The Virgin Way: Everything I Know About Leadership (23 page)

The big day arrived: the handpicked journalists we’d invited along were sworn to secrecy, I was attired in a Central Casting pirate outfit complete with a stuffed parrot on my shoulder, and the whole hijack was flawlessly executed in under thirty seconds.

As always John had covered all the bases by booking every portable crane within a twenty-five-mile radius for the balance of the day, so despite the reported ranting of an enraged Lord King, the offending Virgin tailfin remained in place until nightfall. And, as you can imagine, the whacky stunt generated immense press coverage for Virgin Atlantic and its real-life pirate.

This kind of attention-getting trick helped set a trend that continues to this day with all the Virgin companies and (having got over my early shyness fairly quickly) often with a little help from yours truly. Anyone who has followed my various highly public attempts at self-destruction in transatlantic speedboats, trans-global hot-air balloons, rappelling off high buildings and all the rest will know how I have heeded the advice Freddie gave me that day in 1983 and have been getting my derriere well and truly out there!

Contrary to what some sceptics might have suggested, this was never an exercise in self-aggrandisement, far from it. From the first transatlantic speedboat attempt at recapturing the Blue Riband for the fastest-ever crossing (that’s the one that sank off the coast of Ireland) to the second attempt that succeeded, the same critics should note that there was always a Virgin logo strategically positioned close by and how that logo almost always showed up in TV news stories and on the front page of major newspapers – places where you simply cannot buy advertising at any price. Typically, I was desperately climbing into a life raft and the Virgin logo was on the side of a boat or balloon pictured just before it sank below the Atlantic or Pacific. I have often wondered if we might have inadvertently invented reality TV shows twenty-five years ahead of their time? But one way or the other it worked. We raised the Virgin brand’s recognition factor to amazing new heights and while I may have used up my nine lives, I am still here to tell the tale!

Not everyone was a fan of some of these highly dangerous stunts although my wife and family, outwardly at least, always managed to put on a brave and supportive face. Unable to resist the opportunity to feign displeasure with one of my transatlantic ballooning attempts, the US marketing team at Virgin Atlantic ran an ad in the same edition of the
New York Times
that had the news of my failed attempt on its front page. The ad copy chided me with,
‘It’s not easy convincing people to fly our airline to London when our chairman chooses instead to cross the Atlantic in a hot air balloon! When you’re ready we have a seat for you, Richard – just call reservations.’
Apparently we were accused by some of staging the potentially fatal end to the crossing in order to set up the ad. I’m sorry, folks, but even I draw the line at some point!

IT’S THE (ALMOST) REAL THING

As the Concorde story serves to demonstrate, we have never been shy about going head-on with our biggest competitors. While in international airline circles the BA brand is one of the bigger ones, on the global brand awareness chart it’s a minnow by comparison to the likes of Coca-Cola – the most recognised and respected brand name on the planet.

Arguably, therefore, it may not have been our smartest-ever business decision, but in 1994 we decided to launch Virgin Cola. We had figured that, by the numbers at least, if we could manage to steal just one measly percentage point of Coke’s global market share we would have ourselves a $100-million-plus soft drinks franchise. So with the maximum ‘screw it, let’s do it’ courage we could muster, we went for it. Someone once said that when trying to promote anything in the US one really has to ‘Go big or go home’ – well, we went big! So when we brought Virgin Cola to the US marketplace we didn’t sneak into town via any handy side door, instead we headed straight for the epicentre of Coca-Cola’s kingdom, New York’s Times Square, and boldly launched ourselves into the abyss.

