The Virgin Way: Everything I Know About Leadership (22 page)

Remembering my own struggles to find funding after I dropped out of school, this ingeniously simple concept certainly resonated with me. As supportive as my parents were during those first years, it was an incredibly challenging hand-to-mouth time and besides, even if your parents have the resources, no one really likes asking their family for hand-outs – but the government? Well, that’s a very different thing!

To everyone’s delight, in 2012, behind the efforts of Lord Young, the government formed a new non-profit called the ‘Start-Up Loans Company’, to provide financing to young businesses and appointed James Caan as its chairman. The company has since built up a network of more than fifty delivery partners who are lending money to new businesses all across the UK. To date, more than 15,000 businesses have borrowed over £80 million– an impressive feat by any standard. Through our bank, Virgin Money, we took part in a pilot programme last year, and have now
launched our own delivery partner, ‘Virgin StartUp’,
to help provide training and mentorship in addition to funding. Of course, this is not just an issue in Britain, governments all around the world should be working to figure out ways to put more capital in the hands of entrepreneurs in order to drive economic growth, broaden the tax base, and create jobs.

When one considers that in 2013 (according to the UK government’s ‘Private Sector Employment Indicator’) small businesses of ten to forty-nine employees accounted for ninety-nine per cent of all UK private sector companies and fifty-nine per cent of all private sector employment, it certainly is an incredibly fertile field in which to plant some new entrepreneurial seed money.

‘FEMTREPRENEURS’

As tough as starting a business is for everyone, special attention should be paid to young female entrepreneurs who, inexplicably, still face many more barriers to credit, markets and social networks than do their male counterparts. I say inexplicably because we know that women reinvest more of their earnings into the health and education of themselves and their families, which has a valuable multiplier effect from which we all stand to gain. Furthermore, according to the Boston Consulting Group, women make seventy per cent of household purchasing decisions and not just on children’s clothing and groceries but also the big-ticket items like cars and vacations. So given that almost fifty per cent of the workforce is now female and they are making seventy per cent of the buying decisions, what possible rationale or justification can there be for the comparative dearth of women in senior executive roles and boardrooms?

According to the European Commission, in the largest EU companies the ratio of female board members across member states averages only about fourteen per cent: the Italians are the worst with only six per cent while the French do better with twenty-two per cent. To try and redress (no pun intended) the balance, the EU is considering following Norway’s lead. Back in 2003, the Norwegians set a minimum target of forty per cent for women on boards and by 2008 and that number was up to an admirable forty-four per cent. The UK government meanwhile has tamely ‘recommended’ that British companies should have twenty-five per cent female board participation by 2015. Don’t hold your breath on this one – first of all it’s way too low a target and secondly it’s going to take something a lot stronger than a polite nudge from the government to break the very British ‘old boys’ club’ mentality at board level.

The focus on board gender ratios, though, is putting the cart before the horse. This is a step-by-step process and before anyone can hope to increase the amount of female representation at board level there first has to be a much higher ratio of women in senior executive roles. According to the 2013
Fortune
1000 list of CEOs, only 4.6 per cent (that is, forty-six) are women and that number has been virtually stagnant for a decade. I find that quite appalling but hopefully the infamous glass ceiling is about to become a distant memory with the new generation of dynamic women leaders that are now running a lot of formerly very macho organisations like General Motors (Mary Barra took over in January 2014), Pepsico, IBM, Lockheed Martin and General Dynamics. Others like Sheryl Sandberg, the vociferous COO at Facebook and Marissa Mayer at Yahoo are also gaining momentum in the drive to make gender a non-issue in the workplace. At Virgin we have our own powerhouse women leaders such as Jayne-Anne Gadhia at Virgin Money, Jean Oelwang at Virgin Unite and Cecilia Vega who has just joined us as CEO of Virgin Mobile in Mexico: but I’ll be honest and admit – we too still have work to do.

