The Virgin Way: Everything I Know About Leadership (15 page)

When I got wind of what was happening I volunteered to join in and greet concertgoers as they entered the park: my brief from Ron was to ‘act like Willie Wonka at the chocolate factory gate.’ Inside the grounds we’d created a VIP lounge like no other anyone had ever seen. Rather than being the usual exclusive sanctuary for ‘A-Listers’, this one was still exclusive but the only people allowed in were those who could prove they’d been laid off. It wasn’t quite a Caligulan orgy but it came close! ‘Pink Slip Pinatas’ were hung from trees and for a short while, young fans could celebrate a day of free music instead of stressing about getting a job. Happily, times have improved and we no longer have to pay homage to those pink slips, but ‘Virgin Mobile FreeFest’ was born, and to this day (as the name suggests) the festival is still free. The best part is that our festivals aren’t just enjoyed by the attendees, they also raise hundreds of thousands of dollars a year for homeless youth.

Doing the right thing and learning to respond quickly to events can also be infectious – that same year, while most of the big car manufacturers were complaining about their free-falling sales, instead of whining, the Hyundai Motor Company came up with its legendary programme to buy back cars from anyone who’d lost their job and couldn’t afford to keep up the payments. They may be running with the big dogs now but that kind of ‘pay it forward’ initiative is just one reason Hyundai (together with its subsidiary Kia) has come out of nowhere to be the world’s fifth-largest automaker, producing over seven million vehicles in 2012. What makes this an even more remarkable achievement is that they have done it in exactly the same time that I have been in business – Hyundai produced its first car in 1968, the same year that I published the first issue of
Student
magazine. More proof that scrappy little dogs can take a huge bite out of the biggest and often the most established businesses: in 2012 Chrysler produced one third of the number of vehicles that Hyundai/Kia turned out.

While the likes of Starbucks, Hyundai and Virgin may no longer qualify as bona fide small dogs, all three of us still live by the same principles that we did when we were just cutting our business teeth. Starbucks is perennially voted as one of the best places to work and its people are as important to their brand as anything they put in a cup. Hyundai not only builds great cars but it stands behind them like no other automaker by offering standard warranties of ten years or 100,000 miles, whichever comes first – more than double the duration offered by most of their competitors.

And Virgin, well, I think you know how we feel about customer service and people and although we have been around for forty-odd years now, we’re still as scrappy as we ever were and enjoy nothing better than a good dogfight.

So bring it on, big dog, we’re ready when you are.

Ask any passing bumblebee

Did you know that according to all the laws of aerodynamics, the humble bumblebee should not be capable of flight? All kinds of scientists have spent time and money on wind tunnel and lab testing to prove their thesis that says because of its body shape and weight in relation to its wingspan the bumblebee cannot possibly fly. The only problem with all this is that no one has ever been able to convince a single bumblebee that they should cease and desist in proving the experts wrong on a daily basis. The inescapable – if frustrating for scientists – fact is that whatever innovative technique it is that the bumblebee is employing, it works: and with no apologies to aeronautical engineers the little buggers just keep buzzing around.

I’m certain that at one time or another, just about everyone has been subjected to the asinine put-down on anything extraordinary that goes, ‘Well, it may look good in theory, but I doubt very much that it will work in practice.’ Someone who must have heard this lame sentiment expressed more than most was Leonardo da Vinci, truly one of history’s most remarkable entrepreneurs. One has to chuckle when thinking what this amazing man’s business card might have looked like if it listed all his areas of expertise: ‘Painter, Sculptor, Architect, Musician, Engineer, Mathematician, Anatomist, Inventor, Geologist, Botanist and Writer’. Maybe ‘Beekeeper’ could also have been on that list as he reportedly studied bees closely when he drew up the first ever design for a helicopter. In Leonardo’s case, however, I am sure he would have studied all the reasons bumblebees and hummingbirds are able to defy the scientific claptrap and achieve what they do, rather than wasting time trying to discredit their airworthiness. In fact, had da Vinci ever had a personal mantra it might well have been ‘This works in practice but not in theory’.

A BRIDGE TOO FAR

Brett Godfrey who founded Virgin Blue has long loved telling a tale about da Vinci that perfectly illustrates the age-old bias that still blocks the path to true innovation in a lot of overly conservative businesses. It would seem that in the early 1500s the Sultan of the Ottoman Empire, one Bayazid II, had a problem. He desperately wanted to build a bridge from Asia to Europe. While not quite as daunting a task as it sounds, at the time crossing the River Bosphorus in Istanbul (or Constantinople as it was then) with a single-span 240-metre-long bridge would have been an unprecedented feat of engineering. The commercial pay-off from linking the east–west trade routes would have been huge, however, and so the challenging project demanded some radical thinking.

