RepORt: ViRgin“We want every Virgin subsidiary to bean efficient, manageable size.” The Virginempire consists of 300 small companiesyou sent Virgin one page of numbers and that was that.”Senior managers were treated like independent entrepreneursand given share options for added motivation, while Grantsays the rest of the workforce were happy to work for “quitemodest salaries”.Be aggressive. With this armada of bellicose admirals andemaciated crews, Virgin launched an all-out assault on amultitude of seemingly random markets. Singer Peter Gabrielreportedly 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, drinkVirgin Cola, and fly to America with Virgin Atlantic.”But most Virgin Group startups follow a pattern that’sanything but random. Whether establishing airlines, insurancecompanies, or mobile phone providers, Virgin alwaysmarkets itself as the jaunty newcomer, competing withestablished companies who annoy their customers withbad service or unnecessarily high prices. Branson enjoys“turning industries upside down” but, as he emphasizes onthe Virgin website, that doesn’t mean that he chooses newmarkets by tossing a coin.Brad Rosser, Branson’s corporate development director until1998, says that a new project had to tick at least four of fiveboxes. “It must be innovative, challenge authority, offer value formoney 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’smarketing, in spite of the f<strong>act</strong> that Virgin Atlantic has anannual income of almost EUR 3 bn. As Rowan Gormleywryly puts it, “Virgin has managed to build some pretty bigunderdogs.”Be cautious. Branson is well aware that new ventures are risky,and upstarts often end up with bloody noses. Author and managementconsultant Des Dearlove says, “He’s always managedto use other people’s property for his own adventures.” Asa businessman who’s had to shut down more than 100 ofhis creations, Branson has learned to hedge against risk.When he sets up new companies, he prefers joint venturesto bank loans. His biggest asset is the brand name; Virgin<strong>act</strong>ually refers to itself as a “branded venture capital organization,”and Branson aims to expand it into a global lifestylebrand. Eventually, he wants to turn lots of small companiesinto one vast business.Be big. Small fish get eaten unless they swim with the shoal.The Virgin Group looks after its companies, and each is financiallyindependent of the others, so that if one fails, itdoesn’t affect the others. “They don’t just protect one another,they have symbiotic relationships,” Branson says. “We havea presence in 300 different sectors, and we’re the underdogin all of them.”If Virgin is a giant with lots of little feet, surely the Davidand Goliath idea is a bit far fetched? “Virgin can still get awaywith appearing to be a much smaller company than it reallyis because in every sector we are still the small guy, taking onthe big guy,” Branson points out. “We’re not dominant in oneparticular sector like, say, Google in the online market. We’rein 300 different businesses and, in each, we’re the underdog.”To his former fellow travelers, this sounds similar to Branson’smarketing spiels back in the 1970s. Brad Rosser says,“The ambition of Virgin companies was to make them asbig as possible.” Gormley claims that the Group decided tobecome a big player in the 1990s; “Virgin has become moreconventional, more old-fashioned, and just bigger. Thereis now a huge Group HR department, a huge Group legal,Group brand department, and all the rest.”The days of managing businesses from houseboats andcrypts are ancient history, but tombstone desks still makegood stories. As Rosser puts it, “I don’t <strong>think</strong> that Richardhas ever felt that small is beautiful.”42 THINK AcT sepTember 2011
BRIEFaCtRubRik hieRWorld trade rebounds<strong>Roland</strong> <strong>Berger</strong>’s study: Switchpoints for the Future of logisticsphoto: Tom Nagya Deep reCessION aND a rapID reCOVerYhave shown that we live in volatile times.With seemingly stable trends suddenlyturned on their heads, and whole sectorsof the industry still in decline, logisticsremains one of the best barometers ofvolatility. The recession hit logisticsTHINK AcT sepTember 2011 43
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