Business Stripped Bare (12 page)

For the Virgin Group, expansion into India was always going to be an easier option than China because of our shared culture, the English language and the Indian legal system's mature approach to business. This has all made a massive difference to us.

We took our time in India, making small investments in radio and comics before launching Virgin Mobile with Tata in 2008. Statutory regulations prevent us from being able to use the successful MVNO (Mobile Virtual Network Operators) model – which I'll explain in detail a bit later – so instead we've set up a marketing partnership with one of the country's biggest blue-chip corporations. This is a mouthwatering prospect for Virgin Mobile: Indian phone networks are adding five million new customers a month. This is a massive rising tide.

Our long flirtation with the Indian aviation market didn't turn out quite so successfully. We spent a lot of time talking to Air Deccan, the first of India's emerging low-cost carriers, which had been set up out of a private charter helicopter company in 2003. I met Captain Gopi – G R Gopinath, its founder – and we tried for over a year to take a stake in this growing market. Somehow – and despite the arrival of SpiceJet and Kingfisher and others to compete with Deccan – every time we talked, the price jumped up a bit more. Ultimately we correctly concluded that the industry was expanding too quickly and after some huge losses, Deccan merged with Kingfisher Airlines – a part of the UB Group, owned by the Indian entrepreneur Vijay Mallya. We wished them well and stood aside.

The things that make India an ideal territory for us are the very things that make it difficult. Our impatience with bad service may as well be the national anthem right now, and everybody, but everybody, is seeking to address this national mood. It's hard to be the consumer's champion in a nation of businesses that, rightly or wrongly, claim value for money above all other values. Have we worked out the best way to leverage our brand here? To be honest, I think this will take time.

For me, though, the bigger prize lies to the east. And so it was with no small thrill that I phoned David Baxby. After all, it's not often in life you get to call someone up and say, 'I want you to run China.'

David, who'd been running Virgin Asia-Pacific from Sydney to Shanghai, took it remarkably well. Now that he had anchored our successful businesses in Australia, we wanted him to spearhead our operations in the most populous nation on Earth. Today, we're talking to an exciting new generation of Chinese entrepreneurs. They are intensely keen to retain their Chinese identities and traditions but also to bring in best practices from around the world.

I have been in China several times recently, meeting young business people. The visit that everyone talks about, of course, is the one I made in January 2008, because it coincided with our bid for Northern Rock. It's a pity that the bid overshadowed the substance of our trip, because – unusually for an official mission, a huge amount of very solid work got done.

I'd been invited along to promote goodwill and cement business ties between Britain and China, and I had asked specifically to meet with some of China's entrepreneurs so I could swap notes about their experiences and opportunities.

It was minus ten degrees in Beijing when our flight touched down. I had been asked to say a few words, via an interpreter, about what it was like to be an entrepreneur. Ours was an important visit, diplomatically speaking, and so the size of the audience – several thousand people – was not too much of a surprise. Still, I was surprised and encouraged by the crowd's response: entrepreneurism has been central to Chinese culture for many centuries, and clearly the excesses of China's Cultural Revolution in the 1960s have done little to stifle the Chinese people's belief in themselves as a nation of supremely ambitious shopkeepers.

Indeed, trade and commerce are becoming, once again, a natural part of life there, and the entrepreneurial spirit is much more highly valued in China than it is, say, in Britain. This was very clear when I attended an entrepreneurs' round table in Shanghai.

Novelty explains some of the enthusiasm I encountered. I got talking to Zhang Xin, a fascinating Chinese businesswoman who runs one of the largest real estate businesses in China. She told me that the property boom in China is a continuing opportunity. There are already more than 400 million people who can be vaguely classified as 'middle or professional class' and this category is increasing by 30 to 40 million every year.

Zhang Xin has a passion for art and design and she has won several international awards for her visionary architecture. Born in Beijing in 1965, she moved to Hong Kong at fourteen, came to England and studied at the University of Sussex and then Cambridge. In 1992 she went to work on Wall Street with Goldman Sachs before returning to Beijing to start her own property business in 1995. The rapid rise of small Internet-based companies gave her and her husband an idea for combined living and working spaces. Zhang Xin initiated the concept of SOHO (Small Office Home Office) for young urban professionals and their companies. It's a business now worth billions.

China's own version of Google is an incredible business story, too. On our trip I met Charles Zhang, the CEO of Sohu, the leading Chinese-language Internet business, now listed on NASDAQ in New York. Sohu is a massive branded portal and its related Internet search engine, Sogou.com, has over 10 billion retrieved web pages. Charles told me that Sohu's strong brand had been achieved largely through its online role-playing game Tian Long Ba Bu, which has a massive following among the young Chinese.