CORPORATIONS AND ACTIVE START-UPS

Whatever the gender, one question I get asked frequently is, ‘So what can established businesses do to help young entrepreneurs?’ One quick and easy option is to incorporate young entrepreneurs and their businesses into existing supply chains. On Virgin America flights, for example, our passengers are offered healthy snack foods made by passionate entrepreneurs, such as ‘Krave Turkey Jerky’, ‘Holly Baking Company’s Chocolate Chip Cookies’, and ‘Hail Merry Seasoned Nut Blend’. All three of these companies were started independently by young entrepreneurs who, after discovering they couldn’t find the food product that they wanted on the market, decided to go out and create it for themselves. A very familiar scenario in the Virgin story and the entrepreneur world in general!

In South Africa, the township of Soweto is one of Johannesburg’s poorest suburbs and, perhaps not surprisingly, it didn’t have a single health and fitness club. As a result, when Virgin Active announced we were opening one there it drew equal gasps of surprise and admiration from the local community. Better still, this was no cookie cutter club but was uniquely tailored to Soweto’s particular needs. It features such things as a DJ booth, and a boxing arena with commercial spaces for local entrepreneurs, including a hairdressing salon and even a car wash: in total the club has created more than a hundred much-needed permanent jobs. It is at the core of Virgin’s DNA to support and celebrate innovation and the spirit of entrepreneurship, but in order to reach true scale we need others to do the same. That means getting active and getting creative – nodding in sage approval of other people’s efforts or even the occasional donation of cash is fine, but without assertive action it doesn’t get it done!

MENTORING – FROM THOSE WHO’VE ‘BEEN THERE, DONE THAT’

When talking about the importance of mentoring, the American author and businessman Zig Ziglar couldn’t have said it any better – ‘
A lot of people have gone further than they thought they could because someone else thought they could
.’ Ask any successful businessman and, if they are honest about it, they will almost certainly admit to having benefited from the advice of a mentor at some point along the way.

I have always been a huge believer in the inestimable value good mentoring can contribute to any nascent business. As a young man entering the mysterious and somewhat scary world of business for the first time, I was lucky enough to be taken under the wing of David Beevers, a friend of my parents. David was an accountant and out of sheer kindness (and I suspect some desperate pleading by my mum and dad) he used to spend one evening a week trying to guide me through the basics of bookkeeping – it was hugely helpful and he displayed amazing patience with my repeated requests of, ‘Erm, can you run that one by me just one more time, please.’ I talk elsewhere about how much the late Sir Freddie Laker’s mentoring did for me with Virgin Atlantic and how greatly his down-to-earth wisdom accrued to my entire approach to business.

The first step to finding a good mentor, is of course, coming to terms with the fact that you actually can benefit from having one. Understandably there’s a lot of ego, nervous energy and parental pride involved, especially with one- or two-person start-ups – factors that tend to manifest themselves in a cocoon-like state of mind where, ‘Only I/we get it and nobody else can possibly help make this thing work’. Trust me: they can and they will. Going it alone is an admirable but foolhardy and highly flawed approach to taking on the world.

Just look at the high-fliers who have sought out mentors. Steve Jobs’ variant of my Sir Freddie was former Intel manager Mike Markkula. His investment of $80,000 in equity and $170,000 as a loan earned Markkula a one-third share in Apple but it was his role as what Jobs called the ‘adult supervisor’ that was by far and away his greatest contribution to keeping the unruly Apple youngsters on track. At Google, Larry Page and Sergey Brin brought in a similar overseer in Eric Schmidt (formerly of Sun Microsystems and Novell) who was appointed CEO when they realised the company’s explosive growth was outstripping their ability to manage it. Schmidt’s greatest contribution was building the corporate infrastructure needed to maintain Google’s frenetic growth.

