The Virgin Way: Everything I Know About Leadership (5 page)

At one point my hectic business activities, the perpetually ringing phones, the battery of assistants and constant stream of visitors totally overwhelmed our family home in London’s Holland Park. It got so bad that sometimes my young kids were the ones opening the front door to all kinds of high-flying visitors coming to meet me in my ‘office’. It finally got so silly that my wife Joan quite rightly declared, ‘Richard – enough is enough!’ and insisted that I find an office somewhere else. Much as I empathised with her annoyance, I really didn’t want to uproot all my business stuff, so we came up with a rather ingenious compromise. We purchased an almost identical house just two doors up the street and moved the family into that one, while my office clutter and I stayed put. It was tough for a while, but I eventually got used to the grind of my four times a day 100-foot commute – only twice a day if I didn’t go home for lunch. Now of course Joan and I have settled on our beloved and utterly glorious Necker Island in the British Virgin Islands. Necker is such a fabulous spot that of all the home-offices I have ever had it is possibly the hardest to spend time away from. Despite that I still manage to spend more than half my time on the road, or perhaps more accurately in the air: according to my diaries, in 2013 I was travelling an average of seventeen days a month.

So as you can see my unfair advantage comes from the fact that since the very early days at Virgin, whenever I’ve wanted to see the people I work with, I have always been obliged to go to them. Even when the Virgin Group’s head offices were located in London’s Notting Hill Gate, a stone’s throw from my Holland Park home, I still steadfastly refused to accept a dedicated office there. When a well-meaning Trevor Abbott (at the time the most senior director at Virgin Group) once suggested they really should set up an office there for me saying, ‘It’ll just be somewhere for you to hang your hat when you come in, Richard’, I was quick to (politely) point out that as I never wear a hat it wouldn’t be necessary.

Trevor’s well-meaning gesture might also have been intended to give me somewhere else to set myself down other than in his office when I came in for a few hours. Generally, however, I find that visiting staff on their own – or at least neutral – turf is a lot less intimidating for them than if they have to come to you. I still break out in a cold sweat just thinking of the words I used to dread hearing at school. ‘Branson – the headmaster wants to see you in his study. Now!’ Even if it were to impart some positive news – which was seldom the case – just stepping into that musty oak-panelled room used to put the fear of death into me. The business equivalent is, ‘The CEO wants to talk to you in his/her office as soon as possible’ – particularly if it’s on a Friday afternoon! But even if the meeting is for an amicable chat on some good idea that made it ‘upstairs’, for the junior employee, the intimidation factor of going through that door can often be enough to completely tongue-tie even the most confident of staffers.

The obvious solution, therefore, is to stop issuing edicts to ‘come unto me’ and instead get out there, walk about and change a few lives. It’s hard to imagine the impact of a ‘C’ level heavyweight showing up unannounced at a mid-level manager’s or front-line staffer’s workplace and saying, ‘Hey, it’s Mario, right? I’m Maggie Cohen, the chief information officer, and I just came down here to see if you can spare me a few minutes to talk about your great idea for the new distribution software’ – and then sitting down and listening and taking notes. I assure you such a transformational moment is priceless. A simple twenty-minute exercise such as that goes way beyond ‘accessibility’. But I firmly believe it’s these types of seemingly insignificant little moments that go unrecorded on HR files and balance sheets that distinguish the true leader from the mediocre and, over time when multiplied by hundreds or thousands, help to build the kind of stand-out corporate culture that differentiates a merely good company from a truly great one.

The simple fact is that nobody has ever learned anything by listening to themselves speak. At the same time, sitting in a top-floor corner office may afford some wonderful views of the surrounding scenery but until you get out of there on a regular basis you are never going to get a proper view on what is going on in the company. Get your extra ears strapped on, get out there and take note – literally – of what your people will be anxious and excited to discuss with you. And if they find it odd that you’re suddenly mixing with ‘the madding crowd’, just tell them that Richard sent you!

How do you look to your customers?