For all that, David Baxby and I sensed an atmosphere of anxiety among young business people. The Chinese authorities have opened a door of opportunity for their people, but a tradition of hefty state regulation and interference might yet curtail the record growth of this amazing nation. I hope not.

The catastrophe of the Sichuan earthquake on 12 May 2008 was on a scale to stretch and break China's considerable disaster-relief plans. It was hugely encouraging to see this proud and often secretive nation acknowledging the scale of the plight facing its own people, and welcoming foreign help and support. Managing the Olympics, too, is already proving to the Chinese authorities that they can bend to the rough and tumble of international opinion and still remain true to themselves.

Much has been written about how China's liberalisation of business will lead inevitably to a more liberal political culture. I think that's true, though I suspect it will take a lot longer than the optimists would have us believe. I predict that free speech and open debate will be helped by the development of Chinese brands. Brands, remember, are about meanings. Every brand means something, and nobody can ever really control all the meanings a brand acquires. Brands are ideas. They are tangles of associations. They are dreams. In the developed world we live in such a brand-rich environment, we take their power for granted. I don't think that we should underestimate the power of the brand in China – as a force for change.

I come from a line of lawyers. My father was a barrister in the English legal system. I was probably the first in a number of generations not to go into law, but I understood the value and importance of protecting a good name. We have nailed Virgin's colours to the masts of many businesses, so every one of them must pull its weight with our customers.

The day-to-day survival of the Virgin brand depends upon all kinds of companies, and if one of our companies spoils your day, then that's the day more than just one Virgin company will suffer. That's the day you write off our TV service and look up another broadband provider. You open your wallet and there, poking out the top, is a Virgin credit card. Well, you're not going to be using that again in a hurry. You reach into your pocket to make your call and there, in your hand, is a Virgin mobile phone. You think to yourself: Was this thing such a great deal, after all . . .?

Whatever your brand stands for,
you have to deliver on the promise. Don't promise what you can't deliver, and deliver everything you promise.
That's the only way you'll ever control your brand. And beware:
brands always mean something
. If you don't define what the brand means, a competitor will. Apple's adverts contrasting a fit, happy, creative Mac with a fat, glum, nerdy PC tell you all you need to know about how that works. Even in the absence of competition, a betrayed brand can wreak a terrible revenge on a careless company. How many brands do you know that mean 'shoddy', 'late' and 'a rip-off'?

You see?

Easy.

And that's why our next chapter is all about delivery.

Special Delivery

Right now, I'm sitting in my daughter's home in London and the house has been busy all morning with visitors coming in to see me and talk about Virgin. I've already had several meetings with financiers, our bankers and a Swedish television crew making a programme about Britain. I've also taken phone calls from many of our managing directors and business partners. I've asked Nicola, my personal assistant, and other Virgin Management Limited people to fire off a volley of emails. There's been a list of invitations approved for a media launch. And last night, after flying in from Necker Island, I had a late-night supper with the singer Christina Aguilera, who told me how baby Max is doing and her latest music plans. I'm flying off to see the French president later this afternoon. Tomorrow we're heading to Mumbai to meet some Indian business figures from Tata, the industrial group, and then on to Japan where I'm speaking at an investment conference. We never sit around for long — unless we're on holiday. We thrive on ideas, but our day-to-day business is about delivery.

Good delivery depends upon many things. Two of the most important elements are good communication, and attention to detail. Neither of these essentials is difficult to understand or implement, so, naturally, they're often the first things we forget.

In the early days of Virgin Atlantic, I used to write regularly to all our people, telling them what was happening in the business. I'd jot down my thoughts in my notebook, make a few corrections, get someone to sort out my spelling mistakes and send it out to everyone. I thought letter writing was an important way of communicating.

This wasn't so easy as we grew larger, and because of Virgin's success and my subsequent fame, anything I wrote inevitably hit the press as a news story. So it became difficult to pen the unrestrained letters of the early days. Nevertheless, it is important for people running companies to write a regular letter to keep their staff in touch. And a personal letter sent to someone's home is, I think, still very much more appreciated than an email. Be brave: hand out your email address and your phone number. People aren't stupid, they know not to misuse it or badger you – and by doing so, you will be giving the people who work for you a massive psychological boost. In any event, regular communication by the leadership team is a must in any service business. So keep talking and keep explaining.

I now have a team of people who meet once a week to go through every Virgin company, looking at figures, projections and income. They have a list of priorities, and a list of new projects. They make sure that the Virgin Group is running efficiently. This frees me up to dive in and out when necessary. They know if there is something urgent, they can phone me and I can then focus on the things that really need my personal input.