So please, take it from me: no matter how incredibly smart you think you are, or how brilliant, disruptive or plain off-the-wall your new concept might be, every start-up team needs at least one good mentor. Someone, somewhere, has already been through what you are convinced nobody else has ever confronted! Okay, so their version may have been analogue rather than digital, but trust me, many of the business fundamentals are exactly the same. Building a new business takes more than technological skills and creative genius – it needs people, and if you’re going to create a great culture as well as a great product, those people need tending to in a plethora of different ways

RENT A MENTOR

If you are going to be bold enough to go into business for yourself then you should have no qualms about seeking out the dream mentor. If you have someone you admire that you think will understand your objectives, whether it’s a friend of your family’s, an old university professor, a local businessperson or even a senior executive from a multinational company, then be bold and go for it.

Phil Drolet at Entrepreneur.com suggested that, ‘
An ideal mentor will have achieved what you want to achieve and be someone who you could see yourself going out for a drink with
.’ Just be sure and offer to pick up the tab when you do! But seriously, if they are the right choice, the chances are they are going to be extremely busy too, so Drolet stressed the necessity to respect a mentor’s time by following up with well-crafted and concise emails and not expecting them to do all the work.

Most people – as Sir Freddie was with me – are flattered when a young, enthusiastic entrepreneur comes seeking the wisdom of their advice and counsel. The worst that can happen is that they fail to respond or just say no, which falls into the category of ‘nothing ventured nothing gained’ – one that every good young entrepreneur will quickly become very familiar with!

In many ways starting a company is akin to having your first baby – it’s an exciting and slightly terrifying experience. When the first child coughs or cries too long, your natural instinct is that something’s terribly wrong and you want to take them to the doctor. With the second child you’ll say, ‘Don’t worry, it’s only a cough’ and by the third it’s already a case of, ‘Darling, did you hear something just then?’ The right mentor will probably have raised a bunch of infant ventures and be able to smooth your way through the teething troubles that every young company experiences. They will help you and your team members navigate your way through those seemingly overwhelming (and often daily) early-stage crises and later, all being well, still be there to coach you through the equally daunting process of an orderly – as opposed to runaway-train – expansion process.

Later, if you have successfully negotiated the start-up years and perhaps had someone mentor you along the way, are you ready to pay some of it back by assisting local social entrepreneurs? If so, take a look at your own business or the company you work for: do you and your team have the skills and the energy that would be valuable when helping others? If so, could you perhaps find new partners and take on a new sector? Alternatively can you carve out some time to invest in helping a non-profit tackle its tough first few years?

I can assure you, it will be time extremely well spent and whatever time and energy you invest will come back to you in what I have certainly found to always be true win-win experiences. The leaders of the future have got a lot going for them but are always going to need all the help they can get from the elder statesmen who have been there and done that.

When it comes to finding the right mentors I can think of no better example than what we have achieved with all of our mentor/partners at Virgin Unite over the last decade.

Virgin Unite is a foundation that alongside all kinds of amazing partners, brings together the best of entrepreneurial spirit with ideas that help to tackle some of the tougher social and environmental challenges around the world. We’ve worked with our partners to create leadership collaborations like the Elders, the Carbon War Room and the B Team. We’ve also had the privilege of working with some inspirational young entrepreneurs through the Branson Centres for Entrepreneurship and a global mentorship platform that helps connect successful entrepreneurs with those just starting out.

We created Virgin Unite based on the principle that business can and must be a force for good – so much of our work has also been leveraging the wonderful people and assets we have in our family of businesses to change business for good. Most importantly, as the name Unite suggests we always seek out the best local or multinational partners: no matter how big you are, going it alone is seldom, if ever, a viable option. And as we have found, particularly with the Elders, a good mentor can be an amazingly telling mirror and can also open a lot of doors that previously looked impenetrable.

Driving the chariot

Growing up in England, history was one of my (very few) favourite subjects at school. TV heroes like The Lone Ranger were fine to a point, but the people we learned about in history lessons were for real. Great British explorers like Sir Francis Drake, Sir Walter Raleigh and Scott of the Antarctic filled my head with dreams of far-off conquests, and to this day I still love reading about and learning from past visionaries who were unwilling to accept the established boundaries of their times.

