Richard Branson: Business Stripped Bare

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?