Business Case Journal SCR , .

26

SCR
THESOdETY
FOR CASE
RESEARCH__

CREATING A fflGH PERFORMANCE TEAM THROUGH

TRANSFORMATIONAL LEADERSHIP: THE CASE OF ALINGHI
This case was prepared by Wolfgang Jenewein and Christian Schmitz both from the University of St. Gallen. The
views presented here are those of the case authors and do not necessarily reflect the views of the Society for Case
Research. The authors ' views are based on their own professional judgments. Copyright © 2007 by the Society for
Case Research and the authors. No part of this work may be reproduced or used in ar^ form or by any means
without the written permission of the Society for Case Research Note: The authors acknowledge Oliver Malms,
whose inspiration and support was critical dtiring the writing of this case.

Getting the Extraordinary Done

After Team Alinghi's impressive victories in the preliminary rounds, the stage was set for
a show-down with Team BMW-Oracle in the Louis Vuitton Cup Final. Larry Ellison's BMW-
Oracle syndicate, which according to the press had an unlimited budget at its discretion, was
considered the heavy favorite in the battle against the Swiss newcomer. Team Alinghi. But in
that competition, which would decide which of the two teams was to qualify for the subsequent
America's Cup, Alinghi once again prevailed with poise and confidence. What's more, the
victory laid the foundation for Alinghi's later historic victory in the America's Cup.

In the fifth race against Oracle, we were behind because of a few small mistakes. I
suddenly noticed the positive feeling in the team. No one got rattled. Everyone stayed
completely focused and tried repeatedly to make up for lost ground. We waited for
our chance and got it. At the beginning of the campaign, I wasn't sure how some
elements of the team would develop, but this victory gave all of us more self-
confidence. Up to then, the America's Cup had only been a dream for us. On that
day, it took a giant step toward becoming reality. (Russell Coutts, skipper. Team
Alinghi)

As skipper Russell Coutts elaborates above, teamwork was the decisive factor leading to
Alinghi's success. When it comes to victory or defeat in sailing, it is not so much the best
technical equipment or the biggest budget that counts; much more, it revolves around the people
involved and the way in which they are led and the way they work together. This case documents
Team Alinghi's unique style of teamwork and leadership during the America's Cup.

The America's Cup - A Prestigious Trophy

The America's Cup has its origins in a regatta which took place in August 1851 off the
southern coast of England and was not only considered a test of strength between two teams, but
Business Case Joumal SCR 27

also was marked by national pride and the desire to demonstrate a country's technical
superiority. Unlike most international sporting events, the America's Cup does not recognize a
set of unchanging rules, a fixed venue, or a set racing calendar. It is a challenge-driven
competition in which the yacht club defending the title sets the rules and functions as the host for
the next competition. In doing so, the titleholder competes against the challenging team, which
has prevailed against other potential challengers in the qualification regatta—the Louis Vuitton
Cup.

In view of the Cup's rules, which traditionally place the defending yacht club in a
stronger position, the America's Cup is considered one of the world's most difficult competitions
to win " a reputation reflected in its history. In the Cup's 152-year history, only three nations
besides the U.S. have earned possession of the trophy (cf Appendix I). For 132 years, the New
York Yacht Club remained unbeaten, and not until 1983, did another team—Australia,
represented by the Perth Yacht Club—win the Cup. In subsequent years, the trophy returned to
America three more times (1987, 1988, 1992) and went to New Zealand twice (1995, 2000)
before Alinghi captured the title in 2003 in the 31^^ America's Cup and brought the trophy to
Switzerland representing its first return to Europe.

Origin of a Vision

Bom on September 22, 1965, in Rome and residing in Geneva today, Emesto Bertarelli,
early on, developed an affinity for the sport of sailing. Accompanied by his father, Bertarelli took
part in a variety of regattas and was highly successful. He won not only a large number of
smaller races, such as the Bol d'Or on Lake Geneva, but also the Farr 40 Race in his position as
helmsman. In 1999, he took third place in the prestigious "Fastnet" Race as navigator. Even
back then, the yachts he sailed on bore the name Alinghi.
The name Alinghi was coined by me; it stands for passion and imagination and
expresses much of what connects me to sailing. (Ernesto Bertarelli, navigator,
founder, and president of Team Alinghi)

Sailing is Emesto Bertarelli's passion. While possessing above-average talent for the sport,
he nevertheless decided against a professional career, and instead, beginning in 1985, took on
various management positions in his father's business, Scrono. Due to the grave state of his
father's health, Emesto Bertarelli had to take over the business at the age of 3L Armed with an
MBA from Harvard, as well as a careful, foresighted introduction to the business by his father,
he succeeded in transforming the one-time pharmaceutical firm into the world's third largest
biotech company. Bertarelli was also able to increase turnover from US $809 million to US
$2.018 billion and net profit from US $50 million to US $390 million.

Despite bearing responsibility for over 4,600 employees as the company CEO and the
concomitant workload, Bertarelli remained involved in sailing and actively took part in various
national and intemational races. That is all the more amazing given that, in addition to his work
at Serono, he was appointed to the UBS Board of Directors in April 2002. During his time in the
management of Serono and his participation in various regattas, Bertarelli never lost hold of his
childhood dream of winning the America's Cup (AC).
Business Case Journal SCR 28

That burning desire witnessed its first steps toward fruition in the winter of 1999/2000,
when Bertarelli decided to actively and systemically pursue his dream. To that end, he invited
the three-time German Olympic champion. Jochen Schuemann, to Switzerland for a ski outing.
In 1999, Schuemann had earned the Swiss businessman's trust and respect when the two men
sailed together in the Marseilles regatta; he again caught Bertarelli's attention in his capacity as
helmsman for the Swiss America's Cup yacht "Be Happy." When they met later, Bertarelli asked
Schuemann to explain to him why the first Swiss campaign, the "Fast 2000," had failed. He also
asked the German what an ideal campaign would look like and what issues had to be considered.
At the end of the meeting, Schuemann gave Michel Bonnefous, Bertarelli's friend and manager,
a to-do list that clearly indicated who they had to see and talk to in order to prepare for a Cup
campaign.

I was surprised at how much Ernesto already knew at our first meeting. But most of
all, I was impressed by his seriousness of intent and strength of will (Jochen
Schuemann, helmsman and sports director, Team Alinghi)

Recruiting the Team - The Foundation for Success

On May 4, 2000, Ernesto Bertarelli took another important step toward the fulfillment of his
dream (cf. Appendix II — Chronology of the Campaign). On that day, a momentous meeting took
place between two parties: Bertarelli and Michel Bonnefous, and Russell Coutts and Brad
Butterworth, members of the title-holding America's Cup winners from New Zealand. Since the two
New Zealanders were at that time still under contract to Team New Zealand, the meeting had to be
kept secret. Within minutes it became clear that the two parties had not only set a pleasant and
friendly tone, but they also had very similar ideas about a successful America's Cup campaign. Both
Bertarelli and Bonnefous wanted to make the two New Zealanders part of their team, and, even at
that early stage, they were able to guarantee a budget of 55 million euros, 2 racing boats, a training
boat, 60 sails, 5 masts and several tenders. For the men from New Zealand, it was salve on their
wounds. At the time. Team New Zealand was beset by factionalism within the ranks and financial
woes. That same night, all four men reached agreement that they would enter the 31"' America's Cup
in 2003 on the same team. Unbeknownst to each other, each duo broke out a bottle of champagne
in celebration of their good fortune and the handshakes that had sealed the deal.

