At the Cayman Alternative Investment Summit Richard Branson gave an insight into the business philosophy that developed Virgin into an iconic brand, spanning sectors as diverse as air travel, telecommunication, space tourism and mortgage lending.
To describe Richard Branson’s business approach as unique is an understatement. He has in the past taken on a variety of unrelated business sectors that were generally regarded as not very lucrative, such as air travel, or featured high barriers of entry, like railway, simply with the objective of giving customers a better experience.
In the interview with Michael Ryan, who was instrumental in bringing him to Cayman, Branson said the business school approach is certainly to specialise in one area. “I have come across different areas where I thought we can do it better.”
Branson, who describes himself as “inquisitive”, says Virgin is a “way of life brand” and creating it in the way he did has been a lot of fun. “If we had actually stayed in the music business, which was our first business, we would not be around today. So to be counterintuitive can actually make sense.”
Along the way as Virgin grew, Branson tried to maintain small units. “We wanted to stay small while getting big,” he says, because too many large corporations want to build bigger and bigger buildings and they can become impersonal.
The most important factor for the success of the group are the employees, who Branson says come before the customers and before the shareholders. “If you look after your staff, customers actually will come first. And when you look after those two, then shareholders do well as well.”
Looking after the staff starts with setting the right tone for the culture of a business and that depends to a large extent on senior management. Putting the wrong person in charge of a company can destroy morale really quickly, he says. “So you are looking for people who have got a little bit of a spark and a smile and genuinely care.”
Virgin seeks to employ people to run its companies “who are very good with people and look for the best in people” and who favour praise over criticism. In addition Virgin does things slightly different than other companies, by offering more flexibility such as job sharing, unpaid leave, working from home or taking Friday’s off, Branson notes. “That kind of flexibility makes us a company that people like to work for.”
Branson gave another example for the “little things” that can make a big difference when creating the right work atmosphere. When Virgin took over part of Britain’s rail network 15 years ago, the first thing Branson did was invite all 20,000 former state employees and their families to his home in Oxford. The invitation was then extended to all other staff at Virgin Group. “So we actually had 80,000. We ended up spreading it over seven days. And we had the best party ever,” he says.
Ensuring that work is fun is the responsibility of senior management, he argues.
“It is up to the bosses to remember that 80 per cent of people’s life is spent at work. It is just trying to make sure that they are having a great time at work. When it is their birthday let them take the day off.” And “have a party with the staff and when there is a swimming pool, make sure that you are the first in the pool”, he advised.
However, the most important thing for anyone running a company is to learn the art of delegation, according to Branson, who says he had to learn it early on, because he wanted to create more things. Put yourself out of business is the best advice he can give, he says. “Find someone who is as good as you or better than you and don’t second guess them. And then you can think about the bigger picture, you can dive in when there are problems. You can help them put the company on the map. And maybe if you are an entrepreneur, do your next venture.”
Don’t always listen to the accountants
As far as running his business is concerned, Branson says, he does not always listen to the accountants, citing the bar on Virgin Atlantic planes which, if eliminated, could bring in another $15 million dollars of revenue from six additional seats per year.
Branson says it is strange how the airline industry is generally so badly run and accountants seem to have run it for many years. “If you fly within America with most airlines it is a pretty horrible experience,” he claims.
“We have beautiful salt and pepper pots and people were stealing them because they are so good,” he says. When the accountants suggested to use “ugly” salt and pepper pots that nobody wants to steal, Virgin put underneath the existing ones “pinched from Virgin Atlantic”.
Catching himself, Branson remarks, “I know there must be a lot of accountants in the Cayman Islands, so I am careful what I am going to say”, but adds if you launch an airline in America and you ask two different sets of accountants how much money you are going to make you will get two completely different answers. “You honestly don’t know. You just have to go with your instinct. If I create the best airline in America, I would hope that we will get people travelling with us and at the end of the year we have more money going in than going out.”
The only important thing is to protect the downside, so not to damage the other businesses of the group. He nonetheless assured the audience that Virgin employs a lot of accountants and the accounting profession is very safe with Virgin.