Why Richard Branson is my Hero

Richard Branson was born 18 July 1950. He is best known for the "Virgin" brand of companies which has over 360 different organisations contained within it.

His business career began at the age of 15 when he published the magazine called "Student". He went on to set up a mail-order business in 1970 in the vinyl record business which, in 1972, became a chain of record stores called Virgin Records, later known as Virgin Megastores. He ran this from a large countryside mansion where the great "Tubular Bells" by Mike Oldfield became his flagship. He later signed artists such as Peter Gabriel and the Sex Pistols which catapulted the brand.

The Virgin brand grew rapidly during the 1980s, with the flamboyant Branson at the helm. He was known for running close to the edge in terms of his financing model and risked everything with Virgin Records to set up Virgin Atlantic Airways. Ultimately, due to the capital requirements his bankers forced him to sell Virgin Records to hold onto Virgin Atlantic Airways but he then went on to build the Virgin brand into diverse areas such as bridal gear and railways.

Through all of this Branson has known how to have fun.  He has been involved in Atlantic sea crossings, balloon rides, and aircraft adventures as well.  It is true that some of this is about business promotion but it is also about satisfying a need for "boys own" adventure.  He is like a Peter Pan of the corporate world. 

Richard Branson was listed in the Forbes' 2008 list of billionaires with a net worth of approximately $7.9 billion USD, making him the 236th richest person in the world at that time.

Wow!

His philosophy to the rest of the business world is a little different but makes so much sense.

In the corporate world, we hear so much talk of "shareholder value".Employees are expected to understand what this means and work towards it and be motivated it. And yet with the events of 2008 as companies unravel in the economic turmoil this is being exposed for the smoke and mirrors it really was which was about CEO's and senior staff extracting as much as they could from an organisation and leaving them hanging by a thread.

Another concept that is talked about is "customer service". This is much closer to the mark but the focus that Richard Branson brings is "employee value". He puts the focus on building a great employee culture. He knows that if his employees are happy they will provide great customer service. If they provide great customer service then this will lead to shareholder value through great company returns.

Their employees love working there, their customer service is great, and the rewards for the business have naturally followed.

I have seen this, personally, through my own engagement as a supplier to the Virgin group where, in the current economic environment, their airline groups are fighting tooth and nail in order to not lay off staff despite huge lifts in oil prices, pressure on margins, and a declining travel market. I would sit in their office reception area waiting for my meetings and watching streams of employees coming and going laughing with each other, with large smiles on their faces. And trust me, as I have dealt with many corporates in my time, this is most definitely not the norm!

The other thing is how clever the business model he employs is. As I started to write about him in this article I wanted to describe him as 'innovative'. But in actual fact he's not. He looks to buy into highly 'commoditised' industries where service is low. He looks for a product that is fairly low in variability, has low human element, and where he can absolutely differentiate by providing high customer service on a low cost product. Examples - airlines, records, trains, bridal, cell/mobile phone, credit card, and so on.

It's brilliant, but he can execute it because of three key things he has built to back himself:

1. Capital
2. The Virgin Brand.
3. Employee Service Focused Culture

How do I know this? Well I actually approached the group with a business idea that I thought was pretty clever. They were all over it. They'd analysed it every each way already because they thought it was a great industry. At the end of the day, though, they decided it wasn't for them because the product wasn't commoditised, they couldn't control it and that represented too much risk for their brand. When I sat back and looked at their logic they were absolutely right. Couldn't fault them, couldn't argue. I thanked them for their time and moved on. But at least now I know what the business opportunity needs to look like for them next time to perk their interest.

If you can spare the time, I'd really love you to make yourself a cup of tea and watch the interview below with him.