Business Stripped Bare Page 6

  Incredibly or not, Virgin has thrived by weaving its magic through many seemingly unrelated sectors. Between 2000 and 2003, Virgin created three new billion-dollar companies from scratch, in three different countries. Virgin Blue in Australia took 35 per cent of the aviation market and reduced fares dramatically. Virgin Mobile became the UK's fastest growing network. Virgin Mobile in America was America's fastest ever growing company, private or public. Our revenue per employee – $902,000 – is the best in the world, and we've got the highest customer satisfaction record too, with 95 per cent of our five million customers recommending us to a friend. Over the last thirty-five years we at Virgin have created more billion-dollar companies in more sectors than any other company.

  And right now, as everyone is battening down the hatches and preparing for the twenty-first century's first really big global recession, Virgin turns out to be ready for the storm as well. Because its risks are spread, the failure of one part – even a major part – will not ruin the whole. (Imagine if we hadn't diversified and if we had just stuck with the record and music industry, which today faces huge challenges because of the digital download revolution – we might well have disappeared!)

  So here's the question: if Virgin has more fun when times are good, and weathers well when times are bad, why doesn't every company try to 'do a Virgin'? And why are the business teachers still telling young entrepreneurs to stick to what they know?

  Well, I think the business teachers are right. You should focus on what you know. You should also focus on what gets you up in the morning. And for most people, that means you should focus on one core business.

  The odd thing about Virgin – and this is what people often have difficulty with – is that Virgin's particular focus made it absolutely imperative that it diversified into many businesses. Contrary to appearances, Virgin is as focused as any great company. Its oddness comes from what it focuses on. We might have hit upon the exception that proves the rule: our customers and investors relate to us more as an idea or philosophy than as a company.

  Virgin's success upsets people because it seems to contradict the wise rule that you should stick to what you love. Where's its focus? Where's its centre? Something must be getting that Branson bloke out of bed in the morning – but what the devil is it? We thought it was music, but then it was air travel, which we sort of understood because of his ballooning, but then it was trains, money and mobile phones, and what is it now? Healthcare? Space? Oh help!

  I've never made any secret of what gets me out of bed in the morning. It's the challenge. It's the brand. Maybe it's something to do with my surname. I remember a journalist from the Daily Telegraph magazine did some research into the root of my name and discovered that, yes, 'Branson' was originally 'Brandson': my distant ancestors made their living branding cattle!

  For me, the brand is central. Whenever I say this to people, however, an awful lot of them feel their eyes misting over. 'What the devil does he mean, the brand?'

  I'll try to explain. Let's start simply with a quick sketch of what a brand can do.

  IPC, as we know, publishes magazines. What I want you to do is name three of its titles. If you're in the industry, you'll have no problem reeling off a dozen. (They're very successful.) If you're not in the industry, you won't have a clue. Why would you? The IPC brand means plenty to the industry, but nothing to the punter. The punter wants the flavour, tone and content of the magazine, not its purse-holder. The punter cares about the magazine's brand; the owner's brand would merely get in the way.

  Who published the last novel you read? Which production company made the DVD you watched last night? You probably don't know, the companies know you don't know, and you know what? – nobody minds.

  Brands exist as a means of communicating what to expect from a product or service – or to highlight the family likeness between different products and services. An established brand on a new product is a guarantee that what you're getting will be, in its own way, like something you've enjoyed before. This is not always a good thing. Readers of Mills & Boon romances may want the same kind of story again and again; families look forward to taking their kids to see the new Pixar movie, regardless of whether it's about animals, toys or cars. On the whole, though, novelty and discovery count for a lot in the entertainment sector, and the last thing you want to do is stick some galumphing great label over everything you do, suggesting to your audience that your new thing is just like your old thing.

  At the other end of the spectrum – perched in splendid isolation in the far, far infrared – there is Virgin. The Virgin brand tells you that using this credit card is rather like using this airline, which, in turn, is rather like using this health spa, and listening to this record, and paying into this pension fund.

  What's the family resemblance? What resemblance could there be between these diverse goods and services?

  Pretty obviously, it has something to do with the customer, because when you look at the range of things we're involved in, the customer is about the only factor common to all of them.

  And that really is all there is to it. The Virgin brand is a guarantee that you'll be treated well, that you'll get a high-quality product which won't dent your bank balance, and you'll get more fun out of your purchase than you expected – whatever it is.

  You see, what gets me up in the morning is the customer, and the idea of giving the customer a good time. No other brand has become a 'way-of-life' brand the way Virgin has. And we achieved it, not by clinically deciding one day to become a way-of-life brand, but simply by following our appetites and the things we were curious about. I've always and continually been interested in learning new things and, equally important, I've always wanted to share what I learned with other people.