Don't waste your precious time
. Phone calls and emails can eat your day. Don't let them. No one will think less of you for getting to the point. Because there are so many calls to make every day, I generally keep them very brief. And a short note to somebody is often quicker than a phone call. As the business has got bigger and spread across the globe, a lot is dealt with by short notes. However, I'm always willing to pick up the phone and talk directly to people if an issue needs resolving that way. There's no question that if you are trying to persuade someone to join you, invest with you, or make some changes, then it's important to speak to them directly and take the time so that they know what they must do. Face-to-face conversations are more efficient, and videoconferencing will always come a poor second to a shared pot of tea.

Recently I had lunch with Raymond Blanc. He's the owner and renowned chef of Le Manoir aux Quat'Saisons in Oxfordshire. The reason Le Manoir is so successful is that Raymond makes sure that every tiny bit of detail is carefully thought through. If you're running an airline, a restaurant or any other kind of company,
it's the attention to detail that really defines great business delivery
.

I'd advise every owner of a company to keep a notebook and jot down the things that need doing. If you're listening to staff or customers, then write down the main points. If you're visiting a factory or touring a new site or partying with your staff, use the notebook. When you're busy with a lot going on around you, if you don't write things down, I doubt you'll be able to remember one out of twenty items the next day.

Let me give you an example. The main reason why staff become frustrated is that the same problems and complaints keep cropping up and never seem to get properly sorted. On a recent Virgin Atlantic flight someone told me that the sugar had run out, not once, but on two or three occasions. Why were we not stocking more sugar? And why were we overstocking vegetarian dishes, so that people who didn't want this had no other option? These weren't major problems, and they were easily fixed, but someone somewhere has to make the call, the very next day, to sort them out. Otherwise we become the no-sugar airline. The healthy-option airline. Worst of all, we're the not-really-listening airline. And there are enough of them out there already.

I carry a notebook everywhere I go. Every blue moon I wax philosophical. But most of my entries are like this one, and these are the sort of dull, dreary,
absolutely essential
entries that everyone should be capable of writing, but so few do:
'Dirty carpets. Fluff. Areas around bow dirty. Equipment: stainless steel, grotty. Choice of menu disappointing – back from Miami, prawns then lobster (as a main course) in Upper Class. Chicken curry very bland. Chicken should be cut in chunks. Rice pretty dry. No Stilton available on cheeseboard.
'

I also noted that the duty-free trolley was going up and down the aisles without making any sales. I looked at the in-flight service report. Sure enough: no sales. Something had to be done either to encourage the passengers or to improve the sales opportunities (more likely, both), or get rid of the trolley altogether and save the weight.

But what's most revealing now – and most useful to you if you really are reading this for business lessons – is this note: '
Staff desperate for someone to listen.
'

Under this I jotted down an idea: '
Make sure flight staff reports are actioned IMMEDIATELY
,' and I'm pleased to say that they now are, and onboard staff get the action and feedback they need.

When we launched our routes to Japan, I knew that we needed Virgin Atlantic to pay particular attention to cultural differences and to the Japanese sense of respect and formality, without spoiling our offering. It's a fine balancing act. On the inaugural flight I added some more thoughts: '
Need slippers in Upper Class, not socks. Need Japanese beers. Only one kind of newspaper from London: English. Need Japanese too. Japanese tea from London, not good. Japanese food from London. Tastes good but must be better presented. Looks like fish and chips. Saucers for Japanese teacups.
'

I think company owners and chairmen should get out from behind their desks and go and sample their own products as often as possible. I do see many bosses doing their rounds speaking to staff, but they never write the details down. They will never, ever get anything sorted. And month by month, year by year, they will suffer the consequences.

*

Imagine trying to do a good job in the teeth of official opposition. Imagine being told constantly to cut corners. Imagine being rewarded for good delivery by having your business taken away from you and redistributed. Imagine winning market share and then being prevented from delivering more of your product.

In short, imagine the British government's railway regulatory system!

Communication and attention to detail can make your business run more smoothly, but saying this doesn't nearly convey their importance. As I think you'll see from the following account, good communications and attention to detail were what enabled us to do business
at all
, in what has to be one of the toughest sectors we've ever entered.

In January 1997, when we took over the first of our two railway franchises, we made a public promise to usher in new trains and lead a 'red revolution' for the travelling public – on the busiest train lines in Europe. It was my personal commitment to deliver on this. It has taken some time. Eventually, we were voted the UK's best train company in January 2008 by the Institute of Customer Service. This, in my opinion, was rather overdue, but gratefully received, nonetheless! Virgin Trains also topped the 'Passenger Focus' National Passenger Survey with a score of 86 per cent for customer satisfaction. And
Travel Week
, a trade magazine, declared Virgin Trains the best railway company, as voted for by the travel trade and travel agents. This string of tributes is principally down to all the Virgin Trains people who work day in, day out, often in fairly arduous conditions. It's also a great accolade for Tony Collins, the CEO of Virgin Trains, who has been a champion for the customer and staff, but a pragmatist about how difficult it is to run a railway.