Brad and I knew at that meeting what a unique opportunity it was to be able to more
or less start from zero and be intimately involved in designing a campaign from the
ground up. Without a written contract - only on Ernesto's word - we officially
announced our departure fi-om Team New Zealand two weeks later. (Russell Coutts,
skipper Team Alinghi)

After the meeting at the beginning of June, they went about recruiting two more sailing
legends. For Team Alinghi's chief designer, they wanted the Dutchman Rolf Vrolijk, who had not
only been building successful Admiral's Cup yachts for decades, but had also constructed the much
lauded "Bravo España" for the Spanish America's Cup campaign CADP^ in 2000. After a
preliminary discussion with Russell Coutts and Michel Bonnefous in Hamburg, the Dutchman
indicated interest; however, Vrolijk still had inquiries from Michael IUbruck and Prada Challenge and
did not want to commit himself until he had spoken with Ernesto Bertarelli himself. Within the
week, the two met in Geneva.
Business Case Joumal 3CR 29

The discussion with Bertarelli was just the same as it would be again and again in
the future: technically well-versed and energetic, open and just plain nice. I was
convinced of the campaign's potential, carrying all these positive thoughts in my
head as I was flying home. (1) (Rolf Vrolijk, chief designer. Team Alinghi)

Recruiting the last key player, Jochen Schuemann, who had suffered a bad experience with the
Swiss campaign "Fast 2000" and its yacht "Be Happy" in the 30* America's Cup, turned out to be
more difficult than anticipated. Shortly after his secret meeting with Bertarelli during the ski outing
in the winter of 1999/2000, Schuemann received a visit from Michel Bonnefous at his home in
Penzberg near Munich. Bonnefous had come to offer him a position on Team Alinghi as the sports
director and sparring partner for Russell Coutts. Coutts and Schuemann had been working in the
same business for 20 years, and at 21, each had won a gold medal in the Finn dinghy. While they did
not know each other well, tliey had great respect for one another.

Jochen is a fantastic athlete, someone who has an even better feel for a boat than me.
His organizational talent and his perfectionism are legendary. (Russell Coutts,
skipper. Team Alinghi)

As tempting as the offer was, Schuemann turned it down saying that he wanted to concentrate
solely and completely on preparing himself for the upcoming Sydney Olympic Games and on
winning his fourth gold medal. It was Coutts who refused to take no for an answer. The New
Zealander continued contacting the man considered to be the finest German sailor of all time until
Schuemann agreed to a face-to-face meeting during the Games in September 2000. Unnoticed by
the VIPs of the sailing world and journalists who had come to Sydney, the two exceptional athletes
met on the empty top fioor of the "Cruising Yacht Club of Australia," and amid the Olympic husde
and busde, they discussed the perfect strategy for winning the 31" America's Cup.

We talked about our philosophies of sailing and discovered a whole host of points
that we were in agreement on. In fact, there was no disagreement. We sealed our
future collaboration with a handshake. (Jochen Schuemann, helmsman and sports
director. Team Alinghi)

When in early October the Dutchman Dirk Kramers joined the team as a designer with a
world-class reputation, the core team of Emesto Bertarelli, Michel Bonnefous, Russell Coutts, Brad
Buttcrworth, Ri)lf Vtolijk, Jochen Schuemann, and Dirk Kramers was complete. 'Iliey agreed to
hold their first meeting in a hotel conference room in Geneva. Considering the strength in names
alone, everyone present at die meeting sensed that anything was possible.

I remember when we all came together for that first meeting in Geneva. It was like
the movie The Magnificent Seven, ' where those men all come together, one after the
other. (2) (Ernesto Bertarelli, navigator, founder and president of Team Alinghi)

After the core team had been assembled in the fall of 2000, they immediately began working
on recruiting other members. They were aware that, unlike most of the other well-known syndicates,
such as Prada Challenge, BMW Oracle Team or OneWorld, they were working at a certain
disadvantage. They were starting about half a year late, and many of the best-known and
experienced sailors had already been hired by other teams. Nonetheless, Bertarelli's team was in
agreement: No compromises in selecting members for their squad. A variety of criteria played a
Business Case Joumal SCR 30

role in naming members. The crucial issue was that each recruit had to be considered world-class in
his individual field. In particular, they were looking for sailors who demonstrated a high level of
expertise, were able to think hoUstically and entrepreneurially within the team framework, and were
constantly striving to advance the campaign.

In selecting crew members, we weren 7 looking for sailors who could just sail
perfectly; we were searching more for people who were also capable of servicing
and repairing a boat and at the same time were seeking ways to improve things.
Taken together, little improvements, like moving the trimmer spool by 20cm so that
people wouldn 7 constantly have to side-step it during the race, can be the difference
between victory and defeat. (Russell Coutts, skipper, Team Alinghi)

An important dimension was also the team's intemational character, which did not, however,
obscure the campaign's Swiss identity. Along with technical expertise and an appreciation for an
international dimension, a candidate's positive and constructive attitude, as well as a good sense of
humor, was essential for selection to Team Alinghi.

We weren 7 simply looking for people who could sail well; we were searching out
personalities that radiated passion and humor. The campaign is a long one, and the
crew spends just under three years together in extremely tight quarters. Without
absolute commitment and a good sense of humor, a team hasn 7 got a chance. (Simon
Daubney, recruiter and trimmer. Team Alinghi)

The search for such talented people followed a specific pattern. Each newly accepted team
member was asked whether he knew someone who would fit in with the team and the values it had
developed (cf. Appendix III). The person recommended would then be evaluated in regard to fit
with the values shared by the team and, at the same time, with respect to skills and expertise. At the
end of the process, the candidate would either be accepted or rejected by the entire team. Up
through the spring of 2001, all new members had undergone this democratic selection process. In
the end, the team consisted of 32 sailors; a 20-person design crew, which developed the boats in
close cooperation with the sailors; a 15-person shore crew wbo, under the direction of Michel Marie,
was responsible for logistical issues as well as the n^aintenance and servicing of the boats on land;
and finally, 30 management team co-workers who, under the direction of General Manager Grant
Simmer, were in charge of administration and marketing.

Once we had taken care of the key positions, all decisions regarding new members
were made through consensus. I consider that method especially effective became it
helps greatly in avoiding basic interpersonal problems. You can picture it as a big,
complicated puzzle that has only the corner pieces. All of the other parts simply have
to fit; otherwise, there won't be a harmonious overall picture. (3) (Jochen
Schuemann, helmsman and sports director, Team Alinghi)

The Team Philosophy - The Freedom to Act

After the recruitment phase, the entire team sat down together to develop a common team
philosophy before their intensive training period was to begin.
Business Case Joumal 3CK 31

We want to build a team that we can be proud of, that is able to win the America's
Cup and inspire others to pursue higher goals. (Vision Team Alinghi)

This overarching goal, a product of group effort, was not only accepted by all team members
but also was internalized as the central guiding principle for their activities and endeavors. The
special dimension of that vision was that it possessed both the measurable goal of winning the Cup,
as well as components related to behavior and approach.

Our vision, of course, includes winning the Cup. But for us, the 'how ' was also a
crucial factor. Even if we had finished second or third, we wanted at least to be able
to say: We stuck to the 'how. ' We inspired our people; in terms of the sport, we
behaved fairly. We tried to keep to our motto and not just to win the trophy at any
cost. (Jochen Schuemann, helmsman and sports director. Team Alinghi)

To achieve that goal, the team counted on the skills and individual sense of responsibility of
each member of the team from the beginning. They sought to surpass competitors in all phases and
areas of the campaign and to set benchmarks in terms of sailing and design, as well as in marketing
and communications.

Fortunately, our concept was so straightforward, transparent, and well-chosen that,

from the beginning, we were more the benchmark for others rather than being in the
position of having to react to them. I think that any time you are in a situation
involving strategizing, it is an advantage if you don't have to react but are the one
who is proactive. (Jochen Schuemann, helmsman and sports director. Team Alinghi)

The start was late, so to get into the "driver's seat," Emesto Bertarelli led the team in a
manner consistently aligned with three principles—trust, freedom and technology. According to
Bertarelli, in high performance teams, if you allow one another as much freedom as possible within
the collaborative framework, each individual is able to bring his skills to bear and derive the
maximum from them. This is true for the crew as well as for the design and management teams.