  Should you follow the 'Virgin formula', and focus your company around the customer's experience? Probably not. Not unless your heart's really in it. Not unless, like me, you wake up of a morning saying to yourself, 'Let's give people some fun!' Obviously, I hope you care for your customers. But I can't tell you that your company should be about customers. What your business is about is up to you.

  The Virgin brand came into existence gradually, to reflect what I was fundamentally interested in. And to my own surprise, it wasn't publishing magazines; it wasn't even music. My driving force, I realise now, was finding new ways to give people a good time – ideally, in places where they were least expecting it. Like airports.

  While the brand has its roots right back in the seventies with my beliefs and spirit, I think Virgin Atlantic has done more to capture and articulate what the brand stands for and personifies to consumers. Many other Virgin companies have adopted those powerful values of innovation, honesty, caring, value and fun. So I believe it's about great customer service and giving people a good time.

  This is why Virgin wears its sense of humour on its sleeve. We want to inform and entertain people. You don't have to be a Virgin customer to enjoy our adverts and our publicity stunts. We have found over the years that giving people a good time, and making them feel like they're in on the joke, has been better for the brand than any amount of complex campaigning.

  I'll give you a quick example: on Virgin Atlantic flights we had these beautifully designed salt and pepper pots. At least, we had them when we took off. By the time we landed, most of them had disappeared. Our passengers were swiping them and using them at their own dinner tables. What to do? We decided to make a joke of it. At the bottom of each pot we stamped the words 'Pinched from Virgin Atlantic'. We turned an embarrassment into a piece of cheeky loss-leader promotion. We got people onside by bringing them in on the joke. In itself, this was a fairly trivial matter; repeated across our whole group, our fun-loving attitude makes a tremendous difference to our business.

  Irreverent humour is one of Virgin's brand values, and this has to do with our wanting to be honest about the ups and downs of our business and to share what we think with the people who matter most to us – our customers. The peopl
e who read our adverts are the same people who read about our tussles, our setbacks and our mistakes. So why would we want to pretend the real world doesn't affect us? Everybody knows of our run-ins with BA over the years. When the world's press gathered to watch BA erect their London Eye Ferris wheel on London's South Bank and we heard they were having technical problems, we scrambled our airship. The banner trailing behind it read: 'BA can't get it up.' We also had a lot of fun when we introduced onboard massages on Virgin Atlantic, running an advertisment in the newspapers saying 'BA doesn't give a shiatsu!'

  When Sydney Airport Corporation (owned by a division of the very successful Macquarie Bank) decided arbitrarily to raise their landing charges, Virgin Blue's CEO Brett Godfrey and I decided to put a slogan on the side of our planes and on the massive billboards lining the road to the airport. 'Macquarie. What a load of bankers!' It made headlines, and it made a point: the bankers seemed to be after easy cash at the expense of the low-cost market. Eventually Macquarie agreed to renegotiate the fee question. I dressed up as a native American Indian, smoking a pipe of peace, and buried the hatchet with them. (Literally – it's still there somewhere, under the tarmac!) It was one of those 'No hard feelings, mate' moments, and I think the Australian public enjoyed our irreverent approach. Interestingly, as a result, we've now become partners in a number of companies. Befriending one's enemy is a good rule for business – and life.

  Too many companies want their brands to reflect some idealised, perfected image of themselves. As a consequence, their brands acquire no texture, no character and no public trust. At Virgin, we certainly talk ourselves up, but we are genuinely a real company doing real work in the real world – not some sort of alien visitation.

  It may be that Virgin has grown up to be one model of what a modern company should be. It may be that, by making the customer the focus of its business, and by giving good customer service a brand name, Virgin has created something genuinely new in the business world – something future generations can emulate and build upon.

  Past a certain age, we all want to be Moses, leading our people into the promised land. Then I look at myself in the mirror in the morning after a heavy night and I think: Oh, Richard, get over it!

  Virgin may simply be odd – an accident of history. I like fun. I began work in a decade that prized fun. People associate me with that decade and the feel-good factor has stuck with me ever since. Virgin's been a rallying point for that spirit of fun – but would Virgin have worked at any other period of history? Would it work now? The bottom line is, we'll never know.

  Good brands reflect the histories of the time and the group of people that made them. They cannot be easily copied. They cannot be recycled. A brand is like an artist's signature (in Virgin's case our brand is literally an artist's signature!) What you make of your brand is up to you. While I hope and expect that there are lessons in this chapter for you, I cannot tell you what your brand should do. What I will do is ask that you take it seriously – as seriously as a painter treats the signatures on his canvases.

  A brand should reflect what you can do. You have to deliver, faultlessly and for all time, whatever your brand promises, so it's better to make your offering sound witty and innovative than to pretend you're more than you are. Get the brand right from the start, by being honest with yourself about what it is you're offering. A brand will eventually date you, so I think you're better off intelligently evolving it as we have always done than tritely updating it. These rather trivial rebrandings generate a lot of fairly funny adverse publicity, and with good reason: they're a sort of corporate comb-over – and about as effective.

