create this kind of prosperity across the supply chain, call it the company,

call it the stakeholder. I mean, I would like to see something that is generating some value across all the value chain. So the technology, the patent are a way, are a tool, let me say, are not an objective. For me, never. I was always telling, and I'm telling the people, the technology is a tool. You don't go to buy in a supermarket the latest generation product only because of the technology.

The technology, the way, the emotion that it associates, it resonates. And this is, I think, in Ferrari, we are using the state of the art technologies. We are pushing a lot on patent. We are pushing a lot. One thing that I'm doing here, yes, is to patent more and more. Why? Because the patents are a way to protect your own ideas. This is maybe another difference between high-tech and automotive.

Usually in high-tech, you patent more than in automotive. Okay? Because some people believe in high-tech, you patent also very small things, small details. In automotive, instead, the people are more, if you want, shy, and they don't patent a lot. And then if you go into luxury, they even patent less, if you want. So I'm pushing more in this direction because sometimes small details, small things deserve to be patented

because the patents are going to become more and more important in the future. And we have to protect. We, as luxury companies, we have a lot of ideas that can touch the car, but can touch also other luxury products we do, and we have to patent. What are the big setbacks you've had in your life? No, look, when I started, it was in 95. I can mention two, two important ones. I started in 95,

and I was alone creating this business. And I remember that for the first five years, the company I was working for, they were using me, quote unquote, just to show their main customer that I was the guy doing R&D. After five years, I said, no, now we stop. I want to do these things. I don't want to be shown like a monkey to the strategic customers to show that we are doing something funny. I want to make things happen. So in year 2000, I started to work on my own ideas with the team. And we started to see the first dollar revenue in 2005. And we were at risk of shutting down all my activity. So it was not easy. I remember that there was my wife delivering our daughters and I was telling her, please wait because I have to submit the business plan.

I can remember all the dates because I remember the date of my daughter when it was delivered. No, this was not an easy period because you had on one side to work to make things happen. On the other side, you have to protest daily to make sure that activity was not going to be shut down so you also you were always living you know on the on the thin red line and the approval of the plan I did in the previous company came 16 June 2005. and this is why also here I said 16 June 2022 we have the capital market day you're a bit superstitious actually no I think I like to keep track I mean the time is important for me the time is very important then the second phase came in here 2001 2011-2013. There were some setbacks. We did a mistake. The mistake was that we created a market. We took more or less 100% of this market. We did the mistake to undervalue the power of the competition.

the power of the competition. So when the customer were coming to ask us to do something more innovative, since we had a big market share, we were saying, you know what, if you want this, take it. So when the customer were asking us something new, instead thinking that maybe someone else was offering them these things, we were demonstrating the customer that he was wrong that this was not necessary and then we did a mistake what did you learn from it first of all you are always always to listen you don't have to sit if especially when a customer is asking you something pay attention because someone has been already proposing him. And then this was very important also because my team was very small until 2005. I mean, we were around 100 people. And those people went through the down and then they see the up. Then we scaled up the team from 2005 to 2011.

So the people that joined that period were all only looking at always grow, no? They did not conceive the fact that you can go down. So the second phase, when we went down, and then we recovered very well, was also important for the professional growth of the people. Because people must understand that life is not always one sign. It goes up and down. And especially in this valley that you appreciate what you were not appreciating before.

So I think that you always keep, you need always to keep alive the fire of the progress. You mentioned that your wife had to wait a bit with her delivery so that you could finish the business plan. Tell us about your work-life balance. I was discussing with the team before that this is one important task of a CEO. The work-life balance for me is very, very important. I can tell you that I was not so good till 2011 2012 after that also because of this experience it was very useful so the work-life balance for me is important it means that i have

always find time for myself either to do some you know to do reading or to do some, you know, to do reading or to do some activities. I think it's important. And also to have a free time on the agenda when you want to allocate time, when you want to meet anyone. So the agenda, I was used to have an agenda, as I told you, till 11, 12, that is very packed. And then you don't drive the agenda. It's the agenda driving you.

Since then, I learned, and I'm sure I will continue to learn, to make the agenda a little bit more loose. So when someone is coming to me and asking, I would like to discuss about this, and then I can arrange usually within one day, or I mean the same day, let's talk now. And this is something that I'm using a lot here in ferrari because i want to pass a message that the loose agenda is not because you are lazy the loose agenda is because you want to use at the best time and maybe you cut some operational

stuff and you you you think more to transform and not only to perform because when you are if you balance well the time between, you know, the work and the personal life, the family life, the friends, I have a lot of friends. I mean, these are something that for me are not negotiable.

Are not negotiable. It's important because you are more balanced. I don't think it's good to have a workaholic person, in my opinion. This is my limited view as a CEO, because otherwise you transmit bad information. I mean, the life is not only about work. There is also other things.

And a lot of times you find the solution on the work because you have this free time and you connect. You have the ability to bring on your network other people and other input. So this is for me very important. What do you do in your spare time? I can tell you tonight I go to play paddle with three colleagues. You also live close to Bodena. You have the best food around you. I mean, do you cook?

I cook yes, but when I'm not alone, I don't need to cook. I have fun to cook when we are with some friends. Here I have many friends, even from elementary school. I can tell you that I have spending at least 50% of the of the dinner are with friends that i am i know here since many many years but then i i have i do i like to do some sporting activities and this i like a lot i like to spend time with my my daughters especially in the weekend more time because we are more free i am in modern she's in Geneva. But last weekend I was doing physics, not so funny, but I had to do physics and mathematics with her. What do you read?

What I read? The different books. This is one that I read recently. So A History of the World in Seven Cheap Things. It's nice. They are interesting considerations. No, I read the books of different kinds. So there are books.

Usually the books I prefer are the books written by the Nobel Prizes. Not in chemistry or in physics. This I don't care, quote unquote. It's more about economy, literature. There is one author that I like a lot. It's Daniel Kahneman. I like a lot. I read recently his latest book, Noise. But these are

books I like. I have several books. My wife is always getting upset because I buy a lot of them and then there are some days where I read more, some days where I read less. But I never travel without books. Never. Last question. We have many thousand students listening into our podcast. What would be your advice to young people these days? This I am prepared because I was asked the same question by another journalist. There are four things, all important. Number one, you have to work hard because nothing comes for free. If something comes for free, it's not long lasting because you have to feel it. And this is the experience I was gaining that usually you gain with passion. Don't follow the money. If you select a job because they pay you more,

but you don't have passion, you are losing the most important asset of your life. That is the time, the life. Number three, and I think this is very important nowadays, and I keep talking always with my daughter. She's 17 years old. It's a people relation. Today with the web too, with the social network, all this texting, I mean, spend the time with the people. You cannot live in a digital world. You need time, good quality time with people so third is relation with people and then last but not least

keeps keep learning and i keep keep learning from everyone everywhere and always there is nothing wrong because our brain never get tired of learning so it's hard work it's continuous learning it's passion and it's people relations. Stay with others. Benedetto, this has been an amazing learning experience, and it's been, you know, being together with you, it's been just incredible. I want to thank you for taking the time. It's been a true fantastic experience. Thank you so much. Thank you, Nicolai. Why don't you come here to Maranello, bring some reindeer meat, andandino e ti offro qualche tortellina? Porto qualche carne di randino e ci cuociamo insieme.

Sarebbe meraviglioso. Perfetto, perfetto. Perfetto. Grazie mille. Ciao Nicolai, ciao. Arrivederci.