Business Stripped Bare Page 11

  The combination of strong and independent management, the brand, great delivery and ambitious staff has been a real recipe for success. In an industry which has had its difficulties, we have continued to grow both in the UK and internationally.

  Our big break, for example, was the acquisition of South Africa's Health and Racquet chain, which catapulted the business from a small UK operator to the leading player in South Africa.

  Many of our successful businesses have been built from the ground up – employing new people rather than converting existing companies. However, in the case of Virgin Active, we have been able to do both. It is a credit to the management team that we have been able to buy clubs in Spain and the UK, and rebrand them and re-energise staff to do things the Virgin way.

  The takeover of Holmes Place in the UK – for so long one of the leading health-club brands – is a great example. Matthew and Patrick McCall saw an opportunity to reinvigorate the business and give it the Virgin treatment. Conscious that we would want to spend money rebranding and updating the clubs, Patrick persuaded the investors in Holmes Place to take shares in Virgin Active and come along with us for the ride.

  One of these was Bridgepoint, who had been our partners in the earlier development of Virgin Active and had sold out once but were now happy to reinvest at a higher price. I think they would have been pleased – today the company is one of the top three health-club chains in the world and it is currently expanding in Italy, Spain, Portugal and Dubai.

  Virgin Active still retains that spirit of entrepreneurship, independent thinking and commitment that first attracted us, and has built up a strong brand in its own right. To me, it is proof of how if one picks the right management – and gives them autonomy and resources – they will create a world-class business.

  We've never let a Virgin company go bankrupt even though we've had one or two companies that we'd like to have seen the back of. Because our reputation is everything, we've always paid off the debts of any company we own that has had problems. And we move on.

  We move on. Easy to say: harder to do. And that's why you need honest people around you.

  A few blunt ones don't hurt, either. In 1996, Gordon McCallum put my nose right out of joint. I'd asked him for an honest assessment about the Virgin Group. He told me Virgin was fundamentally a parochial British brand and needed to be stronger in other, international markets in order to be truly global. I felt like a schoolboy being handed a 'must try harder' term report.

  Today, while we retain our footprint in the UK, we are looking further afield for our opportunities. We've chosen twelve countries which we believe are ripe for development, based on their population, the income of their consumers, the awareness of our brand and the ease of doing business.

  So far we've enjoyed success in the United States, Canada, Brazil, France, Italy, Spain, China, India, Japan, Russia, Australia and South Africa. Now, like so many other businesses, we're turning our attention even more to China and India. I'll round off this chapter, then, with a few thoughts about how we hope to leverage the Virgin brand in these culturally complex territories.

  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 professio
nals 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.

  3

  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. W
hy 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.'