TERMS OF ENGAGEMENT

One area in which all these great leaders past and present behave very differently is their degree of personal involvement when it comes to engaging with the enemy – or, in polite business parlance, that would be ‘the competition’. Some prefer to have their ‘people’ manning the barricades or leading the charge while others, myself included, love nothing better than jumping into the trenches for some good hand-to-hand combat with the opposition. Okay, maybe I am getting a little bit carried away as the commercial world pales somewhat in comparison to the physical risks taken by my history book heroes, but there is a lot of common ground in what leading from the front-line does for the morale of one’s troops as well as the message it sends to the other side.

When it comes to leaders being prepared to put themselves out there, my greatest all-time idol has to be Admiral Horatio Nelson and in particular his heroic last stand at the Battle of Trafalgar – which as every good British schoolboy can tell you, took place in 1805. Even in the heat of battle Nelson’s way of operating was to fearlessly position himself (in full naval dress uniform – there were no camouflage fatigues back then) on the poop deck and, quite literally, put himself directly in the line of fire. The brave admiral did, of course, pay the price when a musket ball from a French sniper duly dispatched him to a heroic death. Nelson was truly a leader who led by inspired example and who would never ask anything of his men that he was not prepared to do himself.

I have often wondered how differently history might have viewed the story of Trafalgar had the good admiral somehow managed to direct the same great naval victory from the safety of his cabin below decks. How much would the same outcome have lost in the telling were it deprived of the heroics of a leader who laid down his life for the cause? We’ll never know for sure, but I seriously doubt I would be writing about Nelson 200 years later had he died quietly in bed instead of by taking that musket-ball for the team!

And having already just addressed the subject of women in the boardroom, I really should also give equal coverage to women on the battlefield. The greatest British female hero that we studied in school was the legendary Queen Boadicea who, between 61 and 63
AD
, led an uprising in East Anglia against the occupying Romans. She almost pulled it off but was finally outmanoeuvred by the superior military might of Rome’s armies. Her place in history was secured, however, and she is immortalised with a huge bronze statue near London’s Westminster Bridge that shows the warrior queen – accompanied by her two daughters – fearlessly driving her two-horse chariot into battle!

History abounds with tales of military leaders who died bravely for their countries although not always wisely, and here there can be few better examples than the infamous Charge of the Light Brigade, immortalised in Alfred Lord Tennyson’s poem of the same name. This is something else that most British schoolchildren of my generation had to learn in English class, although, ‘Half a league, half a league . . . ’ is about all I remember today. The infamous charge took place in 1854 during the Crimean War when a miscommunication from well behind the lines sent 673 lightly armed British cavalrymen thundering to their deaths down the
wrong
valley. As with Nelson at Trafalgar fifty years earlier, their leader, one Lord Cardigan, died there alongside his men. Unlike the glorious victory at Trafalgar, however, this was a misbegotten adventure that sent the doomed sabre-wielding cavalrymen riding into ‘the valley of death’ where they were confronted by a deeply entrenched Russian heavy artillery battery.

In warfare as in business there is often a very thin dividing line between courageous success and foolhardy failure. While history tells it that the Light Brigade never stood the slightest chance of success, had Cardigan’s horse-soldiers miraculously managed to pull off an against-all-odds victory they would surely have been memorialised with something more significant than a poem dedicated to their needless demise.

CORPORATE COURAGE

While it still demands courage aplenty, leading the corporate charge in today’s dog-eat-dog business world is thankfully nowhere nearly as hazardous as it was in Cardigan, Nelson and Boadicea’s days. Nevertheless, when it comes to morale and team building with one’s own troops, few tactics have a more positive impact than a leader who is prepared to drive the corporate chariot and put himself or herself right there in the front lines, fearlessly staring down the enemy.