Once again John Caulcutt was the mastermind of a plot that this time around saw me dressed in military uniform driving a lumbering vintage Sherman tank down Broadway. First we heroically smashed through and crushed a giant wall of Coke and Pepsi cans – a purchase that must have helped their sales quite considerably that day. We then ground to a halt and dramatically swung the turret around, took aim and opened fire (well, sort of) on what is surely the holy grail of outdoor advertising, Times Square’s giant Coca-Cola sign. The appearance of a rogue tank making a successful strike was facilitated by John having booked a couple of hotel rooms strategically located right under the Coca-Cola sign and it was from these windows that he set off several smoke bombs on cue from a walkie-talkie from the tank below. Fortunately we had paid in advance for the hotel rooms as the NYPD was already in the hotel lobby as our crew calmly walked out.

We couldn’t have pulled such a stunt after 9/11 without serving a long time in jail but back in those gentler times it was another memorable launch event that brought the centre of the world’s greatest city to a shocked standstill for several New York minutes, and generated press coverage galore. Of course, what Freddie had never promised was that putting yourself out there in the line of fire and generating buzz, or in this case fizz, would ever guarantee the success of a product no matter how good it might be. We genuinely believed we had a winner with Virgin Cola, which (like the failed New Coke had done) had scored extremely well against Coke in all kinds of blind taste tests. For a short while it was very successful in several markets – the UK in particular – but as had been Freddie Laker’s problem with Skytrain, ironically that success was to prove our downfall.

When taking on Coke, I fear that we failed to stick with the playbook that had worked for us before when going up against Goliath competitors. At Virgin Atlantic we had deliberately underplayed our ambitions and so stayed under British Airways’ radar until it was too late for them to snuff us out. Had we employed the same stealth tactics against Coke we might have pulled it off but when we poked the Coke Goliath in the eye with the Times Square stunt and the UK sales figures made it back to their Atlanta headquarters, they decided enough was enough. There were stories around at the time that Coke dispatched a huge SWAT team to the UK – one version had them filling a 747 – to take us out of play. Whatever the truth, it seems they managed to leverage their distribution clout to the maximum, our stock started mysteriously disappearing from supermarket shelves, Coke was discounted everywhere to unprecedented levels and, well, the rest is history.

As one should, we quickly moved on and put our Cola adventure down to experience. It taught me a huge lesson, though: while in some markets, like aviation, we had managed to sneak up and outsmart some huge and cumbersome competitors, we should never underestimate the might, determination, distribution and sheer marketing clout of a mega brand like Coke! Also, with something such as an airline, differentiating your product with tangibly superior and different customer service benefits is a lot easier than when it’s a matter of the consumer’s personal taste preferences for a fizzy drink.

Deciding whether or not to climb into that chariot (or tank) to lead the charge can be a tough one for a lot of very good leaders. Quite apart from the fact your efforts will be all over YouTube within a matter of minutes, not everyone is comfortable stepping into the spotlight. I for one was desperately uneasy with it in the early going and I am by no means the exception. In an unauthorised biography by Nicholas Carlson, published by businessinsider.com, Marissa Mayer, now the CEO and very public face of Yahoo, admits to having been ‘a socially awkward and painfully shy geek’ as late as in high school. Clearly she managed to work her way through it as I did, so no matter what your initial inclination, I would strongly encourage corporate leaders to step up and try driving the chariot into battle.

At Virgin we obviously don’t demand that our leaders take physical risks – that seems to have become my prerogative – but getting out there and leading boldly and visibly from the front is very much a part of the Virgin way. As a shy young entrepreneur I could never have imagined myself doing a fraction of the crazy stuff I’ve done over the years but, as I did, you might really surprise yourself at what you can do when you put your mind (and body) to it. Queen Boadicea has one, so just imagine what your bronze statue will look like some day!

Getting it together

This may sound like a truism but I’ll say it anyway: collaboration, whether external or internal, is a vital component in building a healthy company, as well as an integral constituent of any entrepreneur’s life. Many people have this almost ethereal vision of ‘the entrepreneur’ as someone who operates alone – kind of like an artist in his garret – overcoming challenges and bringing ideas to market through sheer force of personality. Sorry, but this is the stuff of fiction! Going it alone is a wonderfully romantic notion but few if any entrepreneurs ever brought an idea to life without a lot of help. It can come from family, friends, mentors, business partners or all of the above but to be successful in business, collaboration is the key.

