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People

Find Good People – Set Them Free

'Mr Richard! Mr Richard! Do you have a minute, please?'

I was visiting Ulusaba, our private game reserve, close to the stunning Kruger National Park in South Africa. It's an enchanting piece of bush and, thanks to Karl and Llane Langdon, a well-managed one. The previous owners had planned to fence it in – all 2,060 hectares of it – to protect the local wildlife from poachers. We decided, on the contrary, to take the advice of our rangers, and have allowed our leopards, lions, elephants, cheetahs and rhinos to move and migrate freely between our land and the neighbouring Kruger.

The reserve had cost me nearly $6 million in 1999 – a testament to the salesmanship of the South African president, Nelson Mandela, who persuaded me to keep faith with his homeland. Even when times have been hard for the Virgin Group and I needed liquid cash, I could never bring myself to sell it.

'Mr Richard!'

I stopped and turned round and stood there, dazzled by one of the most winning smiles I've seen in my life.

'Mr Richard.' It was a woman from the village, dressed in a KwaZulu gown of bright reds and yellows. 'I've heard you are a very generous man. Can you lend me money to buy a sewing machine?'

At this time Virgin Unite, our charitable foundation, was busy at work in the villages in and around the reserve. The villagers had been walking a long way to Sand River for water that was not particularly safe to drink. So the foundation had sunk boreholes to provide the villagers with a nearby source of clean water. It taught skills, helped with the school and built a medical clinic. It created play areas for kids, and huts from which the villagers could sell their goods to tourists.

The tourists were our business too. For nearly ten years, Ulusaba has been a magical place, especially loved by people who come here to rent our upmarket lodges, one perched on the summit of a granite outcrop with stunning eagle-eye views across the bush, the other a tree house overlooking the Mabrak riverbed, where many animals come to drink and frolic.

I've been asked for money hundreds of times over the last thirty years, but rarely with such directness. You've heard of the elevator pitch? This was the elephant-pool pitch.

She told me she was a talented seamstress but that she needed cash to buy a sewing machine to get her business going.

'So how much do you need?'

'Three hundred dollars would be enough,' she explained. 'And, what is more, I'll repay it within three months and employ six people full-time.' The woman's determination and ambition were fantastic. So was her focus: she knew exactly what she wanted, and why. She got her $300.

And as I walked away I said to myself: That's money I'll probably never see again.

I wasn't being cynical. I simply had experience of how the odds were stacked. At Ulusaba – which means 'place of little fear' – I had come to know many local people who were working on the game reserve and looking after our visitors. And believe me, they have big fears. Malaria, tuberculosis and HIV/Aids stalk their daily lives.

Three months later I was invited back to the village to open some of the community projects supported by Virgin Unite, including crèches, orphans' homes and an Aids-awareness clinic. When I got there, six women came up to me, and gave me a gift of the most exquisite cotton pillows and tribal clothes which they had made. And, to complete my surprise, they returned the $300.

But where was the original entrepreneurial seamstress? I asked.

'Mr Richard, she is so sorry she can't be here personally to see you. She is off to the market selling the products,' they told me.

I've thought of her often since that day: a confident, direct, intelligent woman, using a sewing machine to better her own and others' lives. Never mind Dragons' Den: if you want to meet entrepreneurs, come to Africa. It's a continent full of opportunities for the creation of wealth, enterprise and future prosperity.

Since the mid-1970s, the economist Professor Muhammad Yunus has been saying much the same thing about the women of Bangladesh. But how do we foster entrepreneurism in communities that, whatever their potential, have virtually nothing?

Muhammad Yunus started his Grameen Bank as a practical economics project in 1976. He won the Nobel Peace Prize in 2006 for pioneering an economic system in which small, low-interest loans are extended to people who are unable to obtain a loan from a traditional bank. Grameen's rule of thumb is to keep the interest rate as close as possible to the prevailing market rate in the commercial banking sector rather than moneylenders' exorbitant rates. It has transformed the lives of millions and the bank now has 2,400 branches, and 7.5 million borrowers. The default rates – at 2 per cent – are lower than those of any other banking system. Every year, 5 per cent of Grameen borrowers move out of poverty. His work has spawned a global movement.

Muhammad is a proponent of 'social business'. He said in an interview with the Santa Barbara Independent:

Ordinary businesses are aimed at making money . . . there is no consideration of how people benefit, it is all about making profits. Social business, on the other hand, is all about social benefits, not personal gain. Profits are important to social businesses, which seek to sell products at prices that make it self-sustaining. A social business is not a charity – but profits are not its ultimate goal. When a social business turns a profit, the original investors are repaid, but the rest of the profits stay with the company in order to achieve its long-term social goal of helping the poor.

His view is that many of the problems of the world remain unresolved because capitalism is poorly understood and poorly practised. The issue, he says, is not in the capitalist system itself, but in the hash that people repeatedly make of it. He completely rejects the common view, that capitalism is all about the bottom line.

He says: 'In this narrow interpretation we create a one-dimensional human being to play the role of entrepreneur. We insulate him from other dimensions of life, such as religious, emotional, political dimensions . . . Everyday human beings are not one-dimensional entities, they are excitingly multidimensional and indeed very colourful.'

Muhammad thinks capitalism can – and should – enrich the whole person.

I'm not good at theory. Almost everything I've learned, I've learned by doing. However, Muhammad's opinions excite me. They confirm a lot of the gut feelings I've developed about business over the years. And topping my list of gut feelings is this: business has to give people enriching, rewarding lives, or it's simply not worth doing.