It was exactly 130 years after Lord Cardigan’s misadventure that one Richard Branson, music industry executive, announced that he wanted to get into the commercial aviation business. Based on the stunned reaction of my partners and colleagues at Virgin Records, you would have thought I was about to charge into my very own ‘valley of death’. They were convinced I had totally lost my marbles. Not unjustifiably, they were terrified by the immensity of the financial risks involved in such a capital-intensive industry, and believe me they used a lot of choice words to let me know just how they felt about such a lunatic venture. Not least they quite correctly observed that, other than as an (economy-class) paying-passenger, my knowledge of commercial airlines hovered right around the zero mark. So, without backing down, I decided it would be smart to talk to someone who did know the space – and quickly – before I got in way over my head.

WITH A LITTLE HELP FROM MY FRIENDS

Sir Freddie Laker was a British aviation maverick turned guru and an utterly fearless example of an entrepreneur who could also be a great leader. If you were born after 1960, Freddie’s name maybe doesn’t ring a bell as his ground-breaking Laker Airways was driven out of business in 1982, and even more sadly Freddie died in 2006 at the way-too-early age of eighty-three. A lifelong entrepreneur par excellence, Freddie was one of the greatest innovators of twentieth-century aviation and an utterly inspirational human being.

Freddie invented what today we’d call a ‘low-cost carrier’ and in the process, made transatlantic air travel an affordable reality for a vast new cross-section of consumers. He was a swashbuckling hero whose larger-than-life personality, street smarts and indomitable good humour made him a standout leader in what at the time was a moribund industry desperately in need of someone to take it in a new direction.

Freddie was a pragmatist; even his basic business plan for ‘Laker Skytrain’ was pure common sense. The big airlines of the day were all flying the Atlantic with high fares and half-empty airplanes. Freddie calculated that if he were allowed to break the big airline stranglehold he could slash existing fare levels by fifty per cent or more and not only fill his fleet of wide-bodied DC-10s but grow the market in the process – maybe even double it! And despite the best efforts of the establishment to shut him down before he got started, Freddie eventually achieved both.

After five years of competitive and political stonewalling, Freddie’s revolutionary Skytrain scheduled air service finally took off in 1977. It heralded a new era in air travel with ‘walk-on’ service – initially there were no reservations – that meant that just about anyone could afford to fly from London to New York. At around $135, a transatlantic ticket on Laker cost the same as British Airways and Air France were charging for a flight from London to Paris. And when you mixed in the fact that, even at these unheard-of fare levels, with his low operating costs and in-your-face-marketing stunts Freddie could also turn a profit, then it wasn’t surprising that the incumbent carriers didn’t hail his coming quite as lustily as did the man in the street!

In the stuffy world of 1970s’ aviation Freddie was a tour de force, a one-of-a-kind salesman and an utterly unabashed showman. For a time his image was everywhere; his ever-smiling face appeared on the covers of
Newsweek
and
Time
magazine in the same week. With the press, Freddie was always available and ready with an insightful comment or a fun anecdote and so they adored him – as did his rapidly expanding and intensely loyal band of customers who revelled not only in the low fares but also the excellent service doled out by Laker‘s band of customer-friendly employees, features that in those days were anything but the norm in commercial aviation!

If this is starting to sound at all familiar you may have realised where I am going with this as to just how much Freddie’s trail-blazing helped influence my views – not just on how to run an airline (or not!) but on just how far bold, hands-on leadership can propel any business.

Sadly, Laker Airways would eventually be killed by its success. The early eighties were a tough economic time for all airlines and Freddie’s upstart Skytrain, which had quickly grown to become one of the largest operators across the Atlantic, was becoming a serious thorn in the sides of the establishment carriers. While Freddie was also now losing money, his airline was actually (to double my negatives) in a much less unhealthy state than UK-taxpayer-funded British Airways.