We paid particular attention to working well together and giving each person the
leeway to develop his skills. We led according to the motto: Get the best people for
the team and let them do their job. A prerequisite for that is great mutual trust.
(Ernesto Bertarelli, navigator, founder and president of Team Alinghi)

The collaboration within Team Alinghi was diametrically opposed to what I had
experienced three years before on the 'Be Happy. ' That campaign was anything but
happy. There the so-called keyhole management style (4) predominated. The
campaign director wanted to know about and be involved in each and every activity
and process. Ernesto Bertarelli cultivated an entirely different type of leadership
style. With Team Alinghi, there was a great deal of trust and forgiveness. The
freedom to act was the principle of our collaboration. (Jochen Schuemann,
helmsman and sports director. Team Alinghi)

Alongside trust and freedom, Bertarelli's third guiding principle was top technology. Russell
Coutts received a taste of Bertarelli's commitment to that principle himself when, in March 2000, he
called up the Swiss businessman to offer him the New Zealand team's winning yacht from 1995 for
Business Case Journal . JCJK 32

charter. Coutt's goal at that time was to procure some much needed money for his team. Team New
Zeaiand. Bertarelli, who was much more interested in the skipper, Coutts, than in his old winning
boat, politely refused the offer, indicating that he had no interest in outdated technology. Just as
with his biotech company, Serono, which is known for implementing leading technology in all areas
of the business, Bertarelli makes no comproniises when it comes to the quality of the materials used
for the Alinghi.

When you see my boat, you are able to understand my management style. To support
the leadership of the decision-makers as fully as possible, I always try to use state-of-
the-art technology. (Ernesto Bertarelli, navigator, founder and president of Team
Alinghi)

A Team Comes Together

The races for the Louis Vuitton Cup and the America's Cup are simply the freestyle
program. The cornerstone for success, the short program, so to speak, is laid much
earlier behind the scenes during the difficult period of training. (Grant Simmer,
General Manager, Team Alinghi)

By May 2001, the recruitment phase was finished, and the sailing team moved with the
training boat SUI 59 to Sète on the Mediterranean Coast of France. There they began the hard work
of training and testing. In the process, the team members not only had to accustom themselves to
the punishing work of daily training, with hours of work on both water and land, but also to the
broad diversity within the team. The squad, composed of members from 15 different countries and
including newcomers to Cup competition and highly decorated repeat Cup winners, exhibited a wide
range in ages. The oldest person on the sailing team, Jochen Schuemann, was at 47, more than twice
as old as Yves Dettey, who at 23 was the youngest person on board.

It was only natural that at the beginning of training Team Alinghi was anything but a cohesive
unit. There was taunting and friction among the sailors. It was helpful that Coutts and Schuemann
ran a tight ship from the beginning and that they left absolutely no doubt as to who the boss was.
The intensive training sessions, which began at 6:30 each morning in the weight room and ended
around 8:00 p.m. in the shipyard, aided in breaking down initial reservations and skepticism on the
team.

// was very important to Russell and me not to let egos come to dominate. We had no
problem with removing a really high-spirited sailor from the boat for a while or with
having people change positions until everybody understood our message. I think we
put down a relatively strict regime regarding inappropriate comments and trash-
talking as well as outsized egos. Our manner of discipline ultimately led to the whole
team pulling together. (5) (Jochen Schuemann, helmsman and sports director. Team
Alinghi)

By the time of the sailing team's return from the French Mediterranean Coast to its home base
in Geneva, building the team had taken a huge step forward, but it was nonetheless far from ideal.
There was still friction and resentment among the members. They would need a fair amount of time
to grow into a close-knit community.
Business Case Joumal SCR 33

Internal Competition - The Principle of the Best at Each Position

In keeping with the principle of taking responsibility for oneself, the team members received
a budget for their accommodations in Auckland. Instead of having uniform accoinmodations
arranged for everyone, each person was left to his own devices to find something suitable. Relatively
quickly, crew members got together in twos or threes so that they could afford to rent a larger and
more comfortable apartment or even a house. This promoted the development of not only a
working but also a social community.

Training began every morning at 6:30 with weightlifdng in the gym. After showers and a light
breakfast, the team sat down to the day's briefing at 8:30. Immediately afterward, 16 members
trained with the boat on the water, while the other 16 members of the sailing crew continued the in-
house development of the boats in collaboration with the design team. In addition, tune-up races
and in-house regattas with both the SUI 59 and the SUI 64 were frequendy run for practice during
training, and also under competitive conditions.

// was quickly demonstrated that both yachts. Just like the two sailing team groups,
were completely equal. Although we officially never spoke of an A- or B-team, the so-
called B-team beat the A-team at least as oflen as it lost. That was not only balm for
the soul of each person who was not at that moment on the top team, but also it was
motivation and pressure for the other team to do better the next time. (Jochen
Schuemann, helmsman and sports director. Team Alinghi)

To sustain this competitive atmosphere, special attention was paid to ensuring that all team
members were treated equally and that all decisions were communicated as transparently as possible.
The composition of the sailing team was, in principle, open-ended every day. In the end, each crew
member was able to sail in at least one race in official competition.

We chose the 16 best sailors on the day of the first race on the basis of two years'
worth of training results. Each person, including me, had to undergo that process,
which we maintained throughout the entire America's Cup. The team that we named
on October I, 2002, didn 't have to be the exact same one as on October 2. (Russell
Coutts, skipper, Team Alinghi)

The owner and president of Alinghi, Emesto Bertarelli, who sailed at the position of
navigator, also subjected hin^elf to the selection process.

In our team, we believed in the principle of 'the best at each position ' - and that was
also true for me. Among sailors, it's not your title that gains you respect, but only
your abilities and your performance on the team. (Ernesto Bertarelli, navigator,
founder and president of Alinghi)

The Law of Openness

From the beginning, Bertarelli, Schuemann, and Coutts believed that the team should operate
on the principle of openness. At every opportunity and in all parts of the team, they encouraged
criticism. The leaders were in agreement that the team could become better only if each person was
allowed to speak openly and was constantly seeking to make improvements. For example, after each
Business Case Joumal SCR . 34

training session, a debriefing took place on land. These were designed to cultivate more a culture of
affirmation than one of mistakes. The leaders took pains to expand the strengths of the team
members instead of focusing on their weaknesses.

Afler each training session, I always chose a different team member to give the team
direct and frank feedback about the session during the debriefing following training.
I paid particular attention to letting the particular person know ahead of time about
the assignment, i.e., during the trip back to port. On the one hand, this method had
the advantage of preparing the person giving feedback and he was then able to give
more sophisticated criticism. On the other hand, we made sure that each person,
even the most reticent, could participate in this open dialogue regarding mutual
improvement. (Jochen Schuemann, helmsman and sports director. Team Alinghi)

Moreover, special effort was made to ensure that information was available to all team
members at all times. There was no bureaucratic or physical/spatial separation between the various
departments, and each individual team member bore responsibility for keeping himself informed of
all relevant developments. Everyone on the team agreed that information was a matter to be
gathered and not delivered. At the same time, this informal exchange was supported as much as
possible through structural measures. The morning training sessions in the gym were approved for
the entire team. This meant that every morning, team members from the design department, as well
as colleagues from management and marketing, worked out together with the entire sailing team
under the direction of the fimess coach. In such an informal atmosphere, everyone felt free to
discuss the newest developments and issues.