If you think about it, most of the important relationships in your life started out with a chance meeting with a friend, a friend of a friend or, as my friend who invested in Google discovered, sometimes it’s with a complete stranger. The digital age may have dramatically changed the social scene, but real life (as in face-to-face) networking with real people is still a business essential, especially for an entrepreneur whose instincts have to rely heavily on trust-based relationships – you can’t look someone in the eye by text.

This innate gregariousness among entrepreneurs is the primary reason why communes of like-minded geeks are taking the Silicon Valley concept on the road. I’d call them simply ‘Silicon Valley clones’, but creative hubs aka ‘venture hotspots’ or ‘technology clusters’ are springing up all over the world. Whether it’s in Tel Aviv, Cambridge, Helsinki, Bangalore or Hsinchu-Taipei, entrepreneurs and techies are clustering up a storm and revelling in the collaborative opportunities that result.

WALKING BRAND IN BRAND

Another form of corporate collaboration that has been ‘reimagined’ in recent years is the good old-fashioned joint venture. ‘Co-branding’, the cross-pollination of sometimes seemingly highly disparate brands and individual products, is becoming relatively common, sometimes even between some of the staunchest of competitors.

Among the ranks of the tech giants, for instance, Microsoft Windows runs on Apple computers and Google Maps is featured on Apple – or at least it was until Apple kicked Google Maps off the iPhone. When Google refused to give Apple access to its voice-driven map navigation, Apple, prematurely it seems, launched its own system with some pretty disastrous results. The new Apple map system was plagued with errors – there were thousands of much publicised howlers, like Helsinki’s main railway station vanishing and appearing instead as a park! Apple apologised, and when Google maps was allowed back as an app, there were over ten million downloads in forty-eight hours.

A FIVE-RING CIRCUS

One of the unexpected talking points to come out of the Sochi Winter Olympics was all about co-branding – even if it was for all the wrong reasons! The sleek aerodynamic suits that sports clothing manufacture ‘Under Armour’ and unlikely collaborator aerospace giant Lockheed Martin jointly developed for the US speed-skating team were supposed to ensure a gold rush for the Americans. Instead they turned into a PR disaster for all concerned, as the previously untested suits became the scapegoat for the American team’s failure to win any of the early races in which they were highly favoured. Before the end of the games they had reverted to using their old, low-tech suits, albeit with only marginally better results. Perhaps this just serves to demonstrate the importance of picking the right dance partner – after all, the F-35 Lightning jetfighter and speed-skating suits have seldom appeared in the same sentence before!

Other interesting, and more successful, brand marriages I’ve spotted are: Apple and Nike – who developed a wireless system that allows sneakers to talk to the owner’s iPod and record their activities; Audi and Leica – with a camera not a car; JBL and Nokia on matching smartphone and portable speakers; and perhaps most tempting of all the trio of HP, Google and GoGo the leading supplier of inflight WiFi systems to the world’s airlines, who hooked up to produce the very cool ‘Chromebook 11’ laptop, which among other things features complimentary in-flight WiFi on all GoGo-equipped airlines. This last one is a great example of the really smart upsides than can come from partnering with the right people. The free inflight GoGo offer (which usually costs between ten and fifteen dollars per trip) means that if you are a frequent flier you could recoup the entire price of the laptop (around $300) in as few as a dozen or so round-trip flights – clever stuff!

