Larger operations command more capital, and so, in theory at least, their range of possible actions is greater. But complexity soon gums up the works of an organisation as it expands. (One marvellously backhanded Chinese curse runs: 'May you employ more than a hundred people.')
This is the point at which entrepreneurial functions become separated from management functions. This makes a lot of sense – as you'll see when we look at different forms of business leadership in the next chapter. However, the separation of day-to-day business from the motive energy that birthed the company does cause problems. Suddenly, innovating is seen as something extra, something special, something separated from the activities the company normally engages in. This is when niggles become endemic, intractable problems; morale declines; and the business begins to lose its way in the marketplace.
Virgin's management style is unique, designed to both empower employees and avoid a culture of fear. A couple of other companies encourage new ideas even in their day-to-day operations. These are very different companies from Virgin, and I admire both of them immensely.
Since 1976, with design and ease-of-use its business mantra, Apple has simply kept inventing and improving. The sale of over 100 million iPods and three billion downloads from iTunes is proof of their success. While other businesses have been caught in the free fall of the record industry revolution, Apple has been able to fire up a new generation of listeners, not just with music but with podcasts, radio shows, TV shows, movies . . .
Steve Jobs and his colleague Steve Wozniak both had a passion for gadgets and began as electronic entrepreneurs in 1970. Six years later they were listed in the Fortune 500 rich list. In 2008, Apple had a market capitalisation of $105 billion, ahead of Dell and just behind Intel. The original Apple Mac, which was released in 1984, was described by Steve as 'the fastest and most powerful computer ever placed in the hands of a large number of people'. It was a transformational product. Steve later stepped back from the sharp end of the business – which promptly started to go into reverse. He returned as its saviour.
He is seeking perfection all of the time, and from that original mouse-driven Apple Mac, through to the iPod and the revolutionary iPhone, he has pushed the frontiers of technology in a creative way. And Apple's products have transformed people's lives. On Apple's campus at Cupertino in California, innovation is driven by a combination of perseverance at tackling large, intractable problems and, as a Harvard Business Review article in February 2006 described it, Steve Jobs playing his part as the 'great intimidator'.
By all accounts, Steve is a difficult man to work with because of his impossibly exacting standards, but his co-workers are filled with a sense of 'messianic zeal' to gain Steve's approval for their work. He is meticulous about the details and zealous about protecting all the new features that give his business that vital edge. That's leadership.
Apple is an iconic global brand that inspires emotional attachment. Yet the logo is only very subtly embossed on their products. Steve Jobs and his team know exactly how to design, manufacture and then deliver high-quality products to the market.
Steve immerses himself in the marketing campaigns and product launches himself – he has chosen to be both the manager and the entrepreneur, and in his case he has been successful playing both roles. He's a rare animal. Perfecting the fine art of delegation is normally essential when you're running a large company. Steve is more zealous than he needs to be, but it seems to work for him. It gives the public and investors confidence that the admiral is at the helm – with his hand firmly on the tiller. Steve has that rare business quality: the acute intelligence to see what the public wants. You can tell this by the way Pixar Animated Pictures, which he co-founded, has had a stream of blockbusters which have earned a stack of Academy Awards, including such successes as Toy Story, A Bug's Life and Finding Nemo. Pixar's family films have grossed more than $4 billion at the box office. Steve was there when it merged with the Walt Disney Company in 2006 and he remains on Disney's board of directors. His unrelenting genius is at the heart of everything Apple does and, in my view, this places Steve in a business class of his own.
While I acknowledge that Apple's products have transformed lives – and you only have to walk along a street to see the ubiquitous white earpieces of the iPod – I reckon it is another 'Invented-in-America' brand that has made the most significant difference to the shape of our connected world. I have been asked: 'What is the greatest business invention of the last fifty years?' That's a tough question because you need to factor in the mobile phone, DNA testing, the personal computer and the Internet, but I think the winner has to be Google's powerful search engine.
Google has allowed ordinary people to find things out much more quickly. It has led to more immediate choice – and increased consumer power – and a freer flow of information, knowledge and ideas. It is far more than just a search engine – it has become an engine of change. Google's mission is 'to organise the world's information and make it universally acceptable and useful'. That's a noble ambition. It has allowed political, cultural and interest groups to flourish. It has brought the democratisation of information on to a global scale – something that was unthinkable just ten years ago. It has also brought a great deal of fun into our lives.