A number of the leading bridge-building experts of the time were struggling without much success to adapt the classic and simple keystone arch design to the span and height that the Bosphorus project necessitated. Frustrated with the lack of progress and unwilling to take no for an answer – something I most decidedly relate to – the Sultan turned to a highly unlikely source, an upcoming young Italian painter and designer by the name of Leonardo da Vinci. Excited by the challenge, da Vinci set to work and the dramatic result was an incredibly futuristic bridge design that with the use of unheard of geometric concepts produced a soaring single-span that was, well, not surprisingly perhaps, truly a work of art. The engineering and architectural experts of the day were appalled and condemned it as an abomination and a work of fantasy that could never possibly work.

As anyone who has ever constructed anything in a city knows, obtaining planning approvals can be a long and frustrating task, but in da Vinci’s case 500 years is pushing the envelope! Setting new standards in ‘better late than never’, Leonardo’s sixteenth-century bridge design (with a few updates based on twenty-first-century building materials) was finally given the go-ahead in 2012 by the city of Istanbul. Just imagine how bridge-building design could have been catapulted into the future in the sixteenth century had Constantinople’s Luddite engineers had the ability to see beyond their comfort zone and envisage just how much one man’s genius could have recalibrated the world as they knew it. But history is littered with da Vinci-like tales of how the greatest innovators of their times have had to struggle to get their ideas past the power of incumbents who can only accept those things that fit into their existing pigeonholes and established theory.

VIRGINNOVATION = RE-INNOVATION

The longer I am in business, and it has been almost fifty years now, the more valid I find the famous French saying, ‘
Plus ça change, plus c’est la même chose’,
which simply means, ‘The more things change, the more they remain the same’. Maybe it’s being around longer than most that has let me figure this out but I’ve been noticing that some of our most recent innovations are essentially learning the lessons of similar initiatives we introduced in earlier businesses – they are what I suppose you might call ‘re-innovations’.

Perhaps, as I often find to be the case, Mark Twain explained this phenomenon perfectly when, in a letter to Helen Keller on the subject of plagiarism (of which she had earlier been charged and acquitted) he wrote,
‘All ideas are second-hand, consciously or unconsciously drawn from a million outside sources, and daily used by the garnerer with a pride and satisfaction born of the superstition that he originated them.’

Clearly this doesn’t apply to the technology world where things are happening at a rate that even Mark Twain could never have imagined possible, but outside of tech-driven innovations I think he was absolutely spot on. We are just witnessing a perfect example of the old becoming new again at Virgin Money where we have started doing the same thing for our banking customers that we did in our first record shop in the 1970s and later with our Virgin Atlantic Upper Class Clubhouses (airport lounges): going the extra mile for our customers by giving them something well outside the realm of their realistic expectations.

We set the trend with our very first record shop in London, which became an instant blueprint for the rest of the business. Unlike our much bigger competitors like HMV, who ran a chain of soulless, inhospitable music supermarkets, we came along with a Monty Python approach of, ‘
And now for something completely different . . .
’ We turned our cosy little store into a destination where our customers could lounge around on large pillows, relax, use our headsets to listen to good music over a complimentary cup of coffee and eventually (we hoped) buy an album or a single to take home with them. Our competition thought we were a bunch of whackos but the formula of ‘make it a place people want to visit’ worked, and eventually, when the model grew up into Megastores, several of them would actually become recognised as official tourist destinations in their own right. The Paris store, which we had once been told was ‘at the wrong end of the Champs-Élysées’ was listed in most guidebooks as one of the ‘must visit’ sites in the city and always packed with tourists and locals alike – on an average weekend the Paris Megastore would have around 40,000 visitors.

As in Paris, our choice of location in New York City was more than a little controversial. In 1996 when we announced our intention to open a 60,000 square foot megastore in the then distinctly seedy Times Square, we were warned by the locals that this was ‘a place so unsafe that even New Yorkers wouldn’t go there’. Thanks, however, to the courage and intuition of Ian Duffell, who had joined us from Thorn EMI to develop our worldwide retail portfolio, we pushed ahead and when we finally opened the store it quickly established itself as the cornerstone to the rebirth of the entire Times Square neighbourhood. Happily it also soon became one of the highest-grossing retail locations in the city with sales of over a million dollars per week.

But that was then. Sadly, as outmoded victims of the iTunes downloadable era, both are now gone, although the Paris store did manage to defy gravity and hang in there until the middle of 2013 with a mixture of live concerts and other events. But like our very first store, it remained a destination as opposed to just a place to shop right up until the very end.
Vive la difference!