My lovely wife Joan was born and bred a Glaswegian and as with many of her fellow Scots she loves to quote the great Scottish poet Robert Burns. By osmosis, therefore, I too have become familiar with some of the works of the bard. ‘Rabbie’ Burns is possibly best known as the author of ‘Auld Lang Syne’, which most of us sing every New Year in various states of inebriation.

Of all the words he wrote, however, the ones that have always resonated with me come from his somewhat unlikely titled poem, ‘To a Louse’, in which he wrote,
‘
O would some power the giftie gie us, to see oursels as others see us’.
Simply stated this does of course mean, ‘If only we had the power to see ourselves in the same way that others see us.’ Of all the mantras one might adopt in life, this is surely one of the better ones and for anyone in a leadership role it should be an essential part of the checks and balances that are built into a company’s standard operating procedures. I suppose the corporate version of Burns’ famous line would read something like, ‘
Always try to look at what we are doing from the customer’s perspective.
’

IF IT WALKS LIKE A DUCK . . .

Like it or not, in the eyes of our customers, employees, friends, whoever, perception is very much reality. Or as the old saying goes, ‘If it walks like a duck – it usually
is
a duck’. The ability to see one’s own actions either personally or corporately through the eyes of others is a skill that takes practice and ideally one that should be applied well in advance of making public statements or policy decisions that might be open to ambiguity or question. We are all consumers and yet I am constantly amazed at how many business people seem to dwell in some kind of subjective blinkered cocoon instead of looking objectively at their own products and services.

Even more amazing is the simple fact that we are all surrounded by highly objective, ready-made focus groups. You don’t have to go outside and pay them to sit in a mirrored room – they’re around us every day and go by the name of family, friends, employees and acquaintances. In my experience some of the harshest and most valuable sounding boards you will ever find can be found around the family dinner table. I cannot begin to tell you how many times what I thought to be a really good idea never made it past the tough audience of Joan and the kids. I will never forget her no-holds-barred response to one new idea in particular that I casually announced over dinner with her one night. Never!

It was during the height of the HIV/AIDS epidemic in the late eighties and I was thrilled to see how fired up everyone at Virgin was about doing something positive to help tackle this dreadful disease that was destroying the lives of millions. In typical fashion we brainstormed to try and come up with some practical contribution we could make and before long someone had the great idea of setting up a company that would manufacture and sell condoms for a fraction of the price being demanded by Durex, the UK’s dominant condom manufacturer. Nobody stopped to consider any potential disconnects on the branding front and we simply set about turning the idea into a reality.

Flash forward to my excited dinner table announcement that we were planning to introduce a new product line that would go by the name of ‘Virgin Condoms’. I remember seeing Joan choke on her food before exclaiming in her wonderful Glasgow accent, ‘Condoms! Virgin Condoms? Oh come on, Richard, pleeeease tell me you’re joking. Cos if you’re not, you’re soon going to be the butt-end of a hell of a lot of jokes.’ And of course she was absolutely correct!

As is often the case, with the best will in the world, one can simply get too wrapped up in the creative process and forget to step back and see how whatever you’re working on is going to look from the customer’s perspective. In this instance we were all so fired up with the big idea that nobody had given a moment’s thought to how nonsensical it would be to offer a product called ‘Virgin Condoms’. I mean, it would be almost as crazy as starting a company by the name of ‘Virgin Bride’ – oops, well, maybe even crazier! In any case, following Joan’s astute observation we went straight back to the drawing board and quickly came up with a clever solution. Our first venture into the latex-wear business would instead be branded as ‘MATES’ – which if you think about it is really quite appropriate – and the M on the front of the logo was cleverly crafted using an inverted version of our signature Virgin ‘V.’

IF IT AIN’T BROKE, BREAK IT

Not everyone, it seems, has access to a pragmatic market expert like my wife – or more likely they do, but they clearly are not making very good use of them. Imagine for instance how differently things might have turned out for Reed Hastings, CEO of video-rental company Netflix, had he polled his family’s or friends’ reaction to the question, ‘Okay, folks, how would you feel about a new Netflix offer that will give you the same service you enjoy today but for twice the price and with double the complexity?’ Now, as I've said, I’m not a betting man, but I’d have put money on the response to that one! Clearly, however, such a conversation never took place.

