Tim Jackson - Virgin King (Text Only)

‘Small is beautiful’ is evidently the guiding principle. Branson believes firmly that people work better in teams that are too compact to be impersonal. But separating the companies that make up the group into lots of small suburban houses and offices is not only more human than installing them in a single tower block in London’s financial centre; it is also cheaper and more flexible. There have only ever been two exceptions to the rule: Branson’s airline, Virgin Atlantic, which employs several hundred people in a couple of offices in the town of Crawley near Gatwick Airport; and the Virgin Music Group, which occupies a vast mansion set back from the Harrow Road. The reception area at Harrow Road boasts a stunning combination of Victorian cornices and minimalist art and furniture which was installed by a fashionable architect, and reputed to have cost £80,000. But this was not Branson’s initiative; the man responsible for this act of corporate patronage was Simon Draper, who ran the Virgin Music Group until Branson sold it to Thorn-EMI in 1992.

While others make money from buying big companies that have lost their way, cutting out the dead wood and returning them to profitability, Branson has made only a handful of acquisitions in his life, none of them costing more than £10m. Instead, his speciality is to build from scratch. In a business career spanning twenty-five years, he has used this approach to build an international retail chain, an airline, and a music business that includes records, music publishing and studios. The principle of starting from nothing applies to people as well as to businesses. Rather than hire in specialists from outside who will be expensive and may not be loyal, Branson prefers to offer big jobs to people who already work for him. This is by no means a rule: Trevor Abbott, the Virgin Group chief executive and Branson’s most senior adviser, joined him when he had already been in business fifteen years; and one of the two managing directors of the airline was brought in only in 1990. Yet most of the leading players in the Virgin story are people who joined straight from school or university. One, Barbara Jeffries, first worked for Branson as a housekeeper at Shipton Manor in Oxfordshire; by 1992, she was managing director of all his studio businesses.

Since inexperienced staff necessarily make a few mistakes before acquiring expertise, it helps in such circumstances to take a long-term view. Luckily, Richard Branson has never evaluated his businesses on the basis of how much profit they make each year. When he signed musicians to the Virgin record label, he was often willing to pay advances that his competitors considered ruinously high – but in return, he would demand rights over a larger number of albums, and would want to keep control of the copyright over those albums for longer than other record companies. The record shops under the banner of Virgin Retail grew steadily in number for more than a decade, without ever making a proper return. But Branson ignored the advisers who told him time and again to close them down or sell them – and was proven right in 1988, when WH Smith, one of Britain’s leading stationery chains, paid over £23m for the smaller and less successful stores, leaving him with a more closely focused chain of Virgin megastores. Branson has weathered equally stormy days at the airline, which took four years from its creation to turn in a reasonable profit. He kept his nerve during the 1991–2 recession in the air transport industry, emerging triumphantly at the beginning of 1994 with a daring deal that replaced his fleet of ageing Boeing 747s with more economical Airbus A340S.

This patience extends to his negotiating style, too. During the same recession, Branson was under huge pressure from his bankers to sell parts of the Virgin empire in order to reduce the mountain of debt he took on at the end of the 1980s. Yet he took more than a year to sell Virgin Music Group – and succeeded, like a carpet dealer in an Oriental bazaar, in persuading potential buyers that he neither needed nor especially wanted to sell. This strategy was rewarded in the astounding price that Thorn-EMI eventually paid in cash and assumed debt for the company: £560m, or almost $1bn at the prevailing exchange rate.

In the speeches that he is increasingly often asked to give, Branson is fond of pointing out that while conventional business analysis puts the interests of a company’s shareholders first, followed by those of its customers and then its employees, he takes the opposite approach. For him, it is Virgin’s employees who take top priority, particularly those who deal face to face with members of the public. If they are happy in their work, he hopes, then they will perform well – and in doing so they will satisfy his customers. Branson believes that the interests of Virgin’s shareholders (which in effect means himself and his family) can be safely left behind, on the assumption that a company that pleases its customers will prosper itself.

Fame has brought Branson an array of rich and powerful friends, and an ability to arrange a meeting with almost anyone he wants in politics or business. When his libel action against British Airways was settled in the High Court, the Princess of Wales sent him a handwritten note of congratulation on a card headed ‘Kensington Palace’ bearing a monogram of a capital D with a coronet above it. ‘Dear Richard,’ it read. ‘Hurray! Love from Diana. X.’ The friendship was cemented a few months later, when Diana agreed to preside over the launching ceremony of the airline’s first new Airbus. Her light-hearted appearance, which came only a few days after an announcement that she intended to retire from most of her public duties, put Branson and his company on the front page of newspapers all around the world.

Yet Branson himself is the opposite of elitist, and his company is one of the least hierarchical one could come across. To the annoyance of his senior managers, Branson seems to pay as much attention to a chat with a clerk in the airline’s post-room as to a memorandum from his marketing director. Letters from his staff are always read first; when Branson travels on his own airline, he spends about half his hours on board talking to the cabin crew, and he travels into town at the other end not in a private limousine to a hotel at the city centre, but in the crew bus to the airport motel where those who will be flying back the following morning spend the night. Until he became an airline owner, and thus acquired the right to travel first-class for free on other airlines, Branson used always to fly economy class.

Richard Branson may work his secretaries hard, but he resists the temptation, to which many other company chairmen have succumbed, of ordering them around as if they were servants. He will ask for a mug of tea during a meeting at Holland Park as hesitantly as if he were a guest in someone else’s house. Until recently, he used to dial his own telephone calls; he only stopped doing so when a growing number of people at the other end refused to talk to him because they thought he was only a practical joker pretending to be Richard Branson. (Given that Branson used to specialize in telephoning his friends and pretending to be other people, that is richly ironic.) It is no coincidence that Penni Pike, Branson’s senior personal assistant, has worked for him in the same job since 1977.

He manages and motivates his staff by example. Branson is hugely energetic. He needs his eight hours’ sleep a night, but is nevertheless able to put in very long hours without rest – keeping himself awake where necessary by snatching naps during the course of the day or en route between one meeting and the next. He travels by air on average once a week. Dozens of the present and former Virgin employees interviewed in the course of the research for this book have been influenced by his almost blind determination. Where others would try to put an idea into practice but then give up when obstacles appear to make it impossible, Branson takes it as an article of faith that there is a way around – if only it can be found. Sometimes, of course, he is wrong; but surprisingly often, the extra effort pays off with success – and others begin to imitate the Branson technique. The most extreme example of this approach was the establishment of Virgin Atlantic; by dint of extreme effort from a team of a dozen or so people, the airline was up and flying within four months of the day on which Branson first started discussing the idea.