Business Stripped Bare (28 page)

Nationalising Northern Rock? I think it was the wrong decision which will haunt not only this government but whoever is elected to hold the reins of power in Britain for years to come.

I spent the day after nursing my poor head. The press cuttings were filtering through and we received a number of emails and calls from well-wishers. The Chancellor sent me a note thanking me for Virgin's interest and our offer but reiterating that nationalisation was the best option for the bank.

I couldn't and can't agree with that, and it saddens me to think of all the good work that's been undervalued, and all the opportunities that have been lost.

Inasmuch as it was in me to feel anything that day – aside from the throbbing in my head – I felt, and I still feel, a great deal of sympathy for the people working within Northern Rock. The staff were tremendously decent people caught in the middle of a public nightmare. They worked every hour, every day of the week, for many months, and they remained upbeat. I'm positive they would have enjoyed being part of the wider Virgin family.

And Jayne-Anne's own team played a blinder too. Virgin Money's finance director, Dave Dyer, and its strategy director, Matt Baxby, worked with total commitment. They more than embodied the Virgin spirit and put a great many personal and family matters on hold while we aimed for the prize.

Jayne-Anne phoned me on the Tuesday after the announcement. I was worried about her. She had been a stalwart, driving the process for us, plus she and her husband Ashok had a five-year-old daughter to look after. Jayne-Anne had spent a hell of a lot of time away from home, her weekends were taken up with some hefty reading of reports and number crunching, and most nights she worked long past midnight. I thought she might be very let down.

'I hope you're not standing on top of a building and about to jump,' I said.

'Oh, don't worry, Richard,' she said chirpily, 'I've spent the weekend looking over the figures of Bradford & Bingley and Alliance & Leicester.'

My head began to throb again. A lot. 'For heaven's sake,
why
?'

'They both look ripe for a takeover. Listen . . .'

That was the kind of spirit that cheered me up. At Virgin, we move on.

What if you can't move on? What if there is nowhere to move to?

Assuming you're not burning other people's money in their faces, you could always perform the hardest trick in the book of business tricks: get very small, very specialised and very expensive.

I would absolutely count this as innovation, and of the highest calibre: you're taking a large operation and finding ways to scale it down, retarget it and remarket it, all the while adding bucketloads of value to justify the hike in price. And it's very hard to do – not least because you're in so much pain as you're doing it. (Indeed, your old business is dying around you.)

What is the first thing we do at Virgin when we're faced with a problem? We get together promptly to look for the answer to a single question: 'Is there a way out?' And we then go right to the endgame and ask: 'What is the ideal way out of this problem for everyone?'

You need to become 100 per cent focused on trying to find that way out. If it's a major problem, give it 100 per cent of your time and energy until it is sorted. Work night and day to resolve it, and try to delegate everything else that is going on. If, having done this, you fail to resolve the problem, then at least you know you've done everything in your power you can. Move on. If it means taking a hit, then take it on the chin. Don't even think about it again.
If you're hurt, lick your wounds and get up again. If you've given it your absolute best, it's time to move forward.

As I write this the economy is deteriorating; it may be that some of you will be faced with this task in the near future. Good luck. And may the next chapter, which is all about innovation, give you some serviceable ideas.

A Driver for Business

In 1986 I gave an interview to a British music paper. The headline was 'BRANSON'S BOMBSHELL'. I said that we were planning to put every album and single on to a small portable computer box and that the listener would be able to buy it and play any record they wanted, listening through mini-headphones. I said it would revolutionise the music industry — and people believed me. I got frantic phone calls from some major record company bosses pleading with me not to launch such a device. They told me it would blow away the record industry. Then I pointed out the date. It was 1 April — April Fool's Day. When the editor of the paper found out, he wasn't amused.

Fifteen years later, Apple sold its first iPod.

Already, in this book, we've talked a lot about innovation.
The best, most solid way out of a crisis in a changing market is through experiment and adaptation
. Businesses surf the waves of changing circumstances, and I can't offhand think of any industries whose best players are not constantly engaged in reinvention of one sort or another.

Making changes and improvements is a natural part of business, and for sole traders and very small companies, the distinction between innovation and day-to-day delivery is barely noticeable and unimportant. It's all just business, and creative, responsive, flexible business comes easier to you the smaller your operation.

Larger operations command more capital, and so, in theory at least, their range of possible actions is greater. But complexity soon gums up the works of an organisation as it expands. (One marvellously backhanded Chinese curse runs: 'May you employ more than a hundred people.')

This is the point at which entrepreneurial functions become separated from management functions. This makes a lot of sense – as you'll see when we look at different forms of business leadership in the next chapter. However, the separation of day-to-day business from the motive energy that birthed the company does cause problems. Suddenly, innovating is seen as something extra, something special, something separated from the activities the company normally engages in. This is when niggles become endemic, intractable problems; morale declines; and the business begins to lose its way in the marketplace.

