The Virgin Way: Everything I Know About Leadership (12 page)

An aversion to the average

Several years ago I remember being given a Virgin baseball cap to wear at some promotional event in the US. When I tried to put it on it was way too tight for me, so risking the inevitable jibe about my head getting too big, I politely asked if I could please have a larger one. The response I got was so utterly nonsensical that it has stuck with me to this day – ‘Sorry, Richard, but these are “one size fits all” caps, so it should fit you.’ Wrong!

Unfortunately for consumers – and luckily for entrepreneurs looking for opportunities – it’s not just baseball cap manufacturers who take such an incredibly blinkered approach to their consumers’ real needs. Unless you are talking to a roomful of automatons, one size will never fit all of anything or anyone! I may not have been very good at mathematics at school, but I did learn enough to know that catering strictly to the average anything means that, to varying degrees, everyone else on either end of the scale is being seriously compromised.

DO THE NUMBERS ADD UP?

At the time of our two biggest ventures into transportation –Virgin Atlantic and Virgin Trains – both industries had countless similarities. Commercial aviation was in pretty dire straits and in desperate need of a fresh and creative makeover, and the crumbling segment of British Rail that we inherited with the West Coast Line was in a state of utter decay and on the point of collapse. The only saving grace with rail was that with the old nationalised British Rail system, the travelling public had become so completely inured to dreadful service being an inescapable fact that any changes we made could only make things better. In the sky, commercial aviation was not quite as bad as on the tracks but service was generally lacklustre and overpriced.

As a complete neophyte to both businesses (other than as a disgruntled passenger), I was the one continually asking our employees the seemingly silliest of questions. On the one hand I genuinely wanted to learn how things worked, but on the other I also wanted to be sure that we were seizing every opportunity, big and small, to do things better. The response to my questions would often be a resigned, ‘Okay, Richard, if you really want to know, getting to XYZ is a simple matter of two plus two making four.’ When I saw for myself that the numbers did add up then I was happy; I’d learned something and occasionally we’d even agree that perhaps 3+1 might be a more interesting way than the standard 2+2 to arrive at the same number. Other times, however, the response would be one of, ‘Two plus two makes . . . er, uhmm, sorry, that’s strange – it always used to add up to four but I keep getting five as an answer now. I’ll take another look at that one and get back to you.’

One such example was in the early days of Virgin Atlantic when I found out we were planning to use the ‘typical’ crude old rubber tube headsets for listening to on-board movies that were the standard at the time. With the music industry just getting into Walkmen and electronic headsets, it struck me we could be the first to take a giant leap in inflight entertainment sound quality if we went electronic. When I suggested we look into it I was immediately told that it would be too expensive and wasn’t something our budgets would allow. Undaunted, I asked our on-board product person (at that stage it wasn’t yet ‘people’) to take a look at it and then, on a whim, said, ‘And while you’re at it, see what it would cost to give the electronic headsets away at the end of every flight.’ With our logo on them it struck me that they could be a great way to spread brand awareness if we got people using Virgin Atlantic headsets on their personal Walkmen. I think they all thought I was absolutely nuts but agreed to humour me and take a look at it.

What came out in the end was quite remarkable. We discovered that giving away the electronic headsets after every flight was actually marginally less expensive than recycling the old-style rubber ones. The time, effort and cost involved in collecting them back, repairing, cleaning and repackaging them was substantial and after all that the passengers still had to live with uncomfortable spaghetti-like tubes that had terrible sound quality to boot. Before long you would see our headsets popping up all over the place and I even recall an American business traveller telling me that his teenage kids encouraged him to fly Virgin because they loved the headsets he brought home after every trip. A good example of finding better solutions for the same or less cost simply by always asking how it can be done differently. I don’t think I admitted it at the time, but frankly I was expecting to be told that the new headsets would be way too expensive!

So the moral here is that while curiosity may not be good for cats, for business leaders it is a very healthy and often a very productive trait. And when two and two does make four I have always found that it makes your people feel pretty good about themselves when they get an opportunity to show off their know-how to ‘the boss’ with a discreet ‘I told you so!’