In commercial aviation circles ‘alliances’ (yet another word for collaborations) have become ‘the big thing’ and they seem to be working – for the airlines at least. The sixty-plus member carriers in the big three alliances, Oneworld, SkyTeam and the Star Alliance (which was the first of the breed) account for almost 1.5 billion passengers a year, which equates to a staggering 77 per cent of all airline traffic. In each of the alliance groupings, all sorts of direct competitors have found there is more to be gained by teaming up with each other than fighting a lone battle to survive. In some cases, carriers such as American Airlines and British Airways or Air France and Delta have formed even tighter collaborations that stop short of merging their companies but still accrue many of the same advantages. With Delta replacing Singapore Airlines with a forty-nine per cent equity stake in Virgin Atlantic, we are looking forward to collaborating with them by feeding traffic into each other’s route networks around the world. At the time of writing we have not thrown any of our own airline caps into any alliances but that could change if we can be convinced that there is sufficient upside. Clearly with sixty other airlines doing it there has to be something positive going on here but we won’t do anything that might negatively impact our ability to do things in our own peculiar way – lowest common denominators are not a healthy measurement of any grouping.

SILOS ARE FOR GRAIN

As significant and compelling as outside liaisons may be in expanding a business into new markets or extending the reach of a brand, there is another much more important and often overlooked area in which collaboration is often sadly lacking or even absent – and that’s within your own company!

There are lots of arguments for keeping the number of employees in a company below a certain critical mass – one of them is certainly minimising the silo effect that seems to proliferate in bigger companies. This is the phenomenon where rather than working as one on achieving a single corporate objective and maintaining a uniform healthy corporate culture, a workforce separates into its own distinct silos. Senior management will often be off somewhere else in their own ivory silo, while sales, marketing, product development, finance, IT and all the other components will be firmly entrenched in their own hard-shell silos. The bridges connecting them will usually only be on the upper floors so that the heads of each group can have access to each other even if it is not used on a regular enough basis. The lower echelons seldom if ever cross over to ‘the other side’ for fear of appearing disloyal to their own commune members.

Within each silo there is usually loyalty to their immediate group but nothing except distrust and suspicion as to the motives and/or capabilities of every other division in the company. Sales will think marketing knows nothing about their real world needs, while marketing thinks product development hasn’t got a clue – which in the absence of sufficient feedback from sales and marketing may well be the case. Finance doesn’t see the business as anything except a bunch of data that they usually get late and believes that everyone is out to cheat on their expenses. And IT, well, they’re just doing their own thing as nobody speaks to them except when they have a problem. In a multinational company the problems are usually only multiplied. The Brits will often treat the Americans with xenophobic disdain – ‘The Yanks can’t even spell “aluminium”, for goodness’ sake!’ – and so on and so on.

The lack of communication that results from such a stultifying situation makes for a series of self-fulfilling prophecies at every level. Product development is rushing to design a new triangular widget because they heard from someone that the competition was doing the same. Sales is out selling the new round one that has been promised by their boss who failed to read the email from marketing that they’d recommended changing it to a square one. When the triangular widget is finally unveiled everyone is unhappy, especially the customer service group which had put in a request for an octagonal one but never received a response. All overstated caricatures, perhaps, but not that far from the truth at many a dysfunctional, silo-ridden company.

Real life examples of this abound, particularly in the fast-moving technology world: I mentioned one earlier with Apple’s rush to get their own flawed version of Google Maps to market. Another was Microsoft’s ‘me too’ attempt in 2006 to produce a competitive product to the iPod which at the time enjoyed a sixty-five per cent market share. The short-lived ‘Zune’ would never make it out of single digits in market share, lacking the design flair of the iPod, and it wasn’t compatible with Apple’s iTunes – an oversight that became a major drawback. You can just imagine the Microsoft sales team looking at their new Zunes while wringing their hands and moaning, ‘And this is what they give us to unseat the iPod?’

SYMPTOMS OF CHRONIC ‘SILOSITIS’

The good news is that signs your company is suffering from the silo effect are pretty easy to spot and two simple questions should give you the answer:

• In a normal week, do you spend at least twenty-five per cent of your time speaking to colleagues from outside of your own division?