THE WIDE-ANGLE LENS APPROACH

Until Virgin Atlantic came along thirty years ago, airport lounges were pretty dismal places where first-class passengers and airline club members could maybe get a comfy chair, watch a single channel on TV and enjoy a free cup of not very good tea or coffee. When we started our Upper Class service we realised from the get-go that we would have to offer more of everything, not just in the air but on the ground as well. The ground portion of a long-haul flight – getting to and from the airport and negotiating the rigors of the terminal building on departure and arrival – can account for as much as forty per cent of the door-to-door travel experience. Amazingly, most airlines only care what happens to their passengers from the time they board the aircraft until the time they get off. We decided therefore that this called for us to take more of a wide-angle lens view on the passenger experience and expand our vision to include the entire trip. This holistic approach meant we took responsibility for providing transportation and comfortable accommodation for the whole trip: we included limo service to and from the airport and then set about developing lounges (without beanbags) that would actually be a feature for our customers to look forward to as opposed to just a place to mitigate the airport misery.

Over the next decade what evolved was our Clubhouse Lounges, which today offer everything from a full bar, haircut and shoeshine to a light snack or a full meal with table service, full body massages, hot tubs, pool rooms, business centres and lots more – all fully complimentary, of course. At first our competitors all scoffed saying we were insane and that it was unnecessary overkill, the cost of which would be unsustainable. Our passengers on the other hand lapped it up – as did a lot of former loyalists from those other airlines! Today you will find that the naysayers are all playing catch-up as they try to emulate the success of our lounges, which are a testament to our philosophy of seeing how much we can incorporate into our product and customer service to build genuine loyalty and – lest you think we are in the philanthropy business – by driving new business in our direction.

We also never had the advertising and promotion dollars to go toe-to-toe with our larger competitors with their huge route systems and equally big budgets, so rather than spending millions of dollars a month to tell the world how good we were, we decided instead to sink the bulk of our limited resources into tangible product benefits for our customers to enjoy and let them spread the word on our behalf. A million dollars of advertising buys you very little these days – in 2013 in the US a single thirty-second ad during the Super Bowl cost advertisers a cool $4 million! Blink and you missed it. Putting a couple of million into innovative product upgrades, on the other hand, goes a long way and the payback keeps coming for a very long time.

My favourite story on how a business can lose focus and squander big bucks on advertising instead of product is a tale I heard from a former employee of an American airline who came to work for us. It seems that her former employers had been getting a lot of feedback (and a lot of food back too) from their cabin crews to the effect that their passengers were increasingly unhappy with the standard of the economy class catering on their transatlantic services. Rather than trust the word of their front-line staff, however (mistake number one), they spent a couple of months setting up, conducting and analysing an on-board passenger survey to establish whether or not they really had a problem and if so what it was all about. The results ultimately seemed to point to a combination of two things: first that the passengers were indeed very unhappy with the airline’s food – exactly as their crews had been telling them for months – and secondly expectations about how good the food would be had been set too high by a recent ad campaign that the airline had run at great expense.

Eventually the airline decided they had all the evidence that was needed to address the problem. So they changed the food, right? No, that would have been way too obvious! Instead they told their ad agency to tone down any references to catering in future campaigns. The net outcome, therefore, was that the food stayed bad, the passengers kept complaining and the crew, who felt demeaned by the whole process, just stopped passing the information up the ladder as they knew it would achieve nothing. Truly a lose-lose-lose outcome for company, passengers and crew alike when all that time, expense and energy could simply have been directed on fixing the food based on their cabin crew’s wealth of knowledge as to what their passengers did like.

‘I’M JUST GOING TO HANG OUT AT THE BANK FOR A WHILE’

So enough airline talk, let’s circle back to Virgin Money. When we acquired Northern Rock and their high street branches, just like with Virgin Megastores, Trains and Atlantic we saw it as another exciting opportunity to go in and disrupt the status quo in a business that was in desperate need of a serious shake-up. In all these industries the accepted norm had settled in at a pretty low common denominator and the world of retail banking was no different. No matter how much the emergence of ATMs and online banking have served to automate the way most people do a lot of their banking, there is still an important role for the bricks and mortar walk-in branch and with it the all-important people component and, in the UK at least, that part of the banking world had changed little since I was a boy – until now!

We are lucky to have Jayne-Anne Gadhia as our CEO at Virgin Money. In 2001 when we sold ‘Virgin One’ to Royal Bank of Scotland, I remember calling Jayne-Anne to say I felt very badly about her going and that it looked like she’d been lumped into the deal along with the rest of the furniture. We were sorry to see her go but RBS had clearly seen her as a huge part of the assets they were acquiring. Anyway, I did say at the time that if she ever wanted to come back all she had to do was give me a call, for which she seemed very grateful. It also seems that she remembered this conversation: I was delighted when six years later she called and said she was ready to ‘come home’. Jayne-Anne came to see us a couple of days later and within a week the deal was done – she even brought eighty-two staff with her to help recreate Virgin One at the place where it had started many years earlier.