When we started Virgin Atlantic in 1984 I remember a hard-bitten
New York Times
aviation correspondent almost sneeringly asking, ‘Why on earth, Mr Branson, could you possibly believe that the world needs another airline at a time when the typical carrier is struggling to survive?’ I think he was more than a little surprised when I started out by agreeing that, ‘You’re absolutely correct. So you can take it from me that this is precisely why there will be nothing “typical” about Virgin Atlantic.’ The man’s thinly veiled smirk indicated that he clearly didn’t believe a word of it, but for thirty years now, what someone once dubbed ‘The Little Airline That Could’ has surprised a lot of sceptics by refusing to become just another airline.

HORSES FOR McCOURSES

It is pretty well known around Virgin that as a matter of principle, even with things that are better than average, I have always refused to rank anything as a perfect ten. The irrefutable fact is that no matter how good something might be, there is always room for improvement – and furthermore, as my father used to love to say, there are also ‘horses for courses’. By this I mean that no matter how well something may work in one marketplace, there are very few products or services that will be as well received in New York as they are in New Guinea.

There are, of course, notable exceptions to this with Coca-Cola and Apple probably topping a very short list. But even such iconic staples as a McDonald’s ‘Big Mac’ doesn’t always stand up to a global taste test. In India, for example, a predominantly Hindu nation where beef is not eaten, they were forced to rethink their benchmark burger. I discovered this for myself when on a business trip to Delhi I once made the mistake of asking for a Big Mac and was very politely told that I could have a ‘Chicken Maharaja Mac’ or a ‘McAloo Tikki Mac’, which I was informed featured ‘a meatless patty of potato and peas’. As I recall, I ended up doing what I should really have done in the first place and went somewhere else for a curry. It did stick with me, however, that to take their show on the road, even a megabrand like McDonald’s can, on occasion, be forced to ‘think outside the bun’.

APPLE SEEDS SALES

Another brand that is anything but typical in its approach to every element of doing business is Apple. Steve Jobs’ fanaticism for product design and detail was (and still is) seamlessly visible all the way from technical form and function to packaging to the Apple Stores. And boy, has it ever paid off – there is nothing remotely ‘average’ about an Apple Store. I find the shopping experience there to be a disarming cross between visiting an art gallery and some form of an electronics exhibition that has been stripped of everything but the coolest and best the business has to offer. But as is always the case in every field of endeavour, it is not just the store design or the ‘stuff’ that makes for an exceptional service experience, it is the people providing the service.

In 2012 the research firm ‘RetailSails’ reported that in the US the annual average sales per square foot in mall-based retail stores was $341. Not surprisingly, perhaps, Tiffany, the iconic jeweller’s, was second highest in the country with $3,017 per square foot – nine times the national average. But the runaway leader was Apple with an astounding $6,050 in sales per square foot of store space. According to another retail analyst Asymco, that sales number broke down to a quite remarkable $57.60
per visitor,
of which around $12 was profit. Simply incredible numbers indeed but why, you might ask, am I so intrigued by them? Well, because even with a great product line like Apple’s, fantastic results like this don’t just happen – they are a direct consequence of something behind the numbers the techy analysts tend to overlook: excellent and plentiful customer service supplied by real people!

Walk into any Apple Store in the world, as I did on a recent visit to New York City, and you will usually find the place is swarming with people. Look a little bit more closely at the make-up of the crowd, however, and you can’t help but notice that almost every other person is wearing the distinctive blue or red polo shirt of an Apple ‘sales associate’. They’re everywhere! On walking in, there’s usually at least one of them there to smilingly welcome you and
discreetly
(which is a vital part of the process) ask if they can help in any way. But it’s not just the sheer number of assistants that’s so outstanding – it’s the people themselves. I have never failed to be impressed by the fact that Apple seems to have truly nailed the vital skill of picking great people to work for them: something that I can unashamedly claim is also the number one secret behind Virgin’s success. And as cool (and hot) as Apple’s iPads, iPhones and the rest of their product line most certainly is, unlike a lot of boutique hotels I’ve experienced, Apple doesn’t exclusively have a bunch of skinny ‘twenty-something’ dudes working there. In recognition of the fact that their customer demographic spans every age group from pre-teens to pre-octogenarians, their staffing is equally diversified. In the New York Apple Store I was helped out by a bearded sales associate who must have been almost as young as I am – really!