• Do you have frequently scheduled briefings with the heads of other divisions?

If your answer is ‘no’ to both of these questions, then the chances are pretty good that you are operating in ‘silo mode’ and you need to take steps to dismantle it before it dismantles the company. The good news is that some of the fixes are not that difficult to initiate. But first, where there is an effect there is always a cause. So if things haven’t always been like this and ‘in the good old days we all used to work so well together’ then what, or more likely ‘who’, has changed? If it has just been a general slide into this state of affairs then it really has to be down to the CEO to step up, be accountable and take responsibility for curing the malaise. If the root of the problem can be traced to when someone new came in or was promoted to lead one of the divisions, then perhaps some corrective surgery is called for. In the meantime there are some simple first steps to be taken:

• The CEO should call a meeting of all the division heads and their deputies to tackle the internal communication problem and hammer home why it has to change. Don’t mince words and use any pertinent examples of late delivery of projects or cancelled programmes that might have been avoided with better collaboration between divisions.

• Clear the air and flush out any lingering feuds, finger pointing or negative rumours so that there can be a fresh start and consensus on the way forward.

• Set a weekly senior management meeting schedule (maximum one hour in length) that will be mandatory for all unless there is a very good reason to be elsewhere. At these meetings the CEO should give a corporate update, followed by each division head’s report on their divisions. Division heads should use this as an opportunity to invite input from other departments and seek their assistance if appropriate.

• Take a long hard look at how effectively management communicates with the staff. Use technology and social media to ensure that all of your employees always hear about breaking company news from the company and at all costs before they read about it in the business pages. I am an almost daily blogger and I know a significant percentage of my ‘followers’ are Virgin employees.

I should perhaps make it clear that I am not a big fan of meetings-for-the-sake-of-meetings-based cultures as, somewhat paradoxically, I have found that a prime reason for poor corporate communications can often be that there are simply too many meetings. I have even seen some cultures in which management appears to spend eighty per cent of its time in meetings discussing what they plan to do with the other twenty per cent of their time – the catastrophic British Rail operation we inherited in 1997, for instance, was certainly one such organisation. BR employees repeatedly told us how happy they were to see Virgin at the helm as previously they could never get hold of anyone in management as ‘they were always in meetings’.

These 80/20 rules seldom seem to work out very well, do they? What I am suggesting, however, is that a weekly meeting – where there was none – can be a good start to unclogging the communication arteries. Maybe even the start of a new era – although getting the workforce thinking and acting as one and revitalising the company culture at the same time will take a lot more than just a few meetings. So now we get to the more interesting and even fun parts . . .

WE DID THAT TOGETHER

The first additional prerequisite of the new silo-free environment is an across-the-board commitment to getting other divisions involved in new products from their genesis. That means from the very first discussions on the concept – not just when it’s already half-baked and at a stage where any changes will be costly and difficult to make. One of the saddest phrases you can hear in any company is, ‘I wish they’d told us about this sooner’, when there is absolutely no valid reason for the communication failure.

At all of the Virgin companies we always make a concerted effort to ensure that everyone who might be able to offer any valid input is involved from the very beginning of a new product development. From something as simple as a new menu for our Upper Class passengers to the floor plan of a new Virgin Active health and fitness club, we will seek the involvement and advice of the people who will be working at ‘the sharp end’ – namely those staff members who will have to deliver the product on a daily basis. There is no point in developing a new menu if the cabin crew is going to tell us that it’s not practicable because of on-board galley oven limitations, or that they have seen in the past it is not something the majority of passengers will want to eat. Or if an architect hasn’t got experienced Virgin Active staff giving input on how the gym floor works, we risk opening the new club and having them ask ‘Where are we supposed to store the towels?’ or some similar seemingly minor but important oversight that could have been avoided with better up-front collaboration. Someone once put it very cleverly when they said, ‘There would be no problems with square pegs and round holes if the peg department and the hole department were the whole department.’