In February 1982 Laker Airways was driven out of business when BA led a pack of ailing major airlines that threatened retaliatory action against several institutions that had agreed to prop up Laker’s sagging finances. Absurdly, rather than supporting the free enterprise they were supposed to champion, Maggie Thatcher and Ronald Reagan jointly turned a blind eye in their blinkered quest to do whatever was necessary to help save their failing flag carriers. As it turned out it would be a case of ‘too-little too-late’ as British Caledonian, Pan Am, TWA and others would eventually also fail, albeit of no real consolation for Freddie who had been robbed of his life’s work.

So, in late 1983 when I searched out Freddie and confided in him that I wanted to pick up where he had involuntarily left off, I found an ally who was uniquely qualified – and highly motivated – to mentor me with a treasure trove of invaluable advice. Not one known to mince words, he came out swinging with ‘Sue the bastards!’ as his counsel on how to deal with British Airways should they ever try to sucker-punch Virgin in the same way they’d knocked him out of the skies. Needless to say, I followed this advice to the letter and as a result won the biggest libel action in British legal history against British Airways over their so-called ‘dirty tricks’ campaign.

As it turned out, however, it would be another piece of guidance from Freddie that would change my approach to business for ever, and with it, the way we set about taking the Virgin brand down hundreds of new and diverse global alleyways. When discussing the challenges a penniless start-up faced in attempting to go up against the colossal advertising and marketing budgets of established competitors like BA, Freddie looked me in the eye and said, ‘Listen, Richard, you’ll never make even a dent in their armour with traditional marketing methods. I learned early on that you yourself have got to get your arse out there. Be visible, take risks, get creative, make yourself heard and take the fight to them before they bring it to you. If you can’t find ways to generate a lot of attention through free ink they’ll eat you alive.’

THE BEST FORM OF DEFENCE  . . .

The infamous American bank robber Willie Horton once responded to the question ‘Why do you rob banks?’ with a tongue-in-cheek, ‘Because that’s where the money is.’ Well, in our case, if we were going to steal passengers away from other airlines then British Airways was where most of them were to be found, and this made them a natural target for some good-natured kidnappings – aka ‘diversion of market share’.

As fate would have it, one of our fun assaults on BA was inspired by a throwaway comment made by their chairman Lord King when he publicly referred to me as a ‘pirate’. When I read this I was actually more amused than miffed, and it might have been swept under the carpet had I not mentioned the comment to John Caulcutt, whose company Watermark worked closely with Virgin Atlantic on everything from in-flight giveaways to outrageously creative promotions. Hearing Lord King’s comment, John laughed and with a mischievous twinkle in his eye said, ‘Really! Well, we’ll have to do something about that, won’t we.’ And so John set about hatching a plot whereby we’d make Lord King’s ‘pirate’ comment come true. We huddled on what would be an appropriate counter-attack and in true buccaneering fashion decided plundering BA’s flagship, their huge Concorde model at the entrance to Heathrow Airport, would be fair game.

On our first reconnaissance trip to Heathrow, we were taking measurements to make a Virgin logo that would fit over Concorde’s tail: John was holding one end of the tape measure and I had the other. What we hadn’t realised was that the building just above us was the local police station and those ‘spotlights’ on the ground were in fact security beams! Within minutes the boys in blue were upon us, demanding to know what exactly we were playing at! The ever quick-witted John blurted out something to the effect that I was so in awe of what BA had built that I’d asked him to build me one. Surprisingly they thought this a plausible story and we were back on our way!

It turned out that this near mishap was valuable as it taught us that for the actual hijack (when we planned to cover the BA tailfin with a Virgin logo) we’d have only minutes to complete the task before we could expect another visit from security. The customised plastic tailfin would have to fit instantly or it could blow the whole thing: likewise the sticker that would cover ‘We Fly to Serve’ with ‘Virgin Territory’ had to be an equally rapid fix or we’d risk the Virgin brand being embarrassed.