Virgin's management style is unique, designed to both empower employees and avoid a culture of fear. A couple of other companies encourage new ideas even in their day-to-day operations. These are very different companies from Virgin, and I admire both of them immensely.

Since 1976, with design and ease-of-use its business mantra, Apple has simply kept inventing and improving. The sale of over 100 million iPods and three billion downloads from iTunes is proof of their success. While other businesses have been caught in the free fall of the record industry revolution, Apple has been able to fire up a new generation of listeners, not just with music but with podcasts, radio shows, TV shows, movies . . .

Steve Jobs and his colleague Steve Wozniak both had a passion for gadgets and began as electronic entrepreneurs in 1970. Six years later they were listed in the
Fortune
500 rich list. In 2008, Apple had a market capitalisation of $105 billion, ahead of Dell and just behind Intel. The original Apple Mac, which was released in 1984, was described by Steve as 'the fastest and most powerful computer ever placed in the hands of a large number of people'. It was a transformational product. Steve later stepped back from the sharp end of the business – which promptly started to go into reverse. He returned as its saviour.

He is seeking perfection all of the time, and from that original mouse-driven Apple Mac, through to the iPod and the revolutionary iPhone, he has pushed the frontiers of technology in a creative way. And Apple's products have transformed people's lives. On Apple's campus at Cupertino in California, innovation is driven by a combination of perseverance at tackling large, intractable problems and, as a
Harvard Business Review
article in February 2006 described it, Steve Jobs playing his part as the 'great intimidator'.

By all accounts, Steve is a difficult man to work with because of his impossibly exacting standards, but his co-workers are filled with a sense of 'messianic zeal' to gain Steve's approval for their work. He is meticulous about the details and zealous about protecting all the new features that give his business that vital edge. That's leadership.

Apple is an iconic global brand that inspires emotional attachment. Yet the logo is only very subtly embossed on their products. Steve Jobs and his team know exactly how to design, manufacture and then deliver high-quality products to the market.

Steve immerses himself in the marketing campaigns and product launches himself – he has chosen to be both the manager and the entrepreneur, and in his case he has been successful playing both roles. He's a rare animal. Perfecting the fine art of delegation is normally essential when you're running a large company. Steve is more zealous than he needs to be, but it seems to work for him. It gives the public and investors confidence that the admiral is at the helm – with his hand firmly on the tiller. Steve has that rare business quality: the acute intelligence to see what the public wants. You can tell this by the way Pixar Animated Pictures, which he co-founded, has had a stream of blockbusters which have earned a stack of Academy Awards, including such successes as
Toy Story
,
A Bug's Life
and
Finding Nemo
. Pixar's family films have grossed more than $4 billion at the box office. Steve was there when it merged with the Walt Disney Company in 2006 and he remains on Disney's board of directors. His unrelenting genius is at the heart of everything Apple does and, in my view, this places Steve in a business class of his own.

While I acknowledge that Apple's products have transformed lives – and you only have to walk along a street to see the ubiquitous white earpieces of the iPod – I reckon it is another 'Invented-in-America' brand that has made the most significant difference to the shape of our connected world. I have been asked: 'What is the greatest business invention of the last fifty years?' That's a tough question because you need to factor in the mobile phone, DNA testing, the personal computer and the Internet, but I think the winner has to be Google's powerful search engine.

Google has allowed ordinary people to find things out much more quickly. It has led to more immediate choice – and increased consumer power – and a freer flow of information, knowledge and ideas. It is far more than just a search engine – it has become an engine of change. Google's mission is 'to organise the world's information and make it universally acceptable and useful'. That's a noble ambition. It has allowed political, cultural and interest groups to flourish. It has brought the democratisation of information on to a global scale – something that was unthinkable just ten years ago. It has also brought a great deal of fun into our lives.

I'm honoured to be good friends with both Larry Page and Sergey Brin, the founders of Google. I was flattered to be asked to officiate at Larry and Lucy's wedding on Necker. Larry and Sergey won't mind me describing them as geeks – indeed, with them it's a badge of honour – but they both have strong personalities. Their characters complement each other when they are working on a project. They get on very well and never, ever disagree with one another in front of staff, clients or investors. In the world of business, this requires remarkable self-discipline. If they have a disagreement, they will wait until everyone has gone out of the room and only then will they discuss the matter. They are bound together better than the best marriages, and their personal chemistry is an intrinsic part of their business success.

Today Google attracts the brightest technical talent. I love the idea that employees are encouraged to generate
and develop
new ideas, and that technical staff spend 20 per cent of their work time doing something they choose to do. By giving their people ownership over their work in this way, the company and its customers have benefited enormously. Among many other innovations, this scheme has brought us Gmail, Adsense, Google Earth, Google Maps and Google News, which aggregates headlines from around the world. The company excels at IT and business architecture. It continually conducts experiments to test its system, and then improvises and improves, and it has a backbone of people who are acutely analytical.