/ had been part of campaigns before where the team leaders alwc^s met behind
closed doors and emerged with a big to-do list. That alwc^^s made me mad. With
Alinghi, things were different. Ernesto, Russell, Jochen, Brad, and Grant let us take
part in decision-making. Just a little example: As a sewerman, T'm responsible for
the coordination of the sails in the boat's hull, in the so-called sewer hole. It's
alwc^s hard when you have to hoist a new sail without knowing why and how the
decision was made. When I complained about it, a speaker was installed in the sewer
room that transmitted all of the communications of the five afierguardsmen. In that
way, I could follow the conversation in the boat's control room and anticipate a sail
change in a timely fashion. (Curtis Blewett, sewerman Team Alinghi)

No Baby Sitting

At times, the two-year preparation for the America's Cup wimessed conflicts and
disagreements. Such interpersonal problems inevitably arise when a multinational team has to work
together intensively within a limited space over a long span of time. For that reason, Bertarelli,
Coutts, and Schuemann went to great lengths to see that potential problems and disagreements were
dealt with by the people involved. Furthermore, there were uniform and transparent rules for all
parties concerning interaction with one another and dealing with other difficulties. They instituted
the code "Love it or change it," according to which each team member was responsible for his own
job satisfaction. The management allowed everyone the freedom necessary to address grievances and
change negative situations themselves.
Business Case Journal ÍjCR 35

One day, one of the youngest sailors on our team came to me and told me that he felt
put down by some of the other team members. They picked on him frequently and
threw him in the water in front of the assembled team. He asked me if I could help
him out. As difficult as it was for me, I had to tell him that we weren 7 running a
kindergarten, and he would have to take care of it himself He had to earn the respect
of the others himself If I were to talk to the team for him, he would lose their respect
completely. He got the message and. on his own merit, gained the crew's respect
overtime. (Jochen Schuemann, helmsman and sports director. Team Alinghi)

Russell always told us: "If you 're having problems or conflict, you have to resolve
them yourselves. If you don't, I'll take care of it -forcefully and unequivocally. But
you might not like my solution. That's why I would strongly advise you to take care
of it yourselves. " (Curtis Blewett, sewerman, Team Alinghi)

The Louis Vuitton Cup

On October 1, 2002, the time had come! The first race of the Louis Vuitton Cup was set to
begin. The goal of this grueling Cup, which spans three months, is to select the best of all the
syndicates and produce an opponent equal to the America's Cup defender. More than 2,000
joumalists from around the world descended on the media center of the Maritime Museum in
Auckland to comment on the upcoming races and to provide a global public with the most current
information about the nine teams competing. Up to that day, there had been wild speculation
regarding which of the nine challengers had the best chance of winning. Everyone agreed that the
syndicates Mascakone Latino (Italy), Le Défi Areva (France), GBR Challenge (Great Britain), Team
Dennis Conner (USA), and Victory Challenge (Sweden) only had an outside chance because of stnall
budgets, too little experience and/or inadequate preparation.

On the other hand, heated discussions arose about the chances of the four remaining teams. A
factor in favor of the Italian Prada Challenge, with billionaire PatrÍ2Ío Bertelli at its center, was the
fact that it had already won the Louis Vuitton Cup the previous year and officially had the largest
budget, with approximately 100 million euros. The American syndicate OneWorld Challenge, with
the team's boss Craig McCaw, was seen as having a good chance due to an experienced sailing team,
part of which had been lured away from the Defender, Team New Zealand. Also highly thought of
was the third American team participating in the Louis Vuitton Cup 2003, the Coracle and BMW
Racing Team, with Oracle boss and billionaire Larry Ellison. On the one hand, Oracle and BMW,
two global companies, were backing the syndicate, and on the other hand, Larry Ellison was known
for his ambition and his absolute will to win. While the official budget of 90 tnillion euros was duly
noted, in expert circles, everyone agreed that the Oracle team had access to unlimited funds. The
fourth challenger was Team Alinghi, which was initially conceded little chance of winning; however,
given its impressive training and public performances, the team's prospects were considered to be
steadily improving. The key to convincing the experts lay, above all, in ¿le composition of the team:
Russell Coutts, Jochen Schuemann, and Brad Butterworth, all highly decorated sailing legends; Rolf
Vrolijk, an experienced boat-designer; and Bertarelli, the financier and head of the syndicate

If you take a close look at the favorite teams, you can see that they all had a similar
wealth in personnel and material resources. On the one hand, all of the top teams
had experienced sailors on board who were capable of winning the Cup; on the other
hand, state-of-the-art technology is available on the market at a certain point in time.
Business Case Journal SCR 36

Each syndicate can draw on it. So, first and foremost, it's not about technical
advantages; the America's Cup is not an auction to be won by the highest bidder. It's
much more about a real competition that is decided on the basis of the people taking
part in it and the way they work together. (Jochen Schuemann, helmsman und sports
director, Team Alinghi)

The Louis Vuitton Cup takes place in a señes of acts. In the double Round Robin (1 and 2),
each challenger meets each of the other challengers once per round. A win is awarded one point.
The team with the fewest points is eliminated fcom further competition. The remaining eight teams
contend for the right to compete in the America's Cup through the knock-out system of the quarter-
semi- and final rounds. In the Round Robin, the four best teams enjoy two chances. For the last
four teams, competition is sudden death, which means that teams are eliminated from further
competition after losing a match. While in the quarter- and semifinals, the first team to win four
races against its racing parmer advances (best of seven); in the Louis Vuitton Cup final, as in the
America's Cup, the "best of nine" - the first team to gamer five victories - is the victor, as per the
rules (see Appendix IV).

The races essentially confirmed what the experts had expected. Oracle BMW, OneWorld and
Alinghi lived up to their roles as favorites; however, Prada started with considerable problems in the
Round Robin. The previous year's winner of the Louis Vuitton Cup lost at the beginning of the
Round Robin three times in a row, immediately after which financier, Patrizio Bertelli, dropped his
head designer, Doug Petersen. Bertelli indicated for the record that there was a difference of opinion
regarding how the boat was to be further developed after the initial losses. The team made use of
the break between the two Round Robins to convert the spoon bow to a bow with a double kink,
like all the other boats were using. It helped, and after its initial difficulties, Team Prada was able to
produce a successfijl quarterfinal, which resulted in quaEfication for the semifinal.

But Prada was not the only one having problems in the preliminary rounds. Oracle was
struggling, not with design, but with intra-team conflict. After four consecutive losses, Larry Ellison
became anxious about missing out on the chance to enter the quarter- and semifinals, so he benched
his skipper, Peter Holmberg, and replaced him indefinitely with Chris Dickson as helmsman.
Disappointed, Holmberg allegedly left the city for several days, and among team members there was
some resistance to the new boss on board. In spite of such peripheral distractions, Dickson
capitalized on the opportunity and sailed to seven consecutive victories in the Round Robin, as well
as to a flawless quarterfinal, which allowed Oracle BMW to qualify for the semifinals.

The third semifinalist, OneWorid Challenge, also had its problems. It was repeatedly accused
of espionage and the illegal use of design information from other teams, especially from Team New
Zealand. Teams Dennis Conner and Prada even went so far as to contact their lawyers, who
submitted a 92-page brief with copious evidence, and brought OneWorld Challenge before the
Arbitrations Panel. After thorough examination, the panel confirmed the allegations and fined
OneWorld Challenge US $65,000, as well as a point deduction in each of the upcoming races, lliat
was a shock for Craig McCaw's teana; nevertheless, they were confident of winning the semifinal
against Prada.

Of course, we were following the OneWorld Challenge espionage story and also had
our own information about it. But we didn 7 want to get distracted from our real
Business Case Joumal SCR 37

challenge. It was clear to us that we wanted to win the America's Cup on the water
and not in court. (Hamish Ross, General Counceller Team Alinghi)
Unlike the othet three semifinalists. Team Alinghi had no major problems in the Round Robin
or the quarterfinals. On the contrar}', the team sailed an almost flawless preliminary round, with 13
of 16 possible victories, and finished with the highest point score of the nine competing teams.
Even more remarkable was Alinghi's performance in the quarterfinals against the previous Louis
Vuitton Cup winner, Prada. With their superior, confident performance, the Swiss impressed not
only the experts but also the Italians to the point that they waived competing in the final match
against the vasdy superior opponent, with Russell Coutts, in order to gain more time to prepare for
the quarterfinal repêchage.

Afier the long time spent in preparation, the early successes in the Round Robin and
in the quarterfinals were really critical for our team. In that respect, we had no real
problems; just the opposite. In the preliminary round, we operated on the rotation
principle and were able to make sure that each of the 32 crew members could be
deployed at least once. (Brad Butterworth, Taktiker Team Alinghi)

The Louis Vuitton Cup Semifînal

One day before the start of the semifinal, Alinghi had to deal unexpectedly with a crisis.
During the final training session on the Hauraki Gulf, the mast of the racing yacht SUI 64 broke.
The sailors knew that repairs would take at least 10 hours and thus took pains to bring the boat back
to the shipyard as quickly as possible. While they were concemed because of unexpected incident,
they were at the same time very confident that the design team would be able to repair the boat
overnight.