Later on, we'll be returning to Virgin's African adventures, and some of the wider political questions this story throws up. For now, though – since we have to start somewhere – let's start at home. Let's start with you. Wouldn't it be wonderful if your company were full of people like the seamstress who accosted me that day in Ulusaba? Think what you could achieve.

Well, there's no reason why it can't be, and in this chapter I'm going to tell you how Virgin tries to foster the entrepreneurial spirit at every level of its business.

First of all, take a cold, hard look at your present surroundings.

Are you really going to be able to empower the people around you? I ask because, for all I know, your workplace may be a sink of despair. And while we've had a few notable successes in this area, it is, I would say, superhumanly difficult to change a company's existing culture.

Virgin learned this the hard way in 1996, when we acquired Euro Belgian Airlines and turned it into a cheap, cheerful, go-getting budget airline called Virgin Express. Well, that was what Virgin Express was supposed to become. We rebranded the airline and floated 49 per cent of its stock on the Brussels and NASDAQ stock markets. We knew it wouldn't be easy, because we'd be in competition with solid low-cost airlines such as easyJet, Ryanair and Go, with all the benefits they had of being based in the UK. Not only that, we would be based in Belgium (remembering how much it cost us to operate there brings tears to my eyes to this day). Nevertheless, I believed that with a quick transfusion of the Virgin spirit, we could make a go of it.

Boy, was I wrong.

Our Brussels-based low-cost carrier was one of the toughest challenges we have faced. Debilitating European regulations on the thirty-five-hour working week and high fixed costs meant that there was little room for radical changes. This is a nightmare when you are trying to run a low-cost operation and arrange rosters and crew patterns. But if it was bad for us, imagine what it was like for the staff. They were cynical about the business, for the very good reason that there was no fun, no camaraderie and no real sense of ownership.

We set about changing all that – or tried to – and landed feet first in a can of worms: strict union regulations, tortuous pay negotiations, constant strike threats. I had to go in myself and try to sort it out, and it taxed my own legendary reserves of karma. The crucial lesson I learned was: avoid taking on someone else's legacy. In June 1999 I wrote in my notebook with reference to the turmoil at Virgin Express: 'Almost for the first time in my life I can't sleep at night. Fighting the outside world is easy. Trying to make peace among one's own staff is hell. We must never allow another company to get into this mess.'

As life turned out, shortly after that diary entry we made Neil Burrows the CEO and he set about turning the business around with incredible hard work and great leadership. However, just as Neil had got the costs into line with the most competitive in Europe and finally turned Virgin Express into a credible people business which worked, 9/11 bankrupted our biggest partner SABENA. Eventually, in March 2006, Virgin Express and SN Brussels Airlines merged to create Brussels Airlines and Neil went on to lead the combined businesses merging the two cultures and creating what is today a very successful airline in the capital of Europe. It was a salutary experience, and the business message is clear: if you're in the mood to buy a new business – wait. It can take a long time to change a business culture. Are you sure you wouldn't be better off starting one from scratch? So many business acquisitions end up being disasters because the people involved fail to understand the real challenges involved with getting different types of people to all work together and share the same goals. They look only at the numbers.

This lesson can be applied more widely, and that's what I want you to do now. Look around you. If the people you're responsible for have already been crushed beyond recognition, and if your bosses are more interested in putting you right than in listening to what you have to say, you are better off hunting out more promising surroundings for yourself.

Even better, start from scratch. Seek out people with the right spirit, bubbling just beneath the surface, and get working with them.

The people you need are rare, but they're not hard to spot, so let's start with them.

You will find the 'Virgin type' of person all over the world. I bump into them frequently in bars, cafes, hotels and small businesses, in libraries, post offices, in hospitals, at the jetty in the Caribbean, even in government offices and the civil service. Virgin types pop up everywhere, and in every nation. These people don't know they're special, but they are; they are out there, and you can spot them.

If you're in charge of a company, or a human resources department (I hate this description – I call them 'people' departments!), you should be searching for them, too. These people, by their nature and their outlook on life, enjoy working with others. They're attentive. They smile freely. They're often lively, and fun to be with. I don't underestimate qualifications – I just don't assume they're going to tell me anything about a person's character. Having 'savvy' is much more important than having a formal education. The things you learn can only complement who you are – and in my book, who you are counts for a whole lot.

I am always on the lookout for talent – it's not easy to find energetic and enthusiastic people with the right attitude. We look for people who can grow into their work, and respond with excitement when we give them greater responsibility. Jobs, after all, can be learned. Recently, we noticed two guys doing a brilliant job of running the water-sports activities at a rival hotel. Everyone loved them. We didn't need water-sports people. But we needed managers: and we asked these guys to run our island home in the Caribbean, Necker. In business, someone who can stay cool and calm under pressure is an asset. This is especially true for the Virgin Group, as so much of what we do involves dealing directly with the public. Today's consumer can be very demanding, especially when things aren't going according to plan.

I want to keep the Virgin Group fresh. So I have tried very hard to re-create, in every company, the atmosphere of Virgin's early years. There's no rule book. The past is the past. We can't preserve it; it would be silly for us to try. But what we can do is look for the next generation of the right sort of people. Like everybody else, we're looking for dedication, and belief, and a willingness to go that extra mile for colleagues and customers. But we keep certain other thoughts in mind, too. It seems to me that when you love what you do, you're too busy to stand on your dignity. When you're good at what you do, you don't worry so much about your image. So I think it's a positive sign when people don't take themselves too seriously.

Good people have always been at the heart of the Virgin business, and that's largely because we have tried to keep our businesses small, and our management teams tight-knit. I feel that small, compact companies are, generally, better run. This is partly because people feel more connected in smaller companies.

In an ideal business environment, everybody should have a rough idea of what everyone else is going through. People should be free to talk. Banter is essential. Anonymous, over-formal, regimented surroundings produce mediocre results. Niggling problems either fester, or they end up on your desk. No one runs that extra mile for you.

And there's another thing you should take into consideration: if your people aren't talking to each other, how are they ever going to get ideas? It was the physicist Albert Einstein who said: 'What a person does on his own, without being stimulated by the thoughts and experiences of others, is even in the best cases rather paltry and monotonous.'

There are few places more depressing than a room full of people who have nothing to say to each other. So put people together in a way that will have them bouncing ideas off each other, befriending each other, and taking care of each other, and suddenly they are coming to you, not with gripes and problems, but with solutions and great ideas.

Of course, there'll be friction. People working in small teams, in close proximity with each other, will rub each other up the wrong way from time to time. But nothing festers. Nothing stalls. People get over their problems. They come into work curious about what the day will bring. They're not having to contend with that dreadful, low-level headache that comes from not quite connecting with the people with whom they're spending most of their day.

As a manager, you're going to need a modest amount of psychological insight to build great management teams. But practice pays off, and you don't have to agonise over finding exceptional 'characters'. Given the right conditions, exceptional people will reveal themselves. The buzz of Virgin's early years was generated by a diverse mixture of incredible characters. I remember the brilliant Simon Draper, a student from South Africa who became the music buyer for our fledgling business. At Virgin Records, he was our musical sounding board. He was hip, cool, loved music and therefore had an unerring ability for finding fantastic music. He signed some of our best bands, and the music he fostered was the bedrock of our success.

There's another thing about teams: they don't last for ever. Think of a team as being like the cast in a theatrical play. Actors who work too long together on the same show for too long grow stale. When the business lets you, shake things up a little.

In the early days, when one of our Virgin companies ended up employing more than a hundred staff, I would ask to see the deputy managing director, the deputy sales manager and the deputy marketing director. I would say to them: 'You are now the managing director, the sales manager and the marketing director of a new company.' Then we would split the company in two. And when either of those companies got to a hundred people, I would once again ask to see the deputies and split the company again.

Virgin Records birthed nearly twenty different companies in the Notting Hill area of London. Each one would be independent and competing in the marketplace, but they would share the same accounts and invoicing department. Being the managing director of something small – rather than the assistant to the assistant MD of something big – gave people more clout. They were able to take pride in their successes, and they had to learn quickly and well from their failures. They were offered incentives according to how well they did. Although each company was relatively small, collectively the group turned into the largest independent record company in the world, and the most successful. If we'd kept everyone in the same building, I don't think we would have generated the ideas that led to our success.

Even today, each Virgin company is relatively small, although our airlines and train businesses, by their very nature, have grown significantly. I can't say that I know everyone's name now – indeed, it's been a while since that was the case, but we have tried to retain a culture of intimacy. If we set up a new airline we create a completely separate, stand-alone entity. Virgin Blue in Australia, Virgin Atlantic and Virgin America are independent companies. Our new airline in Russia will be independent, as is Virgin Nigeria, although we have pulled in technical people from Virgin Atlantic to help establish it. We pass and exchange expertise at arm's length. This makes the Virgin Group a fascinating environment for people who work in the airline businesses. One year Virgin people might be working in Britain or South Africa, the next spending time down under in Australia. This is a wonderful way of keeping hold of good people for longer. At Virgin, secondment is a way of life. There has to be a bit of give and take because some of our companies have different ownership structures. But our managing directors usually realise their people can benefit from a cross-fertilisation of ideas and culture.

There is nothing more demoralising than to work your pants off, only for strangers to be promoted to the senior positions you aspire to. At Virgin, we keep business in the family wherever we can, and we promote from within. The woman who was the managing director of Virgin's recording division started work for Virgin at the Manor Recording Studios; she was the cleaning lady. The manager of the Kasbah, our hotel in Asni, Morocco, first demonstrated her winning ways with people as a masseuse on Virgin Atlantic.

By 1995, I estimated some thirty people had become millionaires or multimillionaires as a result of starting Virgin businesses – and this didn't include the hundred or so musicians who became millionaires through record sales. Since then we can probably say that another eighty Virgin people have become millionaires in our businesses. This reward is just a by-product of success in business.

It's a fact of business life that people come and go. The offer of better prospects or career advancement elsewhere will naturally draw good people away from time to time. But what about the others – the ones who leave in order to do much the same thing, for much the same money, elsewhere? What went wrong?

Managers often assume it's a question of pay. This is lazy of them. Yes, money is important. It's essential to pay people fairly for the job they do, and to share out the profits of a company's success. But throwing money at people isn't the point. When people leave a good company, it's often because they don't feel good themselves. They feel marginalised. They feel ignored. They feel underused. Few people spend every spare hour scouring the jobs pages hunting for a higher salary. Most are driven back into the jobs market by frustration. Their bosses don't listen to them.

If you have a strong business idea and it falls on stony ground, there is only one possible response: 'Sod it, I'm fed up with this lot. I'm getting out of here.'

So – managers should listen more?

It wouldn't do any harm. At Virgin Blue, our Australian domestic air carrier, founder Brett Godfrey's management method dictates that all of the management team have to get out once every three months and 'chuck bags'. This means that they turn out at 4 a.m. and do a full shift with the baggage people. That way they get to understand the problems and the hassles of the job. And because turnaround time is so vital, he also wants to involve and reward the baggage handlers too. Brett has given them bigger incentives to help with getting the planes back on the runway again. He calls them the 'Pit Crew' and has decked them all out in Ferrari red. In some airports baggage handlers have been viewed as the lowest of the low. Not at Virgin Blue.

For my own part, I always make it a rule, when I'm in a city, to stay, if possible, where the cabin crews hang out. I'm a regular at the Holiday Inn at Potts Point, Sydney, which has certainly enjoyed better days, but its location is superb. I'll stay there with 200 of our cabin crew, so I can spend time with them and hear how they're doing, and if there's anything we should be looking into.

But we're still missing the point. Maybe your manager is a good listener. Maybe your manager is listening too much, to too many people at once, in too much detail. The thing is, if you have a good business idea, why should you have to ask permission every time? Why can't you just carry it out? Why can't you show it off to your manager in action? Why won't people give you the freedom to try, to succeed, even (horrors) to make mistakes?

At Virgin, we try as far as we can to make people feel as if they are working for their own company. Our more senior people have share stakes or options in the companies they run and, as a result, we've created a lot of very successful people over the years. But however our staff are employed, every one of them should feel that, in some respect or other, they own their own work.

Within reason, this is more important to people than their salary. I'll give you an example: Qantas's cabin crew earn $66,400 a year on average based on 'seniority'! Virgin Blue's much younger crews get $40,000. Our crews clock in for over 700 hours a year. Qantas's work for just 660 hours. This difference is likely to be eroded over time as the business matures, but in the meantime Virgin Blue's customers are reaping the advantage in lower fares.

How is this possible? Are Virgin Blue's staff of poorer quality?

Not a bit of it. Some people think airline hospitality is an easy job, and maybe it is – on paper. I've tried being an airline steward for a few days and I know just how hard it is. To get it right and have people come back again and again, the staff have to be absolute perfectionists in terms of their customer-service ability. So whereas at some airlines you could literally go into a pub on a Saturday night, hand out some business cards, train a few people up and that would be it, Virgin Blue puts its guest-facing crew through a rigorous five-stage recruitment process.

Why would they go through all that for a lower salary? Because Brett has introduced a reward system on Virgin Blue. Instead of creating a climate of fear, he has set things up so that the cabin attendants can take responsibility for their actions. He calls it 'First to Know, First to Fix', so that if cabin crew sort things out and it is recognised then they get a free flight ticket, which they can give out to anyone. This is typical of Brett's approach. Another point he insists on is that people with self-discipline don't need to be treated like naughty schoolchildren. It is important not to hammer people who make mistakes, provided they were made with honest intent.

After all, we only live once, and most of our time is spent at work, so it's vital that we are allowed to feel good about what we do. Throwing yourself into a job you enjoy is one of life's greatest pleasures – but it's one that some leaders of industry seem determined to stamp out at all costs.

Enjoyment at work begins where all other enjoyments begin: in good health. I write this with no small twinge of conscience, as I do get unfit from time to time. Week after week goes by and I hardly seem to leave the air or airports. I think of Nelson Mandela: during his years in captivity, he kept himself fit with press-ups and sit-ups. He kept his brain alive with a daily routine of exercises. Recently I spent about four months travelling back and forth to Australia, and I could have done with some of Mandela's spirit. I think I only managed an hour's surfing during a one-night stop-off in Bali; at least the buzz from that kept me going for days.

There is no denying, it's easier to stay fit in pleasant surroundings. Our Virgin health clubs make the experience as pleasant as possible, but it's a lot easier to spend an hour chasing rays in the shallows off Necker than it is to slog up and down in a swimming pool. Still, exercise is a bullet worth biting, whatever your surroundings and whatever the pressures of the day. The more energy we can bring to our working days, the better.

It's important, if you see someone overdoing it, to say, 'Go on a holiday.' If someone has lost a family member, let them take as much time off as they need. There's no point in having people working under unmanageable stress. You've got to give people time to mend. It's the decent thing to do, it makes practical sense and, when you're in the kind of business we're in, it may even, one day, save a life. Remember, we run airlines. We run train companies. We take people's money and in return we hurtle them about the globe at hundreds of miles an hour. Our chief engineers need to ensure that their engineers are contented, fulfilled and enjoying their work. This is the only surefire method we know of inculcating a culture of safety and routine excellence – and Virgin's safety record is, as a result, second to none.

While we're on the subject, I might as well mention another one of our safety measures. You've probably noticed that all our trains and planes have names. By giving these huge, powerful, potentially lethal machines names, we help our people remember where they were working yesterday, or last week, or last month. We help them recall specific problems and gripes with individual engines, coaches or aisles. We make communication easier. People don't have to reach for their diaries every time they're asked about some niggling detail. We never forget that our engineers and flight crew are people, and we'd much sooner personalise our machinery than mechanise our staff.

I find it extraordinary that so many managers pay no attention to the fabric of their workplaces. How are people supposed to believe in your company when all they see of it, day after day, is a couple of dying pot plants and a fire extinguisher? At Virgin, we give people the tools they need to do their job properly. How else are they ever going to feel pride in where they work? Virgin people have told me that at the end of a tiring day, when they are off duty, having a drink in the pub, or a meal, they're occasionally asked where they work. When they say, 'With Virgin,' the enquirer usually replies, 'Lucky you! That must be a great place to work.'

Our staff usually agree.

For many of our companies, the work environment is also public space. On our planes, for example, we make sure that our seats are the most comfortable in the air, the food is excellent, the uniforms are the best and the planes are modern, safe and efficient. On board a plane, customer service and staff satisfaction are pretty much the same issue. They should be handled as one.

But a concern for surroundings is part of the general Virgin philosophy. It runs through all of our businesses, whether or not they deal directly with the public. We're not talking about glitz or vast expense. We're talking about providing people with the right tools for the job. Do that, and your employees will approach every day with freshness and enthusiasm. If you file and forget them in some kind of stationery museum, the keenest heart will wilt.

It occurs to me that so far in this chapter, I've been giving you a lot of 'don'ts'. Don't micromanage. Don't ignore people's needs. There's a better way of looking at the manager's role, and I can best express it by telling you about the first time I met Gordon McCallum.

Virgin Atlantic's inaugural flight landed in San Francisco in 1996. As we celebrated, I was buttonholed by an extremely vivacious Irish marketing executive who worked for McKinsey & Co. She invited me to talk to a group of the company's analysts and consultants at their California Street offices.

McKinsey's consultants spend most of the working week in the offices of their client companies. As a consequence, they don't get much time with each other. So they have made Friday lunchtime their chance to get together: a bonding session over a brown-bag lunch of chicken-mayo subs and fruit juices. Usually, they have a guest to talk about business. Now it was my turn. I got my invitation on the Wednesday; I turned up on the Friday.

Was I prepared? I was not. I cannot for the life of me remember what I said. Whatever it was, though, Gordon made the effort to keep in touch. Years later, I asked him what I said at the meeting that had hit a nerve with the McKinsey people.

'No idea.'

'Really?'

'Not a clue.'

'So why did you stay in touch?'

Gordon shrugged. 'You turned up with a sandwich and a fruit juice,' he said. 'You made time for us.'

When I was twenty-one, someone described Virgin as an 'unprofessional professional organisation', which for my money is just about the best backhanded compliment anyone in business could ever receive. We run our companies professionally and we make sure that everyone does their job to the highest standards. But the way we make sure is to see that people are having fun. Fun is not about acting stupid. It's the feeling you get when you're on top of things. We try to make sure that the people who come into contact with a Virgin business end up with a smile on their face (not always easy).

Formality has its place when it simplifies things: when it lets people know what's going on and what to do. We can't be continually reinventing the wheel every time three people meet in a room. That said, I dislike formality. For every time it oils the wheels of business, I can point to fifty more occasions when it gummed things up, made people feel miserable and stifled communication. It says something about the state of business when people are surprised that I walk into a room and eat a sandwich with them.

The best Virgin manager is someone who cares about people and who is genuinely interested and wants to bring out the best in them. A manager should basically be a considerate person who is as interested in the switchboard operator and the person who cleans the lavatories as he or she is in the fellow managers. In my view, a boss who is willing to party with all of their people – and pay attention to their personal concerns – has the makings of a great leader.

They will earn their colleagues' loyalty and trust, for a start. But just as important, they will make friends. Remember what I said earlier, about business being, first and foremost, about concern? Business is not something you can stand away from. So it hardly surprises me that, over the years, I've befriended the people I've worked with, and found business to do with my friends.

It saddens me how rare it is that people want to go on holiday with the people they work with. When I work with people, I really want to get to know them personally. I want to meet their families, their children, I want to know their weaknesses and their strengths, and above all I want them to know mine. That way, we can do more together.

It can go wrong. I remember there was one situation many, many years ago when a very close friend came to run a division of Virgin. We were both so happy about it. Then, a little while later, his life was thrown into turmoil and some of the other managers were coming to me to say that he wasn't working out. I had to persuade him that he was trying to deal with too much and that he should step down. It was a really difficult moment, and it put a massive strain on our friendship. But the fact is we were friends, we dealt with the problem the way friends do, and we stayed close. Attending the twenty-first birthday of his triplets, I felt thankful that, at Virgin, we had found a way to factor friendship and decency into our internal dealings, which had saved this friendship. I know it makes us happier; and I believe strongly that it benefits our work.

Across the whole Virgin Group, we encourage people to take ownership of the issues that they confront in their working lives. In a service-led industry especially, this kind of attitude pays huge dividends. I think if people are properly and regularly recognised for their initiative, then the business has to flourish. Why? Because it's their business; an extension of their personality. They have a stake in its success.

Herb Kelleher of Southwest Airlines in the US once said: 'It's difficult to change someone's attitude – so hire for attitude and train for skill.' I've talked a little bit about what I look for in people, but there's one key quality I haven't mentioned yet, and this might surprise some people: it's discipline.

In his book Good to Great, the business guru Jim Collins says all companies have a culture but few have 'a culture of discipline'. This doesn't mean that people are tied to a tree and whipped if they don't work well, or have their wages docked if they're five minutes late. It's not that kind of discipline I'm talking about. It is to do with having disciplined people. And we have disciplined people right across our Virgin businesses. After all, if you're going to let people get on with and even develop their jobs, you need people you can trust.

Some people are a bit startled when I sing the praises of self-discipline, and I think it's because they associate self-discipline with formality, with rigid thinking – with a slave-like, machine-like devotion to duty.

They have in mind an airline pilot. The pilot sits down in the cockpit surrounded by an array of complicated computers and gauges. Step by step, the pilot and his co-pilot begin their preflight checks. It is disciplined and methodical. Then, before take-off, the pilot speaks to air traffic control, and, following precise instructions, proceeds to the runway. The pilot then waits to be cleared for takeoff, keeping in contact with the control tower. After approval, the pilot decides how the plane should take off. Once airborne, the pilot does everything needed to keep the aircraft, passengers and crew safe and then, when it approaches its destination, brings the aircraft down – often in foul conditions – into the airport. The pilot operates with great discipline within a very strict and highly regulated system. Pilots are not expected to be creative or entrepreneurial. They mustn't do anything out of the ordinary. Right?

Well, not quite.

It's 5 November 1997. Bonfire Night – when people in the UK traditionally have bonfires and firework parties. At Heathrow, staff are awaiting the arrival of Virgin Atlantic's A340-300 Airbus, Maiden Tokyo, from Los Angeles. I'm here waiting to board a flight to Boston on this windy and blustery morning when I get the call. Only one set of wheels had dropped down from the landing gear of Flight VS024.

Maiden Tokyo is coming in for an emergency landing.

At the helm is Captain Tim Barnby – a very modest person and one of the best and most experienced pilots in the UK. On board are 114 people – 98 passengers and 16 crew. I'm listening in on my mobile, keeping my mouth firmly shut as the operations crew and Tim run through their options. It doesn't sound good. A four-engined Airbus landing on one set of wheels in strong crosswinds has all the makings of a major incident.

Tim can't see if the landing gear is down or not so he flies the plane low over the tower of air traffic control to help them visually assess the situation. It just gets worse and worse: not only are the left set of wheels not down – the undercarriage door hasn't opened, either.

Four people now stand between a plane full of people and disaster: Tim, and his two co-pilots, Andrew Morley and Craig Matheson – and our own chief pilot Robin Cox on the ground talking them in.

Tim and his colleagues brought the plane down the runway on one set of wheels. Then right at the end of the runway, he gently dropped the wing on to the ground. Fire crews sprayed the plane with foam and passengers used the emergency chutes to get out on to the tarmac. Nine people were treated for minor injuries but all the passengers got off safely. And the plane? Tim landed it so gently, so carefully, that a month later it was back in the air.

I use this example because it is more dramatic, but the lesson I want to draw from it could just as well apply to a train driver, a customer-service operator, or indeed anyone throughout our business. A self-disciplined employee will have the patience to conduct routine business routinely, the talent to respond exceptionally to exceptional circumstances, and the wisdom to know the difference between the two. In some settings, this is easy to do. For airline pilots, it is incredibly, even crushingly difficult. Pilots operate according to a strict framework, but they cannot afford this strict routine to dull their senses or flatten their reactions.

After the emergency landing, I invited Tim and the whole crew to Necker, our private island in the British Virgin Islands, to say thank you. I'm pretty sure they had a good time, and I'm pretty sure that working for Virgin is more rewarding than flying for other carriers. In the end, though, we can only rely on Tim and pilots like him to look after themselves: to handle the tedium of routine long-haul flying and still be able to react brilliantly when things pack in around them.

For Virgin, it is fundamentally important to give people with the right temperament the freedom and responsibility to do their jobs properly – and Bonfire Night 1997 confirmed our decision only ever to hire the best pilots we could find.

Virgin Atlantic doesn't take on pilots from scratch. We make sure that they have a long track record of experience in military or commercial flying – often up to ten years' flying with a short-haul airline. Tim's CV is longer than most: among the planes he's flown are Spitfires and B17 bombers. We don't require that all our flight crew are Britain's number-one leading aerobatical display pilot in their spare time – but it helps! It's also one reason why we are now able to recruit spaceship pilots from Virgin Atlantic and Virgin America and so easily find the test piloting and supersonic experience that we need for the unique Virgin Galactic mission.

When I started Virgin Atlantic Airways I appointed as our chief executive Roy Gardner, who had been chief engineer at British Caledonian, a highly respected airline. This emphasised our commitment to having someone at the helm who knew about the planes and was committed to safety. And at the time of writing this (I am never complacent because I understand the nature of mass transportation) Virgin Atlantic and all our other airlines have been in operation for twenty-five years without a major incident and without loss of life. I (like all involved in running an airline) hope I have another twenty-five years of being able to say the same thing.

Remembering who you are: it's the biggest challenge an expanding business ever has to face. Virgin Atlantic is now a quarter of a century old and has worked hard to keep its original essence. I recall at the time, looking around on the very first day, wondering if we would ever be able to keep this up – all this enthusiasm, all this laughter. I wondered if we'd get the chance to be truly different.

Then I remembered Herb Kelleher.

Herb set up Southwest Airlines in Texas in the 1970s, and for nearly forty years his airline has set the benchmark for successful no-frills aviation in the United States. Southwest built its business around two innovations: low fares, and outstanding customer service. Considering the woeful record of many of America's other airlines, this has always impressed me. Looking back, I think Kelleher's thinking made a big difference to how we approached things at our airlines, and particularly in Australia with Virgin Blue.

From day one, Herb and his executive colleague Colleen Barrett focused on developing the company's culture – a way of doing things that would sustain its founding values as the years went by.

We've already met Herb's dictum about hiring for attitude and training for skill. His other 'primary attitudes' are also Virgin's and my attitudes, through and through:

1. Employees are number one. The way you treat your employees is the way they will treat your customers.

2. Think small to grow big.

3. Manage in the good times for the bad times.

4. Irreverence is OK.

5. It's OK to be yourself.

6. Have fun at work.

7. Take the competition seriously, but not yourself.

8. Think of the company as a service organisation that happens to be in the airline business.

9. Do whatever it takes.

10. Always practise the Golden Rule, internally and externally.

The egalitarian spirit of Southwest Airlines has driven its success. Even in the first quarter of 2008, with a weak economy and soaring jet-fuel prices, it achieved record operating revenues – a staggering $2.53 billion – and its net income actually went up – by 30 per cent! – to $43 million. You don't achieve results like that without the loyalty of a huge number of happy and satisfied customers.

Herb and Colleen and the managers of Southwest understood, better than most in this industry, that employee satisfaction and customer service are two sides of the same coin. They have maintained their culture of customer service by employing people who are right for the business, and by giving them the tools and incentives to do their work well. Until recently, they had no serious rivals. Now, I'm proud to say, they've got Virgin America to contend with: a younger, fresher organisation. This is going to be a memorable tussle, but a tussle rather than a fight because the real enemies are the huge, heavily protected legacy carriers in the United States who have fed off barely disguised subsidies from Congress for nearly a decade whilst letting their planes age, service standards collapse, prices rise and people become demoralised.

*

Every once in a while, the vast Virgin Group has to remind itself who it is. This is never a one-man job. Stephen Murphy's arrival as chief executive was part of a major overhaul of Virgin's operations. Along with colleagues such as Gordon McCallum, Robert Samuelson, David Baxby, Frances Farrow, Patrick McCall, Mark Poole and Will Whitehorn, Stephen and the team have helped reshape and redefine where we wanted to be as a business.

Now, that paragraph probably struck fear into your heart. Restructuring is a pretty bloody process, right?

It can be. If your business has ossified to the point where you haven't a clue what's wrong, and in desperation you've called in a bunch of management consultants who charge by the hour, then, let's face it, your troubles began some while ago.

I'm not saying for a second that the Virgin Group finds structural changes painless. But we do have this advantage over most businesses: we're modular. We can shed limbs and split functions without turning the whole operation upside down. Over the years we've been criticised for turning ourselves into a ragbag of unconnected businesses. Our critics miss two important points. First, they're not assigning enough importance to the Virgin brand. (I'll try to explain our brand philosophy, and how it has helped us thrive in diverse businesses, in the next chapter.) The second point is: so what? Ending up as a ragbag of assorted companies now and again is no disadvantage to a group that does its housework regularly and keeps its businesses as small, independent and entrepreneurial as possible.

Circumstances and opportunities change. The world changes, come to that. The only constant is change itself. When I started in business, the standard one-liner about commercial short-sightedness was 'People will always need hats'. Oh, how we tittered, as we stuffed those LPs in big brown envelopes and lugged them to the post office. These days the line to raise a youthful sneer is probably 'People will always need rock albums'.

Companies aren't change-proof, and no company will last for ever. And in the Virgin Group particularly, they come and go. What's wrong with that? Companies do things. They are tools designed for a particular purpose – or they should be. If they are superseded, or surplus to requirement, we shed them. We try our level best not to shed the people, or the know-how, but the company itself is not something we allow ourselves to get too nostalgic about. When Virgin renews itself, critics who tut-tut at all the leaves falling to the ground have failed to spot the tree.

And in the mid-1990s and early 2000s, we did lose leaves. We lost whole branches. We began to look carefully at what worked for us and what didn't. We cooked up the Investment Advisory Committee – a more formal structure for considering fresh business projects and monitoring the performance of our existing businesses. (Dr Yes was peeved, but he bit his tongue.)

And not long after, on 14 February 2007, we had the chance to show what a leaner, more clear-headed Virgin Group could do. The combined company of NTL, Telewest and Virgin Mobile relaunched in the UK as Virgin Media, creating the largest Virgin company in the world.

Now, have you heard the story of the dog who chased the car? Chasing the car was great fun – but now that he's caught it, what the devil does he do with it? This was pretty much my dilemma as I contemplated Virgin Media's 10 million customers and 13,000 employees across the UK. Up till then I'd always thought of myself as a 'small is beautiful' kind of entrepreneur. Virgin Media was not by any measure small. It wasn't beautiful, either. There were acute issues that had to be addressed, and this would mean months of hard work. This time, James Kydd, Ashley Stockwell and our senior brand and customer service people were on hand to remind us who we were, reshaping the company so that it maintained and contributed to the Virgin brand.

The NTL part of our business, in particular, was in a very sorry state. We needed to make drastic changes to its levels of customer service. For one thing, the people dealing with complaints didn't seem that interested in helping people.

We found out why: it turned out that they were spending their entire working lives reading from scripts.

These went straight in the bin. We told our call-centre people to solve problems with one call if possible, and we reallocated resources to the front line to improve customer operations.

We wanted to keep things simple for the customer and for our own people, and it seemed to us that the best way of doing this was to let people just get on with their jobs. There was scepticism at first. What would happen if one of our customer-service people overstepped the mark? What if people started offering customers too much?

My response to that was pretty much 'Live and learn'. I don't think anyone should be criticised for being overly generous when handling a disgruntled customer. If one or two of our people got themselves into a tangle, it just meant that they'd do better next time.

In the airline business, you learn very quickly not to skimp on the goodwill gestures. They let people know that, whatever the difficulty, you're still working for them. Even better is quick, accurate information. As we know, 'quick' and 'accurate' almost never go together, but we do what we can, and in the meantime, our gestures go a long way to reassure some seriously inconvenienced people. Of course, families who've been waiting for many hours could be let into the business lounge. Yes, of course we can make you more comfortable: would you like a massage? You've been fantastic, and we'd like to say thank you: here's a flight upgrade for next time. None of this is in the service manual, because you can't dictate attitudes from on high. All you can do is hire the right people and empower them to sort things out as they happen.

If someone has paid you for something, and it goes wrong, being cagey or defensive will kill you stone dead. You will never see that customer again, nor their family, nor their friends. If someone has a lousy experience at your hands, they will warn people. The knock-on effect of this destroys businesses. If, on the other hand, you are able to sort out your customers' problems better than they expected, then they will be your loyal friend for life.

We began this chapter by discussing entrepreneurship, and we're finishing with thoughts about customer service. A curious combination, no?

I feel very strongly indeed that young, independently minded businesses can provide customers with great service: it's the monoliths and the business establishment that make customers' lives a misery. I think this because the values of the Virgin brand are all about customer service; we are focused on the customer in a way that most businesses aren't.

But I also want to make a wider point.

In the 1970s, when we set up Virgin Records, no one in the UK used the word 'entrepreneur' any more. Or if they did, they considered it something unsavoury. A businessman running a number of firms was seen as a 'chancer' – the television comic stereotype was Del Boy, the wheeler-dealer on the outside of the law, in Only Fools and Horses, or Minder's Arthur Daley, the gin-drinking spiv played brilliantly by George Cole. In earlier days I was regularly dismissed as a 'Del Boy' myself (this always puzzled me; I thought I was more like Rodney). In fact, throughout history the entrepreneur has always been a favourite villain. From Ancient Greece to Shakespeare's Merchant of Venice right through to the film Wall Street, entrepreneurs represent 'moneymaking' and 'capitalism' – and in some sections of society those are still dirty words.

The UK media's view of business people has changed – but not nearly enough. Some elements of the British press still can't quite get their heads around the idea that business is a worthwhile pursuit, which actually provides most of the tax revenue, employment and wealth of the whole nation. Entrepreneurs have taken the risk in starting companies, innovating products and offering the services that make people's lives easier, better and safer.

As my friend Jon Butcher puts it, 'Entrepreneurs have literally destroyed poverty in the Western world as the rest of the world knows it, and as history knows it. No other social system can compete with the entrepreneurial free market system in terms of productivity, raising standards of living and creating permanent prosperity. Asia has exploded out of poverty in my lifetime thanks to entrepreneurs. Huge chunks of poverty should be taken out of Africa in the next ten years thanks to up-and-coming entrepreneurs. So capitalism actually works. Communism and true socialism are no longer taken seriously because they simply don't work. They actually hurt people. They've kept entire generations in poverty. They are disastrous though well-meaning systems that have ruined hundreds of millions of lives. Yet somehow there are elements of our culture that still associate profit-making with vice.'

Entrepreneurs are also the greatest philanthropists, from Andrew Carnegie in the nineteenth century to Bill Gates today. Carnegie, who made his vast fortune in the US steel industry, paid for almost every library in the Western world built in the nineteenth century, which brought about an educational revolution.

So, let me spell it out. Entrepreneurship is not about getting one over on the customer. It's not about working on your own. It's not about looking out for number one. It's not necessarily about making a lot of money. It is absolutely not about letting work take over your life. On the contrary, it's about turning what excites you in life into capital, so that you can do more of it and move forward with it. I think entrepreneurship is our natural state – a big adult word that probably boils down to something much more obvious like 'playfulness'. I believe that drudgery and clock-watching are a terrible betrayal of that universal, inborn entrepreneurial spirit.

For centuries – and certainly since the Industrial Revolution in the eighteenth century – industry has swallowed lives and, in turn, helped to give business a bad name. Men and women have had to conform to a mechanical model of work. They have been treated like cattle (literally, in many cases). Within my lifetime, upheavals in politics, science and technology have changed the nature of work, especially in the developed world. For some of us, it is our incredible good fortune that we are all having to think less like employees, and more like entrepreneurs. The era of 'jobs for life' is over – at last!

Inspire your people to think like entrepreneurs, and whatever you do, treat them like adults. The hardest taskmaster of all is a person's own conscience, so the more responsibility you give people, the better they will work for you.

For thirty-five years, the Virgin Group has steered clear of rote mediocrity and steamed full-speed ahead into a world of pleasurable scheming, spiked with the occasional cock-up. The way we have worked has allowed us to live full lives. I can't give you the formula for this, and you probably wouldn't follow it anyway. After all, you're having to respond to the circumstances you're in, while doing the job that you're doing. I hope this book will give you some ideas about how you can empower your employees – and empower yourself, come to that. But you really have to find the solutions that work for you.

Here is the good news: the more you free your people to think for themselves, the more they can help you. You don't have to do this all on your own.