In July of 2011 Netflix was flush with success. It had twenty-three million subscribers, its stock price was riding at an all-time high at around $300 and new members by the boatload were signing up every month. And then in September, for reasons that no one can fully explain, the DVD rental giant shocked Wall Street analysts and its employees and customers alike by announcing it was revamping its highly successful business model. They announced that a new spin-off company, Qwikster, would take on the mailbox DVD rental side of the business, while those customers who preferred streaming video would buy that separately from the newly pared-down Netflix. What had been working just fine for them – a single monthly fee to Netflix for both services – would now be payable to two separate entities – doubling the complexity and forcing customers to lock into choices they didn't really want to face.

The attempted transition was so badly executed on every front that it quickly turned out to be an exercise in ‘united we stand, divided we fall’. Some analysts speculated that the company may have been foolishly attempting to fast-forward evolution by trying to wean its client base away from the old-fashioned business of having DVDs delivered by mail with all the associated logistics, warehousing complexities and costs – none of which existed with the rapidly growing online streaming mode of video delivery. Everyone agreed that video streaming was indisputably the way of the future, but such a monumentally dumb move was certainly not the way to get there. The customer reaction was instantaneous and furious: within a month almost a million of them cancelled their subscriptions and the company’s stock – which in July had been trading above $300 – had fallen to around the $100 mark by early September.

It was way too late for the publicly embarrassed Reed Hastings to have that dinner table chat with the family, but to his credit he did at least react quickly by instantly hitting the brakes before the ill-conceived new structure ever took effect. Qwikster was ‘qwikly’ gone and in what was described in one report as a ‘tear-stained apology’ to both the remaining and recently departed Netflix subscribers, Hastings openly admitted, ‘I messed up and I owe everyone an explanation.’ What that explanation didn’t say, however, was, ‘If only I’d talked this over with my friends and family, none of this fiasco might have happened.’

While Netflix almost managed to ‘snatch defeat from the jaws of victory’, happily the company has recovered well as a predominantly online provider, although the dinosaur-in-waiting of DVDs by mail still contributes significant revenues. A lesson to be learned from this story is the importance of leaders displaying the courage to own up to and accept responsibility for their mistakes then act to quickly fix them and move on. Last time I checked, Netflix stock was in the region of $450, so its shareholders’ pain was a temporary thing as a result of the quick actions of a CEO who wasn’t afraid to admit that, like all human beings, he was fallible.

HOW TO SHOOT YOURSELF IN THE CAN

While the Netflix story is one of the more recent examples of failing to look at a business from the outside in, in the annals of blinkered decision-making it is by no means the most incredible. That honour must surely belong to the Coca-Cola Company. ‘Coke’ is not just one of the world’s biggest selling and most recognisable brands but it has fiercely loyal customers – as we discovered when we tried to go up against them with Virgin Cola – or ‘Virgin Coke’ as I was prone to calling it until several of our lawyers suggested I might be wise to cease and desist!

Unfortunately for us, Virgin Cola never succeeded in wreaking one tenth of one per cent of the damage to Coca-Cola that they managed to inflict upon themselves in the mid-eighties. I am usually a believer in the ‘if it ain’t broke, fix it anyway’ school of thought, but what happened with the ill-fated introduction of ‘New Coke’ was, as someone described it at the time, ‘Like trying to improve the Mona Lisa’s smile by painting over it.’ On 23 April 1985 – a date that will forever ever live in fizzy drink infamy – Coca-Cola surprised the planet by suddenly introducing their ‘New Coke’ and simultaneously ceased production of the original formulation. This was no ordinary drink they were messing around with – I read somewhere once that 10,000 Cokes are consumed around the world
every second
of every day! With that kind of a following it was hardly surprising that the reaction around the Coke-drinking world to the New Coke’s coming was nothing short of seismic.