The break in the mast before the semifinal was initially a complete shock. We knew
that there was little time to spare till the next day's race. We worked all night, and
every person, literally, every person on the team, helped to solve the problem. What
struck me about the whole thing was that no one ever asked whose fault it was. In
other campaigns, it was often the case that people accused each other of mistakes.
Here it was different; we didn't talk about mistakes but about solutions. (Dirk
Kramers, chief engineer, Team Alinghi)

The SUI 64 was completely repaired in time for the start of the semifinal against Oracle BMW
Racing Team on December 10, 2002. The adage "The worse the rehearsal, the better the
performance" seemed to hold true once again. Alinghi dominated the race skillfully and with
confidence and won the semifinal by 4:0. Since the crew change in the Round Robin, when New
Zeaiander Chris Dickson had taken over the helm from Peter Holmberg, the Oracle team had been
unbeaten. After the clear loss to the Swiss, they had to go into the repêchage of the semifinal. 'ITiere
they met up with OneWorld Challenge, which had defeated Team Prada in the second semifinal. In
the repêchage, Larry Ellison's team never dropped its guard and handed OneWorld Challenge a
clear cut defeat with 4:0. Tliat victory by Oracle BMW Racing set up the final pairing for the Louis
Vuitton Cup—^Team Alinghi and Oracle BMW Racing.
Business Case Joumal SCR ' 38

The Black Heart Campaign

On January 3, 2003, shortly after a boisterous New Year*s celebration with family and friends
of the team, Michel Bonnefous and the Alinghi management requested an international press
conference at the Interactive Plaza at 135 Halsey Street. Along with journalists, Jeoff Barraclough,
Auckland's police spokesman, was in attendance. It was immediately clear to everyone that
something serious had happened. The hate campaign against Team Alinghi, at times vociferous, at
times relatively mud, had begun in May 2000, after it was made public that Coutts and Butterworth
had switched teams. At the beginning of 2003, it had reached its sad climax. Bonnefous informed
the public about two anonymous letters in which New Zealand teatn members, their families and
even their children had been threatened. The police had analyzed the letters and determined them to
represent a serious threat Since the identity of the sender could not be ascertained, the team was
advised to turn to the general public. Bonnefous was clearly upset as he explained that "we have
come to New Zealand to share our passion for the sport of sailing with others and not to have our
children threatened. This has been going on for two years now, and we're dred of having to just grin
and bear it. So, we are departing from that policy and now turning to the public." (6)

The Black Heart Campaign put a great deal of pressure on us. Every day and
everywhere, we were confronted with posters and newspaper articles attacking us.
But we didn't want to let them upset us. We wanted to deal with the defamation
campaign confidently. That was why we didn't take any legal action. We believed
that would only take away from our concentration. In hindsight, I'm convinced that
we became even closer, and with each attack, our solidarity grew. (Russell Coutts,
skipper, Team Alinghi)

Ernesto gave a very emotional speech to the team afrer the publication of the two
letters, and shortly before the Louis Vuitton Cup final. He said that we could only
deal effectively with the threats and intimidation from without by closing ranks, and
the best response could only be a victory on the water. That triggered an emotional
push in the team. (Hamish Ross, General Counsel, Team Alinghi)

The Louis Vuitton Cup Final

The finals of the Louis Vuitton Cup are traditionally preceded by the unveiling ceremony.
According to regulations, both finalists, as well as the defending America's Cup holder, are required
to present the yachts they will use in the subsequent races to the public. From a design perspective.
Team Alinghi had no surprises. They were planning to use the proven SUI 64. The Swiss team did,
however, have a little surprise in store for the public at the presentation. With the aid of sotne
adhesive film on the keel and some paint, they transformed the boat into a cow lying on its back,
with two pointy horns and a pink tongue hanging out.

Oracle BMW Racing was coimting on its USA 76, which had been tested in the preliminary
races. The Americans had made use of the Christmas break to optimize the yacht for light-wind
conditions; consequently, the keel bulb was beefier, squatter and more compact.

Át the unveiling ceremony, it became clear that the Oracle BMW yacht had been
primarily developed on a computer, while our boat had, for the most part, come into
being on the water, as the result of close collaboration with the sailors. Unlike the
Business Case Journal SCR 39

Americans, who were counting on high speed in straight-ahead sailing, we placed

more importance on the tactical component, which would allow for better
acceleration potential in maneuvering. (Rolf Vrolijk, head designer. Team Alinghi)

As the third and last team, the America's Cup defending champion, Team New Zealand,
presented its two boats. (7) They surprised the audience with a long, cigar-shaped keel bulb and with
a second skin, called a "Hula," which was a bowl-shaped appendage that fit like a second hull,
starting aft of the keel and stretching past the rudder. The New Zealanders expected the additional
waterline length of the boat to provide better hydro-dynamic characteristics and thus a faster boat.
After the presentation, experts hody debated whether the second skin was compliant witli the rules.
The vast majority were of the opinion that, according to Rule 26B, the surveyors should have
immediately disallowed the appendage, which was technically not part of the hull but still functioned
in tliat capacity. ( )iily Team Alinghi was exuberant. During training, a similar hull had been tested
before it was rejected, pardy out of fear that it would be illegal, but mostly because there was no
evidence of improved performance.

Afler the unveiling of the yachts, our self-confidence was soaring. There were no big
surprises. On the contrary, the presentation of the New Zealanders ' boats with the
'Hula ' gave us the sense of being design-wise a step ahead because of our proactive
testing of that keel shape during training. (Dirk Kramers, chief engineer. Team
Alinghi)

January 12, 2003, arrived and with it the final of the Louis Vuitton Cup between Team Alinghi
and Oracle BMW Racing. ITie first two races were won decisively by Alinghi. Not iintñ the third
race did the competition come to a head-to-head race. At the first three marks, Alinghi had a narrow
lead on the Americans, who never trailed by more than 13 seconds, and on the downwind leg, Peter
Holmberg and Chris Dickson even succeeded in passing the Swiss. Shortly thereafter, because of an
illegal windward maneuver, the Oracle BMW team had to take a 270-degree turn penalty, which
forced them to make an extra tum around a buoy. Coutts and his crew capitalized on that mistake
and increased their series lead to 3:0. The fourth race was won by Larry Ellison's team. In the fifth
race, his team was about 140 meters ahead at the first marker; however, Aiinghi would not give up.
To the great surprise of many experts, the team battled back and, in spite of the light winds, passed
Oracle on the downwind leg and went on to victory. That win increased Alinghi's victory count to
four (4:1). Oracle's will was broken. In the pre-start sequence of the 6''' race, Holmberg employed a
risky maneuver and was penalized with a 270-degree tum, which in the end, proved to be decisive
for Alinghi's victory and which led to the final series count of 5:1. For the first time in the 152-year
history of the America's Cup, a land-locked country was victorious in the Louis Vuitton Cup.

The trade press was impressed by the precision with which Alinghi performed during the entire
Louis Vmtton Cup. The Swiss team lost a total of only three points from the first Round Robin to
the final victory. It was also remarkable that in the last four races there were eight changes of lead
between Alinghi and (Oracle, but Bertarelli & Co. consistently made the so-called big points. Even
Larry Ellison acknowledged Alinghi's dominance, and at the final press conference, he said for the
record, and without grudge, that the Alinghi is "the best sailing team I've ever seen."

Many times, we have been behind in a race and ultimately the team that wins is the
team that keeps the belief and determination to think it can win. (Ernesto Bertarelli,
navigator, founder and president of Alinghi) . i
Business Case Joumal SCR • 40

The America's Cup

Although Alinghi had won the Louis Vuitton Cup in an impressive manner, the experts and
the betting agencies believed it had only an outside chance in the America's Cup. Neither that
speculation nor the hate campaign against Coutts & Co., which had sprung to life again, was able to
unnerve the team. Just the opposite! The preparations for the final match-up in the America's Cup
were characterized by business-like sobriety and the highest level of concentration.

