THINK ACT

REPORT: VIRGIN
Branding
Venture Capital
Virgin’s Richard Branson believes in the power of small.
His tactic: every time one unit grows large enough, create another.
Virgin has no intention of being the market leader, and prefers to be
the underdog – at least, that’s its marketing line
By Hilmar Poganatz
THE SMALLER, THE BETTER. British billionaire
Richard Branson likes to keep
things simple; for many years, Virgin
Group board meetings were held in his
London villa. “I was working in his son’s
bedroom, and he was working from his
bedroom,” recalls the former CEO of
Virgin Direct, Rowan Gormley. This
was a lot more space than during the 15-year period when
Branson ran the Virgin empire from his houseboat. And
it was positively cavernous compared to the offi ce of the
student magazine Branson edited as a teenager, buried in
the crypt of a church, with a desk made from “an old marble
slab laid across two gravestones.” Branson’s talent for anecdote
is legendary.
However, you can’t argue with numbers; in four decades,
Virgin has created more than 300 companies, and employs
approximately 50,000 people in 30 countries. It started
with Virgin Records, continued with Virgin Atlantic and
eventually became a global empire, the Virgin Group, investing
in businesses as diverse as mobile phones, transport,
travel, fi nance, media, music and fi tness. In 2009, sales of
Virgin brands totaled around EUR 13 bn, and the company
was worth just over EUR 3 bn. Branson, now 61, still
holds true to the maxim he learned as a student journalist,
formulated by economist E.F. Schumacher in 1973: small
is beautiful.
Be small. “The philosophy of Virgin was that as soon as any
business got big – and that originally meant more than
20 employees – then you should try and break it up into
smaller units.” Rowan Gormley learned this at one of his
fi rst meetings as Branson’s advisor; the idea was that small,
independent units are more customer – and employee –
friendly, and faster to respond.
“We want every Virgin subsidiary to be an effi cient, manageable
size,” says Branson. In 1992, for example, Virgin
Music consisted of fi fty subsidiaries, none employing more
than sixty people. Robert M. Grant, professor of strategic
management at Milan’s Università Bocconi, says Virgin has
“very little hierarchy, offering short lines of communication
and fl exible response capability.”
“The companies were all independently fi nanced,” Gormley
says. “Everybody had their own reporting structure;
40 THINK ACT SEPTEMBER 2011
Photos: DDP, Imago, Mauritius Images (2)