Contrast the Apple customer service experience with that of the ‘typical’ retail store – that’s the genre that takes in an average of just five per cent of Apple’s sales – and one has to wonder if their needle-in-a-haystack approach to staffing levels might have something to do with their comparatively miserable sales statistics. I am no retail sales analyst, but according to Asymco, Apple tripled its average sales associate-per-store count from thirty-seven in 2007 to 117 in the first quarter of 2012. And if that seems excessive, just consider that in 2012 at their more than 300 stores around the world, those Apple employees brought in a phenomenal average of $473,000 per person! That seems to me like almost half a million reasons to make sure that you always have enough, or even more than enough, well-trained, personable sales people on your shop floor, phone lines or wherever you have a customer interface, to ensure that your clients experience great customer service every time they come into contact with your people. Having a great product like Apple’s certainly helps, but the icing on the cake is having great people in the front line. Get that part of the equation wrong and ‘typically’ poor customer service can undermine even the best of atypical products.

We saw an example of precisely this phenomenon at Virgin Atlantic some years ago when Continental Airlines launched a new business-class cabin that bore a, how shall we say,
‘
striking resemblance’ to our Upper Class cabin and service. If imitation is the sincerest form of flattery then we should have been extremely flattered. Not only were all the cabin features virtually identical but they had even copied our on-board catering right down to things like a cheese tray and scones with clotted cream and strawberry jam! While they’d done a pretty good job of copying the hardware, what they’d failed to learn was the importance of the software, as in our cabin crew’s ability to breathe something extra into the whole experience. We lost a few of our regular passengers to the new Continental service for a short while but after one or two trips they were mostly back with us telling us, how much they had missed our people.

LOYALTY IS HARD WON

If there is one thing I have learned from our range of businesses over the years it’s that
true
customer loyalty is not something that can be bought and retained with bribes like frequent flier miles or occasional discount coupons. If you want to differentiate your products and services from the typical fare served up by your competition and earn the loyalty that tends to tag along then you have to recognise that your most important customers are the ones that are motivated by atypical incentives. And I am not just talking about the standard fare that Customer Relationship Management (CRM) systems can predictably facilitate. Generating employee and consumer loyalty are both about the same thing – creating a level of engagement that supersedes what’s in the paycheque or the bonus loyalty plan points. The other day, for example, I heard about a young entrepreneur who had arrived one morning at the Virgin America counter in Portland, Oregon – he was in a state of utter panic. He’d been up most of the night preparing his presentation for a big investor and had somehow managed to oversleep. His Virgin flight from Portland to San Francisco had left already and there weren’t any other flights to SFO that would get him there in time for his pitch of a lifetime. Rising to the challenge, our team rallied and rushed him on to a Los Angeles flight with what they described as a ‘technically impossible’ connection to San Francisco. To say it ‘would be tight’ was an understatement as his flight from Portland was scheduled to arrive in LAX a couple of minutes before the San Francisco airplane was due to leave. But our people knew the two trips were usually on not-too-distant gates and as the passenger had no bags it might just work – certainly sitting in Portland wasn’t going to achieve anything! They assigned the passenger a seat at the front of the plane and told the flight crew as well as the ground crew in LAX what was happening. The pilots played their part and managed to get them to Los Angeles seven minutes early. He was met at the door by a Virgin America agent who rushed the anxious young man to his connecting gate with all of two minutes to spare – the pilot and crew on the next flight even congratulated him as he stepped on board! The icing on the cake was when we learned later that he had made it to his pitch with minutes to spare and it seems it all went well.