  This, anyway, was our philosophy when we came up with the name 'Virgin' – and I had to respond vigorously to the Registrar of Companies Office in the UK when they said the name Virgin was too rude to register. Part of that response consisted of proving that 'Virgin' had been used as a ship's name without complaint as far back as 1699 and indeed one such ship was recorded as having docked at Cadiz on 26 April 1699 in the May edition of the London Gazette. It was a bit risqué, I suppose – a bit of fun. But the word wasn't simply plucked out of the air. It reflected the fact that every business we began, we started from scratch. We've been 'virgins' in almost every new business field we've entered. To my mind the name Virgin was the opposite of rude: it meant pure, in its original condition, unexploited and never used. Virgin referred to us, because we were all virgins in business. Registering the brand was critical. Defending it in every legal jurisdiction in the world has been expensive. But it's all proved essential for Virgin's success.

  A brand's meanings are acquired over time. Some meanings will be the product of serious discussions and years of directed and dedicated effort. Some meanings will just stick to the brand, whether you like it or not. Remember, a brand always means something, and ultimately, you can control the meaning of your brand only through what you deliver to the customer.

  If I describe to you Virgin's early years, you'll be able to see how the Virgin brand came to mean what it does today. I would like to say that all the things Virgin means to people were the product of masterful business planning. They weren't. Luckily, we did a good job, so the labels that stuck to us were generally positive, whether we intended them or not.

  Immediately, however, I am confronted by the fairly frightening fact that I will have to explain to younger readers what music meant to my generation. How else are they going to understand Virgin Records, our first company?

  I believe music isn't as central to most young people's lives today as it was back in the 1970s. There's a lot of brilliant music around today – I think about KT Tunstall and Amy Winehouse for starters – but looking back, the 1970s was a unique time, and people then had an incredible passion for rock music.

  Partly, it was about choice. In those days, living in England, we didn't have DVDs and mobile phones, and we didn't have an array of TV channels – only BBC and ITV – and computer games were the playthings of superpowers, who used them to target their deadly arsenals of nuclear weapons. So for young people most of their time and energy was spent on music – and that meant buying records. It was the one luxury kids had. Anticipating a new Led Zeppelin, Yes or Queen album kept us going for weeks.

  In the 1970s and 80s, album releases were monumental events; and we built a business on the back of them. I think there are some interesting business lessons that still apply today from the creation of Virgin Records. After all, the progressive-rock music business was then in its infancy, and Virgin Records was there from the start.

  When we started Virgin Records, mainstream crooner Andy Williams and avant-garde rocker Frank Zappa were in the same alphabetical A–Z racks in Woolworths. While the 1960s had witnessed an eruption in pop music and rhythm and blues groups – led by the Beatles and the Rolling Stones – the old record labels run by big business still dominated. There was no discounting of music, and the industry that existed was very conservative and stuffy. It was presided over by middle-aged guys who listened to string quartets. Most recording studios were sterile and expensive factories set up for only a few recording takes, and music shops with their perforated hardboard sound booths were stuck in the 1950s. There was little excitement attached to buying music. And there were only a few radio shows where you could hear decent rock music.

  In the spring of 1970, we decided to create a mail-order service that sold the kind of music we liked: a record company that was outrageous, irreverent and long-haired. That flavour established Virgin, sowing the seeds of what it has become today. From day one, young people identified with it because it was so different.

  As well as the American magazine Rolling Stone, there were two British weekly music newspapers when we began. Melody Maker was a serious rock and pop paper, with reviews that also covered folk music and jazz. Although it was a must-read, the writers were rather worthy and full of their own self-importance. And there was New Musical Express, or NME, which was more pop-orientated and somehow stuck in t
he sixties. Then a new arrival, Sounds, with its tagline 'Music is the Message', came along.

  Sounds was first printed on 10 October 1970 and I was on the phone to the advertising department to secure some cut-price adverts. I've always believed in trying to get into a new publication that is trying to break the mould. Sounds was a magazine that mattered for our success. It was right in our marketplace. It sold 200,000 copies in its first week and gave the opposition, Melody Maker and New Musical Express, a bit of a fright. Sounds' first rock album chart was dominated by Black Sabbath's Paranoid, the Rolling Stones' Get Yer Ya Ya's Out, Led Zeppelin II, Deep Purple in Rock and Cosmo's Factory by Creedence Clearwater Revival. These would be the albums that our mail-order business would sell. Unfortunately, there were some dreadful anomalies in the charts too, such as The World of Mantovani. His world would be banned from Virgin Records. So too was Andy Williams.