Everybody on the team knew exactly what he had to do and what was at stake. There
were no pep talks from the leaders or any attempts at some kind of pseudo-
motivational mumbo-jumbo. All I had to do was watch Russell, and I could sense his
ambition, his intensity, and his focus. That was my motivation. (Curtis Blewett,
Sewerman Team Alinghi)

I had never before seen Russell the way he was before and during the America's Cup
finals. He was absolutely focused and always had this kind of tunnel vision. In such
situations, it's always best to give him a wide berth. (Grant Simmer, General
Manager, Team Alinghi)

February 15, 2003, witnessed the first duel between the defender. Team New Zealand, and the
challenger. Team Alinghi. Tens of thousands packed the shores, and over 2,500 boats lined the
course on the Hauraki Gulf as the first race got underway. Immediately after the start, the NZL 82
was half a boat length ahead, but Alinghi was able to keep up. A short time later, commentators
from all over the world expressed concern about the water that \ras swashing into the New
Zealanders' yacht A couple of minutes after the start, the sailors were standing thigh-deep in water.
By 25 minutes into the race, a total of six tons of salt water hadflowedinto the boat's hull, the extra
weight of which set off a chain reaction. First, the delicate tip of the boom broke, which was
followed by the shackle on the genoa. That sealed the first defeat, and the experts concluded that the
New Zealanders had focused most of their attention on the boat's design and optimization on the
computer and much less on its handling. The team had spent a large portion of the preparation time
available to them with computer design work, and unlike Alinghi, only one-third of their time was
spent on tests on the water.

Last winter, we were constantly on the water. Wearing woolen caps, we trained for
12 hours every day. The NZL 82, on the other hand, spent too much time inside,
where they were seeking to make the boat faster. (Christian Karcher, grinder. Team
Alinghi)

On the second day of the Cup, light and shifting winds were the order of the day. This time
Alinghi was able to make the better start. But Dean Barker and his crew caught up, and on the first
downwind leg turned their 12-second deficit into a lead before the first mark. That marked the point
at which one of the most exciting head-to-head match-ups in America's Cup history began. The
NZL 82's lead amounted to 14 seconds, as the Alinghi attempted to position itself on the favorable
left side of its opponent. Coutts threw three dummy tacks, since it was believed that Team New
Zealand would not be especially agüe due to its 7 Vz-meter-long keel bulb. Whüe maneuvering, both
boats almost came to a standstill, but the New Zealanders countered each attack and retained the
lead. Alinghi refused to let up, and during the entire beat, it doggedly attacked the defender's left
side. It was a grueling duel with a total of 33 tacla, and it seemed as if Dean Barker was sailing to
Business Case Joumal SCR 41

New Zealand's first victory. At the last windward mark, though, learn Alinghi's afterguard decided
on a memorable maneuver—tack-jibe-set. The Swiss sailed with tiie wind from starboard toward the
mark, tacked, immediately jibed and set the spinnaker. This risky maneuver allowed the Swiss to get
the better breeze, pass the New Zealanders on the windward side, and drive to the finish line with a
razor-thin lead of 7 seconds. ITiis second victory was a demonstration of the Team Alinghi
afterguard's tactical skill (cf. Appendix V and VI).

A Vision Becomes Reality

During the pre-start sequence of the third race, both competitors, acting on the advice of their
weather teams, lined up on the right side of the course. At the last minute, however, Team New
Zealand's afterguard became doubtful and decided in favor of the left side, as it seemed to promise
better conditions. This was an incorrect decision which left them 150 meters behind shordy after
the start. Team New Zealand was not able to offset the bad start and remained behind all the way to
the end of the match.

During the race, we had seven dinghies constantly providing us with information.
John Bilger, our weather expert, was on one of them. He told us that we should start
to the right, and since we had complete confidence in him, we saw no reason to
change tactics. That was decisive for the match. (Brad Butterworth, tactician. Team
Alinghi)

For the fourth race, the New Zealand team, against the wishes of Skipper Dean Barker,
replaced their tactician, Hamish Pepper, with the Frenchman Bertrand Pace. But the new member of
the afterguard was not able to prevent defeat. The boat again began taking on water, and on the
second beat, witb winds at 17 knots and two-meter waves, the boat was dismasted as its 450,000-
euro carbon-fiber mast snapped like a matchstick. At that point in the Cup, Alinghi was leading 4:0.
The last race, which the New Zealanders had to sail with a reserve rig, was a foregone conclusion.
On March 2, 2003, Team Alinghi recorded the requisite fifth victory, enjoying a 45-second lead with
a final skillful and confident run. Thus, the team completed a perfect race to the top of the sailing
world.

The next day, the whole world was talking about a historic victory. After over 152 years and
dozens of attempts by other campaigns, the Swiss Team AHnghi brought tbe America's Cup back to
the place where it had begun—Europe. The joy on the boat knew no bounds; some simply enjoyed
their shining moment in silence; others expressed their elation in embraces and exuberant dancing in
the stem of the boat. It was done; a vision had become reality.

If you have the will and believe in yourself and your dream, you can achieve almost
anything. (Ernesto Bertarelli, navigator, founder and president of Alinghi)

Challenges for 2007

According to regulations, as the winner of the 31" America's Cup, Team Alinghi is responsible
for the organization and running of the next -America's Cup. The first requirement is then the
naming of the Challenger of Record, (8) with whom the team lays out the basic principles for the
coming races in the so-called "Notice of Challenge."
Business Case Joumal SCR 42

It was important for us to be able to work with a strong and modern-oriented

challenger. Afier a series of discussions with various teams, the Golden Gate Yacht
Club of Oracle BMW Racing seemed to us to offer the best potential. We have a
common vision of the Cup of the future. We want to shake some of the dust off the
Cup and give it a fresher, more modern look. (Ernesto Bertarelli, navigator, founder
and president of Team Alinghi)

We have made radical changes to the protocol in many respects. We want to offer
smaller teams with fewer financial resources the opportunity to participate; so we 've
loosened up, among other things, the rules regarding nationality (9) and technology
(10) transfer. In addition, we want transparent and fair athletic competition, so
we 've broken with the 152-year-old tradition of having the race management be
provided by the current Cup holder. This accepting of advantageous positioning has
got to stop. In the future, an independent regatta director will take over the
administration of the race. " (Michel Bonnefous, Manager, Team Alinghi and
Director, AC Management)

Team Alinghi considers the selection of a suitable venue to be the most important task with
respect to preparations for the 32"*^ America's Cup. From the over 60 port cities which applied, the
pool was narrowed to eight: Barcelona, Lisbon, Marseilles, Naples, Pahiia de Mallorca, Port Cervo,
Elba, and Valencia. After further evaluation process in which stable wind conditions and a big city's
logistical requirements and conditions were weighted heavily, it was announced on December 15,
2003, that Valencia would be the venue for the America's Cup 2007. Until then, there is a great deal
of preparatory work to be done. Team Alinghi must prepare itself for this occasion with the same
meticulousness which brought it victory in the AC 2003. Given the various realms of responsibility
involved in being both the America's Cup organizer and defender, it was decided that Alinghi should
be divided into AC Management and Alinghi Challenge. While Michel Bonnefuous leads AC
Management, taking care of the organization and coordination of Cup events, Alinghi Challenge is
responsible for athletic and sailing issues. It will be exciting to see whether Team Alinghi, in its role
as defender, will be able to achieve the heights that it did in winning the America's Cup 2003.

Between now and Valencia 2007, we have a great deal of work to do as organizer
and defender of the America's Cup. The trick will be in the team's maintaining its
energy and unique spirit. Our philosophy for the next Cup is that we, just like every
other team, should feel like the challenger and not the defender. We want to be
mentally ready to really fight for the Cup and not just defend it. Capturing the
America's Cup generates unbelievable strength. " (Jochen Schümann, Helmsman und
Sportdirector Team Alinghi)

Endnotes

1. Source: Pokomy, T. (2003), S. 88.

2. Source: Pokomy, T. (2003), S. 18.

3. Source: Pokomy, T. (2003), S, 83f.

Business Case Journal SCR 43

4. Keyhole Management Definition: Authors employ tbe term in reference to managers

who supervise all employee activities, monitor project progress and who insist that they
themselves be directly involved in all management decisions. Such managers understand
leadership to mean finding employees' mistakes.