Sergey and Larry understood early on that they are not managers. Their trade now is in finding ideas and turning them into businesses or other enterprises. While they conceived Google and built it, they also found a brilliant CEO in Eric Schmidt, who runs the company on a day-to-day level. Eric was the CEO of Novell, and he also sits on the board of Apple. He is steeped in the technology world but he knows how to deal with financial matters and the investment community. This is a classic example of how the roles of entrepreneur and manager can be separated – a theme explored further in the next chapter. At Google, both sides of the business are given room to breathe. Eric's day-to-day management of the company allows Sergey and Larry to commit themselves to the search for new ideas – and to enjoy some of their wealth!

One of our Virgin team was visiting Google's HQ in Mountain View and told me they have an enormous whiteboard detailing the strategy of Google. It is Google's Master Plan and there are thousands of ideas on the board, all contributed by the employees. One of the key tasks along with 'Hiring network engineers' and 'Hiring hardware engineers' was 'Hire Richard Branson'. I don't need to be hired: I'm always happy to help Sergey and Larry.

On April Fool's Day 2008 we announced the launch of Virgle, a partnership between Virgin and Google looking at creating a community on Mars in the next fifteen years. We were advertising for volunteers to travel on a one-way ticket to Mars. It was concocted over dinner at Necker when we talked seriously about the creation of a human colony on Mars and what it might look like. We then pondered who we would invite. Our announcement made headlines around the world and had dozens of blog sites buzzing with activity. Were we joking? Of course we were joking. Mind you, fifteen years before Apple started selling iPods, I was joking about portable digital music players. With that in mind, we've registered the Virgle brand – just in case . . .

Innovation can occur when the most elementary questions are asked and employees are given the resources and power to achieve the answers. That's how Virgin America did it. While the legal team fought to convince the Department of Transportation that Virgin America was indeed a US-owned carrier, the Virgin America design and finance teams focused on taking care of business, and that was the business of creating a totally different and better flying experience.
What does a great travel experience look and feel like? How would it be different from anything else US travellers have experienced? What would it take to knock their socks off?

Building an entirely new way to fly required a team of specialists who respected each other's expertise but didn't hesitate to fight for what they believed was important, who worked in close proximity round the clock, made decisions swiftly, and passionately believed in their vision for the customer. Ironically they themselves
were
the customers!

While understanding that the airline was to be under US control, Virgin USA CEO Frances Farrow was convinced that the issues the flying public truly cared about – the actual product and experience – should be without equal in US skies. Her first focus was to go after the best talent for customer service and design, and where better to look than people leaving Virgin Atlantic?

As I've said before, Virgin employees, after they've started a shiny new Virgin company or run a mature one with aplomb, are worth holding on to because they love the brand they helped build and their experience and knowledge of the brand are priceless. New companies are a great way to keep them challenged – and to keep them within the family.

Adam Wells, a whizz-kid from Virgin Atlantic's design team which had created the award-winning upper-class suites, and Todd Palowski, Virgin Atlantic's customer service specialist, were brought in as part of the original customer and product insight team. They were quickly followed by talent of the likes of Charles Ogilvie, a cutting-edge interactive entertainment guy.

This small but dedicated group began to dream big. The team didn't inherit drab legacy planes and they weren't stuck in the status quo. They were empowered with the Virgin brand to do things differently; there was no other way to create a completely different experience.
What if we got rid of check-in lines? What if we turned the airplane into a living room? How can we give control back to passengers? What should we put in our toilets? How can airplane seating express freedom? And how can we express that freedom from the moment passengers reach the ticketing area?

Flying is generally a passive experience. From the moment you enter the airport, you are told what to do. Claim your boarding pass here. Put your luggage there. Stand in line, take your belt off, remove all liquids The onboard experience is no better. If you're lucky, the cabin crew flips on a heavily edited movie that no one really wants to watch. And that's followed by a trolley of unhealthy snacks that blocks you from the loo.

What you don't have is freedom. The Virgin America team believed they could find a way to give it back to you, and they did. (Sorry, they're geniuses but even they couldn't make check-in go away.) They designed a liberating experience, one in which you could genuinely do what you wanted with your flying time. You want to work on your laptop? Open it up and go, there's plenty of room. Running out of power? Plug it in, charge up your computer and play a game while you're at it. Want to chat with your cousin who is a few rows back? Try seat-to-seat chatting on the inflight entertainment screen using the QWERTY keyboard at your armrest. Feeling peckish? Order a sandwich from your seat, and a flight attendant will deliver it to you
when you want it
. Want to listen to music? Create a music playlist? Watch a movie ... in Mandarin Chinese? Go for it. It's all there right in front of you.