What Auto Racing Teaches Us About Constraints

Opening Statements:

The market for automobile racing is an interesting complex system; because it pushes the boundaries of what is practical in the competition. Every vehicle is a very complex system, in and of itself, stuffed into about a dozen meters cubed. There is also the bath of the track and air conditions and the human influence of dozens of teams driving a complex market that keeps it funded, supplied and accommodated. Overall, its relatively scientific; in that, there are many machines being tested in similar conditions. Builds, procedures and competence are tested against similar conditions on a blacktop laboratory; and the winner speaks to the effectiveness of that particular combination... and it's all about who can push against the constraints the hardest without failure. Racing teams are people who understand constraints as well as anyone; because it's their job to test them. It's a very interesting, complex system that can teach us much about the risks and rewards of "sending it".

The Machines:

Race cars are built to push the boundaries of how fast automobiles can get from an origin to a destination. The constraints are many; so the need for efficiency in footprint, weight, cost and speed is imperative. These influences are optimized in conjunction with each other in an effort to produce the returns on the investment in them. Winning races funds the machines and everything that makes them win... sort of. There is also sponsors and some community funding involved in more recent years; with the influence of social media. The machines are complex in that, they are a system of subsystems and complex parts, that are subsystems in and of themselves with parts. Drag-N-Drive machines are particularly complex; because they have to have all the characteristics of a race car and a street legal vehicle. For instance, road racers don't necessarily require the road safety equipment that Drag-N-Drive cars do; and Pro-Mod dragsters don't necessarily require cooling systems or road safety equipment. Drag-N-Drive cars push the boundaries of what a street legal vehicle can do on a drag strip. That added complexity not only tests more boundaries (constraints), but also speaks to constraints that exist with the average road vehicle. It's a racing class that teaches us about constraints not only in extreme conditions, but also in average conditions... by contrast. The machines are designed to not only go full throttle for several seconds, they are also designed to make several trips of hundreds of miles; towing or carrying a load of at least hundreds of pounds of supporting equipment.

The Teams:

The teams are fairly diverse; but consist of drivers and support staff. Some teams may have multiple cars in various classes; all with their own drivers and support staff. It can be as little as a driver that works on their own car; to as many people that can ride in the vehicle. It's often one driver and a rider that helps with preparation, maintenance and repairs. Now that telecom tech has become so conveniently accessible; there are also support staff that can contribute remotely with things like tuning.

The teams push boundaries of both competence and effectiveness; but also efficiency with smaller numbers of staff in the field. There's really no use of having a dedicated tuner riding in the car; when the space could be used for needed equipment, or the trips could be done with less weight, and thus less load on the vehicle. This tests not only the proficiency of both the staff in the field and the remote staff, but also the communication skills of both; as the remote staff rely on good communications of the observations of the staff in the field, and the staff in the field require good communications of remote staff for diagnostics and probable solutions. That's another, more recent layer of complexity that makes the Cybernetics of the system more interesting. It's not just the relationship between the humans and automobiles with added computer mediation. There's another layer of interaction via telecom tech. That being addressed, the staff members don't just connect with each other via telecom, they also connect with community that supports their efforts; in and out of the field. The social influence and impact in modern racing have become more direct and intimate as well; as racing teams have begun producing their own content and promotions as well.

The Venues:

The venues are quite literally where the racing rubber hits the road. They work in conjunction with the racing teams, racing fans, equipment suppliers and regulatory commissions to create returns in fun, safe, innovative, competitive and profitable experiences. The fans are kept safe behind barriers that don't obstruct their view; and are offered food drink and facilities... and of course some pretty intense entertainment. The racing teams are offered a track, access to safety regulators, a pool of prospective new fans, access to prospective new sponsors, a pool of competitors and a chance at prize for winning. Equipment suppliers are offered a chance to observe tests of their product lines, a pool of racers to market them to, ad space and a fun research environment. Regulatory commissions are offered a place to enforce safety regulations, access to racing teams and equipment suppliers, access for field research and a fun environment for their work. They too often have a presence on social media; which gives them added reach for their own sharing and promotions. All of the relationships described in the previous paragraph equate to a lot of responsibilities and opportunities for competitive advantage. Race tracks compete with each other to a degree; but regional and zoning influences are a constraint in that respect. Race tracks are loud and smokey so there are constraints on where they can exist. They are expensive to own and operate and that factor is also an added constraint on the number of how many can exist. The number of race fans in certain radius is an important factor in getting over the five year hump; especially if there is another track within a certain radius of it. Competition between tracks can of course be quite fierce; especially considering fan loyalties. Bringing in the fans of specific racers can happen if the track is well liked for it's condition. Racers enjoy tracks that are in good condition; not only for races, but also for testing and tuning. Tracks can gain customers for having especially nice facilities, or really great chilly, cheese fries. Ad space and social media presence can bring in sponsors; and compliance with safety regulations can mitigate risk factors. The Cybernetics of raceways is complex and interesting as well. It's a complex system of relationships; as much as real estate for race day.

The Market:

The market for racing competition is a niche economy in and of itself; as it has almost all of the interesting facets of an economy. For the fans it has accommodations, though limited, for it's very short term use case, food and drink in concessions, facilities for when nature calls and the entertainment that draws them in. It creates jobs for a work force, requires real estate properties, products and services, science and technology for innovation, regulation for fairness and safety, zoning for property value concerns, and a wide variety of social interactions and functions. It pushes the envelope in many of these aspects, in some way or another. They are all in essence risk vs return judgements that get more interesting the more they are dug into.

The risk aspect of that particular market is the same as the risk of other markets and essentially the general economy. It's the risks that are taken when pushing the boundaries (constraints) to the edge of failure. The competition on the track, between venues and equipment suppliers is fierce but welcoming to those who can compete. This may be primarily due to it's association as a sport. That social aspect of it seems to feed back into the economy. There's also the fact that there has been more than one way to fund racing teams since the early days of auto racing. It's not in essence a winner take all market. All of the organizations in that market are valued for their own contribution to the market; without necessarily being deprecated from it. The competitive nature of the market itself seems to promote competition and mitigate shenanigans; with it's general aversion to cheating and misconduct. This appears to aid in pushing boundaries (constraints) without more general failure. It's a statement for Classical Economics; as it shows that the most competitive markets are the ones that welcome, as opposed to narrow competition. These are markets that can push to the edge without failure; because the complexity of healthy competition is in essence contingency. There are little to no singular points of failure in a market with plenty of competitors. The racing teams teach lessons with their machines by pushing them until they break, in essence demonstrating how races can be lost by pushing too hard; without risking the entire market. The market is centered on the peak efficiency and effectiveness of a machine and the pinnacle of competence of a team. That's what everyone gathers to see. It's all about pushing to the edge without failure. That's what wins races.

Closing Statements:

A balance between risk acceptance and aversion is key to long term peak performance. This is something that can be observed in auto racing. Though risks do produce rewards they also win "stupid prizes". Watching racing teams mature to competent competitors and even contenders demonstrates that principle in as many diverse, independent tests that one can find. It's not a niche outlier either. It's a general aspect of nature. Few financial crises are a product of external factors. Almost all of them are a result of pushing beyond acceptable risk levels. It's either great expectations concerning returns and/or over leverage and/or misconduct. It's not a sporting relationship; and that works against it's long term returns. Financial crises are lost races that originate in lack of respect for constraints.