5. Source: Pokomy, T. (2003), p. 84f.

6. cf. Source: Pokomey, T. (2003), p. 142.

7. The Defender must present both yachts but does not have to make a final choice in
favor of one or the other until just before the America's Cup final.

8. The Challenger of Record bears this name because it is his challenge which is accepted
first ("first") by the Defender.

9. The nationality rule indicates that each team member must live in the syndicate's home
country. That rule engendered enormous costs for teams as they had to pay the moving
and travel costs of the entire families. Each member can now freely choose his/her own
place of residence in coordination with the employer.

10. Until that point, syndicates were allowed to purchase competitors' used Cup yachts,
but without the attendant technological data. For smaller companies, that presented an
especially difficult obstacle to entering the America's Cup.

Work Cited

Pokomy, T. (2003). Alinghis Gipfelsturm. Der America's Cup. Delius Klasing Verlag
Business Case Joumal SCR 44

Appendices ' -

Appendix I: The History of the America's Cup: Challengers and Defenders

1851 America, Schoner, USA vs. Royal Yacht Squadron

1870 Cambria, Schoner vs. Magic, Schoner, USA
1871 livonia, Schoner vs. Columbia & Sappho, Schoner, USA
1876 Countess of Dufferin, Schoner vs. Madeleine, Schoner, USA
1881 Atalanta, Sloop vs. Mischief, Cutter, USA
1885 Genesta, Cutter vs. Puritan, Cutter, USA
1886 Galatea, Cutter vs. Mayflower, Cutter, USA
1887 Thistle, Cutter vs. Volunteer, Cutter, USA
1893 Valkyrie II, Cutter vs. Vigilant, Cutter, USA
1895 Valkyrie III, Cutter vs. Defender, Cutter, USA
1899 Shamrock I, Cutter vs. Columbia, Cutter, USA
1901 Shamrock II, Cutter vs. Colimibia, Cutter, USA
1903 Shamrock III, Cutter, Sir Thomas Lipton Reliance Cutter, USA
1920 Shamrock IV, Cutter, Sir Thomas Lipton Resolute, Cutter, USA
1930 Shamrock V, Sloop vs. Enterprise, Sloop, USA
1934 Endeavour I, Sloop vs. Rainbow, Sloop, USA
1937 Endeavour II, Sloop vs. Ranger, Sloop, USA
1958 Sceptre, Int. 12 m Class vs. Columbia, Int. 12 m Class, USA
1962 Gretel, Int. 12 m Class vs. Weatherly, Int. 12 m Class, USA
1964 Sovereign, Int. 12 m Class vs. Constellation, Int. 12 m Class, USA
1967 Dame Pattie, Int. 12 m Class vs. Intrepid, Int. 12 m Class, USA
1970 Gretel II, Int 12 m Class vs. Intrepid, Int. 12 m Class, USA
1974 Southern Cross, Int. 12 m Class vs. Courageous, Int. 12 m Class, USA
1977 Australia, Int. 12 m Class vs. Courageous, Int. 12 m Class, USA
1980 Australia, Int. 12 m Class vs. Freedom, Int. 12 m Class, USA
1983 Australia II, Int. 12 m Class, Australia vs. Liberty, Int. 12 m Class
1987 Stars and Stripes, Int. 12 m Class, USA vs. Kookabiarra III, Int. 12 m Class
1988 New Zealand, Big Boat vs. Stars and Stripes, Catamaran, USA
1992 U Moro Di Venezia, Int. America's Cup Class (IACC) vs. America III, IACC, USA
1995 Black Magic, IACC, Neuseeland vs. Young America, IACC
2000 Team New Zealand, IACC, Neuseeland vs. Luna Rossa, IACC
2003 Alinghi, IACC, Schweiz vs. Team New Zealand, IACC .

k:
Business Case Joumal 45

Appendix II: Chronology of the Alinghi Campaign (A.C, 2003)

May 2000 Meeting Bertarelli & Coutts: Formation of Team Alinghi.

May - Dec. 2000 Recruiting Process: First inspection and decision round.

September 7,2000 Official announcement of the Swiss challenge through Société

Nautique de Genève.

November 3,2000 "Be Happy" arrives at Switzerland. Shortly thereafter start of

modifying the hull of yacht "SUl-59."

March 1,2001 End of first recruiting phase: Core team has heen formed.

May 18, 2001 Start of sailing sessions with "SUI-59" in Sète (France).

June 2001 Start of (new) construction of "SUI 64," the first racing
yacht.

November 2001 Beginning of test and training sessions at Aukland, NZ with "SUI-
59" and "SUI-64" yachts.

February 2002 Start of constructing the second racing yacht "SUI-75."

Oct. 02-Jan. 03 Louis Vuitton Cup in Auckland, New Zealand.

January 19,2003 Winning of the Louis Vuitton Cup through Team Alinghi and
qualification for participating at the America's Cup.

February - America's Cup in Auckland, New Zealand.

March 2003:
March 2, 2003: Winning the America's Cup.
Business Case Joumal SCR 46
*
Appendix III: Team Alinghi Values & Goals

Team Alinghi Values: -

> Professional: We deliver results for our partners and commit to

excellence in meeting our objectives.

> Intemational: We benefit from the diversity of our people and work in an
open and creative environment.

> Team oriented: We maximize our potential by supporting each other and
working together.

> Passionate: We have a passion for sailing, fair competition and the
integrity of our team.

> Free spirited: We are willing to take risks to live our passion fully. We will
remain independent and free of any prejudice.

Team Alinghi Goals

> Develop Alinghi to be known as the best sailing team in the world.

> Design, build and develop the fastest America's Cup yacht.

> Assemble the best group of people and build a team for the 32nd AC with
consideration for our long term competitiveness.

> Develop two sailing crews capable of winning the Cup.

> Create, develop and apply the most advanced technology in all aspects of the
program.

> Continuously benchmark our performance against measurable targets and the
competition.

> Create an environment where people respect our team values.

> Enhance and develop the Alinghi brand to support our growth and generate sufficient
revenues to fulfil our vision.
Business Case Joumal 47

Excerpt Sailing-Maga^m 09/30/2002;

The Challengers

September 30, 2002

Beginning on October 1, 2002, they will once again line up for the Louis Vuitton Cup elimination series:
Ten racing yachts from six countries are vying for the chance to take on the defending champion, New
Zealand, in Auckland's Hauraki Gulf in Febmary 2003. Since 1983, Louis Vuitton, maker of luxury goods
and suitcases, has been the organizer of the so-called „Round Robins" in the regattas in which the team
to ultimately face off against the cup holder New Zealand is decided.

Ttie Swiss Alinghi Team is one of the heavy favonles (Photo © Thieny Martinez - www.atinghi.com)

The following are competing in this year's Louis Vuitton Cup:

Cup Defender: Team NewZealand- NZL 81 / NZL 82

^/m3h/^SvOT/zeriani/;-oneoftheheavy favorites-sail number SUI 64/SUI 75

Oracle BMW(USA) - also heavily favored to win - USA 71/ USA 76

Team Dennis Conner (USA) - the old hand - USA 66 / USA 77

One World ChaUenge (USA) - starting with a one-point deduction - USA 65/ USA 67

Prada Challenge (Italy) - the challenger against New Zealand in the last A.-Cup, heavily favored ITA 74
ITA 80

Le Défi Areva (France) - FRA 69 / FRA 79

Malcazone Lattino (Italy) - ITA 72

GBR Challenge (England) - GBR 70/ GBR 78

Victory Challenge (Sweden) - SWE 63/ SWE 73

Business Case Journal SCR . 48

Appendix IV: The Louis Vuitton Cup - Challenger Elimination Series for the

America's Cup

T h e rules in summary:

Each team sails against each of the other teams two times (Round Robin), and by the end,
the one team has already been eliminated. The series then continues under the knock out system,
in which the first four teams have a double chance, and thus are not completely eliminated from
competition after losing a match.