I'm the kind of person – as most people will know from my ballooning escapades – who is willing to stick my neck out and take risks. When we launched the West Coast Main Line franchise on 9 March 1997, we said we would replace the whole fleet, and improve services and connections. We also promised new diesel Voyager trains on the CrossCountry networks which criss-crossed Britain. But it would take a number of years before we could deliver this. We had inherited the worst part of the system and to start with we had to make do with a lot of 40-year-old rolling stock and clapped-out engines inherited from British Rail. Some of the rolling stock was in a terrible state. My first action as proud owner of a new railway set was to sign a £10 million cheque so that we could get some spare parts to run the trains.

We steam-cleaned them, painted them and tarted them up as best we could. More than that, we kept them running, while promising our passengers a better service in future. It took time and a lot of pain and disruption. And we got a great deal of abuse from people who still didn't like the idea of the railways being deregulated and privatised after half a century of nationalisation.

The 401 miles of the West Coast Main Line from London Euston to Glasgow is one of the world's great railway journeys. As it heads north, the constant twists and turns of its gentle bends make it difficult for a train driver to build up a decent speed. Only tilting trains can counteract the terrain. It's really a misnomer to call it the West Coast Main Line because it touches the coastline only once, briefly, at a small strand near Morecambe Bay. It is an inland route, taking in concrete-encased Birmingham with its landscape of canals, factories and occasional dereliction, busy Midlands towns such as Crewe and Wolverhampton, and Border Uplands. In the 1920s, the opulent steam trains chugged out of King's Cross and Euston at 10 a.m. each day to race to the north. Virgin Trains was ambitious enough to try to re-create some of that lost glamour for the twenty-first century.

We felt we could transform Britain's rail network from the worst in Europe to one of the best. But for the Virgin brand not to be too damaged in the process, we would have to bring the public along with us. Innovation had to be the difference for Virgin Rail.

For the first few months of our franchise we examined all the technological possibilities. In May 1998 I flew out to Italy from London City airport to the Fiat Ferroviaria site in Turin, which is the train-making arm of Italy's largest private conglomerate. I saw the kind of stylish, well-constructed trains that we needed on the UK's dilapidated system. The innovation of tilting trains was explained to me, along with the complex relationship between tilt, speed and stability. Next day the journey from Turin to Rome was my first on a tilting Pendolino ETR 460. It was fast and smooth as it hit 150mph through the Piedmont countryside. When we returned from that trip I sat down with Will Whitehorn and the rest of the Virgin Trains team. I was wildly impressed, but I kept my head. I said: 'I want these trains to be the best there are – and the safest. I'd like us to look at what's available across Europe and elsewhere.'

As it turned out, I was right to be impressed: the Pendolino proved to be the best electric train anywhere, bar none. Its tilting system allows a skilled driver to control the train at speed with a huge element of safety. The trains can tilt by eight degrees on rail bends – you'll notice it, but it won't spill your coffee. An automatic warning system rings a bell in the driver's cab as he passes each trackside transponder. This sends a message to the driver saying it's safe to tilt, allowing him to increase the train speed from 85mph to 110mph. On straight stretches the permissible speed is 125mph – soon to be 135mph, and we built the trains to be capable of over 140mph, ready for the future if the track is further improved. It is the driver who has the feel of the train and learns its limits – but if the driver ignores any warnings the computer automatically applies the brakes.

We signed a deal worth £1.85 billion – at that time, my greatest ever financial gamble. The bogies of Fiat's Pendolinos would be adapted in Birmingham by GEC-Alsthom for Britain's narrower-gauge railway lines. (Alstom – the merged company dropped the 'h' – took over Fiat's train-making in 2002.)

Stagecoach transport group chairman Brian Souter is one of the UK's leading business figures and a 'transport entrepreneur' through to the bone. He and his sister, Ann Gloag, are a formidable pair: they started out in the bus and coach wars after deregulation before moving into trains. From their base in Perth – with Ann selling the tickets and cleaning the buses, and Brian driving some of the routes, they have transformed the company into one of the UK's corporate success stories. The business was sidetracked when it tried to expand into the United States by buying Coach USA, but through their own determination and drive, Stagecoach bounced back from this setback. As I write this in 2008, Stagecoach is one of the UK's most successful transport companies and Brian is still in the driving seat.