It was a textbook case of just how flawed a strategy it can be to place too much reliance on assuming the customer knows what they want. The guys in the white lab coats at Coke had conducted extensive blind taste tests with existing customers and others, all of whom had apparently indicated a strong acceptance (if not necessarily a preference) for the planned New Coke’s slightly sweeter formulation. Of course, these tests had been conducted in somewhat of a vacuum and none of those contributing to the shocking result had been asked, ‘We are glad you like this, now how would you feel about it replacing the Coca-Cola that you’ve loved all your life?’

The stunned consumer response was, to put it mildly, ‘not pretty’. The company HQ in Atlanta was deluged with hundreds of thousands of calls and letters expressing utter disgust from global Coke drinkers. To a person they not only didn’t like the new taste but also felt betrayed that the decision to go ahead and change their favourite drink had been taken without any open consultation process. Many felt that at the very least the old and new versions should have been offered side by side on supermarket shelves for a time so that consumers could have made their own choice.

As a fan of well-written complaint letters (even when addressed to me) I have to say that some of those received by Coca-Cola should be enshrined in a ‘Hall of Shame’ somewhere. Coke’s CEO Roberto Goizueta was inevitably singled out as the villain of the piece and ‘Coca-Colass CEO’ and ‘Chief Dodo’ were two of the more polite forms of address taken by angry letter writers. One missive even asked the embattled executive for his signature on the grounds that ‘The autograph of one of the dumbest executives in American business history will likely become valuable some day.’ Even a few offshore fans chimed in – from Cuba, life-long Coke drinker Fidel Castro dubbed the misadventure as, ‘A sign of American decadence.’ Of course, he was probably thinking, ‘How can I have a Cuba Libre without Coke?’

It turned out that Castro’s much-publicised comment only served to get CEO Goizueta into more hot water, this time from his own father. He later recounted how his dad, a Cuban who had fled his homeland to get away from Castro, told his son in no uncertain terms that he had screwed up big time. But the classic capper to this story was when he reportedly said, ‘Roberto, I think this is the only time in my life that I have agreed with something Fidel Castro had to say.’

Now I am not suggesting that soliciting the input of foreign dictators is necessarily the way to go, but when you have family and friends who are also consumers, it is downright foolish not to take full advantage and listen to their outside-in points of view.

THE CUSTOMER IS ALWAYS . . . RELEVANT

Please don’t think that by promoting outside-in vision I am suggesting that the customer is always right – far from it. In fact, in my experience, particularly with anything that represents a really game-changing innovation, I believe that most consumer opinions tend to be overly cautious and tempered by what they have or have not experienced in the past. If they cannot envisage what you are talking about because they have never experienced anything like it, then they are likely to be overly guarded in their comments.

For a variety of reasons – and as the New Coke taste-test fiasco demonstrates – I have always had trouble accepting the validity of the kind of consumer feedback that is garnered from formal focus groups. This is the kind where they all sit down in a room and pretend they don’t know they’re being watched and recorded by the people behind the mirror. Not only does it frequently bring out the prima donna in some members of the group, who see it as an opportunity to perform for the cameras, but most groups behave like sheep. Usually one dominant participant will have the most boisterous opinions and the others will meekly get in line behind them. Now while there is always a similar risk within a family group, at least you know a little bit more about the people involved and they also aren’t walking away at the end of dinner knowing their comments will never come back to haunt them. For example, if I had chosen to ignore my wife Joan’s ‘Virgin Condom’ comments and gone ahead with the name anyway, I suspect I might have chosen to eat out for a while.

The approach we have taken in deciding what our new Virgin Hotels should look like is a good example of the Virgin way of taking advantage of family input. Certainly the women in my life, my wife Joan and daughter Holly, have had their say but in this case the ‘family’ I am talking about is the extended Virgin family of companies, their employees and our fifty million or so customers around the world. The Virgin Hotels input in question was not by way of any formal research but by leveraging our years of acquired understanding as to what our customers like and expect from Virgin-branded products and services. It is vital that our new hotels exude all the same elements of unrivalled personal service and design excellence tempered with user-friendly functionality that have evolved by trial and error with our three airlines, at Limited Edition (our resort/luxury escapes division), at Virgin Active and other family member ventures.