The remaining four teams in the Round Robin cannot afford even one error. The system
was developed so that the stronger teams would not have to race an unnecessarily high number
of races and to allow them to conserve their strength for the battle with Team New Zealand.

The Rules in Detail

ROUND ROBINS - Eaeh team sails against each of the other teams

Ten teams fight it out for four places in the Semi Finals, ln total seven teams are
eliminated.

This is the first 'knock-out' stage of the America's Cup. From this point forward the
competition is restricted to Match Races - head-to-head gladiatorial contests between two boats.
The Louis Vuitton Cup begkis with two Round Robins, where each team races every other team
once.

This is the time when the top challengers will be desperate to avoid mistakes and
consolidate their position at the top of the table. For the middle group of teams, the fight for the
fourth and fmal spot in the Semi Finals will be an objective from the very first race.

And the bottom group of challengers play an important role here as well. Any upset win
that they earn has the potential to send a better team home. Everything is at stake from the very
first race.

' Source; Retrieved and edited for case purposes from the World Wide Web, 10/31/07:
http://www.americascup.com/en/americascup/program/index.php
Business Case Joumal SCR 49

SEMI FINALS

4CHAUEWERS

The pressure intensifies as four teams fight to survive and race another day.

Who is among the final four of the 10 challengers? Have the favorites lived up to their
promise or have there been some upsets? Whoever they are, the road does not get any easier, it
just gets harder. There are no *easy* races now.

The team at the top of the table after the Round Robins has won the right to select its
opponent for the 'first to four' (best-of-seven) Semi Finals. The other two teams will be paired
up as well. The two winners advance to the Final.

Each day there is one race for each pair of Semi Finalists. This phase of the event can
last between just four days, in the case of a 4 - 0 sweep, or seven days, if it comes down to the
last race.

FINALS

2 CHAlLL.HCt.RS

In the final phase of the challenger competition just two teams remain. Tbe winner takes
home tbe Louis Vuitton Cup and will have eamed the right to face New Zealand in tbe 3P*
America's Cup Match.

This best-of-nine series could be over in five races, or perhaps, as in 2000, it might come
down to a ninth and final race.

For the challengers as a group, the Louis Vuitton Cup Final is the culmination of four
years of testing, training and racing, all in an effort to create one team capable of beating tbe
defender, Alinghi.

In this system, tbe winner of the Louis Vuitton Cup has gone on to defeat the defender
four of the six times the trophy has been awarded. Prior to the first Louis Vuitton Cup in 1983,
the challenger had never beaten the defender in America's Cup racing spanning 132 years.
Business Case Joumal SCR ^ ^ . 50

THE 31'^ AMERICA'S CUP MATCH . '•':

i
D( f IHDtH VS CHALlEMfiCS

For two months, the defender, Team New Zealand, has been watching the challengers
develop and get stronger through the Louis Vuitton Cup. Now it is time for Team New Zealand
to show whether it has what it takes to hold on to the trophy.

Whilst the challenger has been forged in the battles of the Louis Vuitton Cup, New
Zealand has been intensely training and testing on its own in an effort to build enough speed and
strength to retain the America's Cup.

The 31^ America's Cup Match is a 'first to five' (best-of-nine) series that will test the
abilities of the two teams over a range of conditions. Consistency is the key here and the first day
or two of racing is a critical indication of which team has the speed to succeed and capture the
Cup.

The America's Cup Match might be over after five races, in a 5 - 0 white-wash, or as in
1983, it may come down to a final race for glory.
Business Case Journal SCR 51

Appendix V: The Afterguard and its Functions

TTie afterguard is the decision center for every America's Cup yacht. Tt is here that five
sailors continuously analyze what is happening during competition, weather conditions, and the
boat's own position. On the basis of such analyses, the afterguard sometimes makes split-second
decisions regarding necessary action or measures on board, which are in turn carried out by the
grinders and trimmers. Thus, the roles at the control center of SUI 64 are clearly assigned. The
helmsman Russell Coutts is responsible for the start, boat speed, and rounding the buoys. The
navigator Emesto Bertarelli collects information by computer and informs others of where the
boat is at any given point. Brad Butterworth, tactician, takes care of boat-to-boat decisions, the
so-called match-race maneuvers. And strategist Jochen Schümann is, along with mastman
Murray Jones, responsible for observing wind and weather conditions, as well as developing a
race strategy (see figure below: The Afterguard and its Functions, as well as Appendix VIU). In
this way, each team member focuses on a very specific part of a wealth of (at times
contradictory) information. In this situation, it is imperative that the afterguard deals with
information very carefully. As soon as the helmsman gets too much input, his ability to respond
at the wheel suffers.

The important strategic and tactical decisions are discussed and weighed out in our
aflerguard. Based on the information we have, we reach consensus on our decisions.
The only exceptions are in special situations, such as evasion maneuvers, which
don 7 allow for a vote. And a lot of things are communicated non-verbally. ¡f I think
that we absolutely have to turn, I sometimes communicate by simply locking eyes
with Brad or Russell for a split second. (Jochen Schümann, helmsman and sports
director, Team Alinghi)

On our team, it was especially striking how well the afterguard worked together.
None of the stars sought to distinguish themselves at the expense of the others, and
the individual team members didn 7 view the campaign as an opportunity to enhance
their individual reputations. There was no bullshitting, with one person trying to how
somebody else just how it's done, and among team members, there were no
competition issues. Even with all of their past success, nobody in the afterguard felt
the need to give his ego free rein. (Brad Butterworth, tactician. Team Alinghi)
Business Case Joumal SCJR .- 52

Who Does What? - The Afterguard and Its Functions . ^r, ••

1. Helmsman Russell Coutts. Coutts is at the top of the communication chain. He

receives information from every side. He is primarily responsibie for boat speed. He
observes the instruments on the mast and tries to achieve computer-calculated target
speeds. At the same time, the trimmers are constantly talking but also concentrate on
their work with incredible intensity. They respond to fluctuations in wind pressure, and
Coutts, in turn, falls off or heads up. It is a continuous process. The helmsman also
receives the afterguard's information. He listens to their discussions so that he is
constantly informed of the strategic situation. The heknsman himself rarely speaks. He
filters the dataflow and stores all information crucial for him.

2. Tactician Brad Butterworth. He communicates with the navigator and strategist.

They supply him with facts, and he makes decisions based thereon. Butterworth keeps
an eye on the entire goings-on in the race, but above all, on the opponent. With the aid
of a radio compass, he keeps track of the opponent's relative performance level and
tries to anticipate his competitor's behavior. He adjusts tactics with input from the
strategist and passes on decisions regarding turns or jibes to the helmsman. The exact
timing of recommended maneuvers is then left to Coutts.

3. Strategist Joehen Schumann. Schümann anticipates the fastest possible route to the
buoy regardless of opponent. He communicates up to five minutes before start time
with the weather team and from those communications develops a plan for the course,
which he constantly checks against the real conditions that ensue. In the process, he
checks the wind, clouds and currents. He chooses his words carefully. Instead of "1
would tack shortly," he says: "The right side looks better. More pressure in two
minutes." His counterpart is Butterworth. Schümann uses the tactician's assessments as
a backup for his own decisions. Schümann also helps to adjust the backstays.

4. Navigator Ernesto Bertarelli. Bertarelli is considered the race course manager. His
equipment consists of a small touch-screen computer which supplies him with all
required information. He checks the performance data and keeps the tactician up-to-
date regarding where the boat is on the course at any given time. He can see on the
screen which side of the start line has the advantage, how much longer the crew still has
before reaching the line and whether the boat's present speed might cause them to be
over the line early. He sifts out only data which is most important.

5. Strategy Murray Jones Jones provides wind information from the mast as long as the
conditions are light enough that he can go into the rig. That is why the position is also
referred to as wind spotter. Jones is connected to Schümann and Butterworth via
microphone. Whether he is in the mast or not, however, he passes on information about
gusts and wind activity, as does Schümann. In the cockpit, he makes use of the traveler
and communicates with the main sheet trimmer.
Business Case Journal SCR 53

Appendix VI: Individual Positions of an America's Cup Class Boat: