- Richard Branson
- Business Stripped Bare
- Business_Stripped_Bare_split_010.html
1
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.