THINK ACT

REPORT: VIRGIN
“We want every Virgin subsidiary to be
an effi cient, manageable size.” The Virgin
empire consists of 300 small companies
you sent Virgin one page of numbers and that was that.”
Senior managers were treated like independent entrepreneurs
and given share options for added motivation, while Grant
says the rest of the workforce were happy to work for “quite
modest salaries”.
Be aggressive. With this armada of bellicose admirals and
emaciated crews, Virgin launched an all-out assault on a
multitude of seemingly random markets. Singer Peter Gabriel
reportedly said, “Virgin is gradually getting everywhere.
When you wake up in the morning you listen to Virgin Radio,
put on your Virgin jeans, go to the Virgin Megastore, drink
Virgin Cola, and fl y to America with Virgin Atlantic.”
But most Virgin Group startups follow a pattern that’s
anything but random. Whether establishing airlines, insurance
companies, or mobile phone providers, Virgin always
markets itself as the jaunty newcomer, competing with
established companies who annoy their customers with
bad service or unnecessarily high prices. Branson enjoys
“turning industries upside down” but, as he emphasizes on
the Virgin website, that doesn’t mean that he chooses new
markets by tossing a coin.
Brad Rosser, Branson’s corporate development director until
1998, says that a new project had to tick at least four of fi ve
boxes. “It must be innovative, challenge authority, offer value for
money by being better than the competitors, be good quality,
and the market for the project must be growing.”
The David and Goliath image is the focal point of Virgin’s
marketing, in spite of the fact that Virgin Atlantic has an
annual income of almost EUR 3 bn. As Rowan Gormley
wryly puts it, “Virgin has managed to build some pretty big
underdogs.”
Be cautious. Branson is well aware that new ventures are risky,
and upstarts often end up with bloody noses. Author and management
consultant Des Dearlove says, “He’s always managed
to use other people’s property for his own adventures.” As
a businessman who’s had to shut down more than 100 of
his creations, Branson has learned to hedge against risk.
When he sets up new companies, he prefers joint ventures
to bank loans. His biggest asset is the brand name; Virgin
actually refers to itself as a “branded venture capital organization,”
and Branson aims to expand it into a global lifestyle
brand. Eventually, he wants to turn lots of small companies
into one vast business.
Be big. Small fi sh get eaten unless they swim with the shoal.
The Virgin Group looks after its companies, and each is fi -
nancially independent of the others, so that if one fails, it
doesn’t affect the others. “They don’t just protect one another,
they have symbiotic relationships,” Branson says. “We have
a presence in 300 different sectors, and we’re the underdog
in all of them.”
If Virgin is a giant with lots of little feet, surely the David
and Goliath idea is a bit far fetched? “Virgin can still get away
with appearing to be a much smaller company than it really
is because in every sector we are still the small guy, taking on
the big guy,” Branson points out. “We’re not dominant in one
particular sector like, say, Google in the online market. We’re
in 300 different businesses and, in each, we’re the underdog.”
To his former fellow travelers, this sounds similar to Branson’s
marketing spiels back in the 1970s. Brad Rosser says,
“The ambition of Virgin companies was to make them as
big as possible.” Gormley claims that the Group decided to
become a big player in the 1990s; “Virgin has become more
conventional, more old-fashioned, and just bigger. There
is now a huge Group HR department, a huge Group legal,
Group brand department, and all the rest.”
The days of managing businesses from houseboats and
crypts are ancient history, but tombstone desks still make
good stories. As Rosser puts it, “I don’t think that Richard
has ever felt that small is beautiful.”
42 THINK ACT SEPTEMBER 2011