I'm honoured to be good friends with both Larry Page and Sergey Brin, the founders of Google. I was flattered to be asked to officiate at Larry and Lucy's wedding on Necker. Larry and Sergey won't mind me describing them as geeks – indeed, with them it's a badge of honour – but they both have strong personalities. Their characters complement each other when they are working on a project. They get on very well and never, ever disagree with one another in front of staff, clients or investors. In the world of business, this requires remarkable self-discipline. If they have a disagreement, they will wait until everyone has gone out of the room and only then will they discuss the matter. They are bound together better than the best marriages, and their personal chemistry is an intrinsic part of their business success.
Today Google attracts the brightest technical talent. I love the idea that employees are encouraged to generate and develop new ideas, and that technical staff spend 20 per cent of their work time doing something they choose to do. By giving their people ownership over their work in this way, the company and its customers have benefited enormously. Among many other innovations, this scheme has brought us Gmail, Adsense, Google Earth, Google Maps and Google News, which aggregates headlines from around the world. The company excels at IT and business architecture. It continually conducts experiments to test its system, and then improvises and improves, and it has a backbone of people who are acutely analytical.
Sergey and Larry understood early on that they are not managers. Their trade now is in finding ideas and turning them into businesses or other enterprises. While they conceived Google and built it, they also found a brilliant CEO in Eric Schmidt, who runs the company on a day-to-day level. Eric was the CEO of Novell, and he also sits on the board of Apple. He is steeped in the technology world but he knows how to deal with financial matters and the investment community. This is a classic example of how the roles of entrepreneur and manager can be separated – a theme explored further in the next chapter. At Google, both sides of the business are given room to breathe. Eric's day-to-day management of the company allows Sergey and Larry to commit themselves to the search for new ideas – and to enjoy some of their wealth!
One of our Virgin team was visiting Google's HQ in Mountain View and told me they have an enormous whiteboard detailing the strategy of Google. It is Google's Master Plan and there are thousands of ideas on the board, all contributed by the employees. One of the key tasks along with 'Hiring network engineers' and 'Hiring hardware engineers' was 'Hire Richard Branson'. I don't need to be hired: I'm always happy to help Sergey and Larry.
On April Fool's Day 2008 we announced the launch of Virgle, a partnership between Virgin and Google looking at creating a community on Mars in the next fifteen years. We were
advertising for volunteers to travel on a one-way ticket to Mars. It was concocted over dinner at Necker when we talked seriously about the creation of a human colony on Mars and what it might look like. We then pondered who we would invite. Our announcement made headlines around the world and had dozens of blog sites buzzing with activity. Were we joking? Of course we were joking. Mind you, fifteen years before Apple started selling iPods, I was joking about portable digital music players. With that in mind, we've registered the Virgle brand – just in case . . .
Innovation can occur when the most elementary questions are asked and employees are given the resources and power to achieve the answers. That's how Virgin America did it. While the legal team fought to convince the Department of Transportation that Virgin America was indeed a US-owned carrier, the Virgin America design and finance teams focused on taking care of business, and that was the business of creating a totally different and better flying experience. What does a great travel experience look and feel like? How would it be different from anything else US travellers have experienced? What would it take to knock their socks off?
Building an entirely new way to fly required a team of specialists who respected each other's expertise but didn't hesitate to fight for what they believed was important, who worked in close proximity round the clock, made decisions swiftly, and passionately believed in their vision for the customer. Ironically they themselves were the customers!
While understanding that the airline was to be under US control, Virgin USA CEO Frances Farrow was convinced that the issues the flying public truly cared about – the actual product and experience – should be without equal in US skies. Her first focus was to go after the best talent for customer service and design, and where better to look than people leaving Virgin Atlantic?
As I've said before, Virgin employees, after they've started a shiny new Virgin company or run a mature one with aplomb, are worth holding on to because they love the brand they helped build and their experience and knowledge of the brand are priceless. New companies are a great way to keep them challenged – and to keep them within the family.
Adam Wells, a whizz-kid from Virgin Atlantic's design team which had created the award-winning upper-class suites, and Todd Palowski, Virgin Atlantic's customer service specialist, were brought in as part of the original customer and product insight team. They were quickly followed by talent of the likes of Charles Ogilvie, a cutting-edge interactive entertainment guy.
This small but dedicated group began to dream big. The team didn't inherit drab legacy planes and they weren't stuck in the status quo. They were empowered with the Virgin brand to do things differently; there was no other way to create a completely different experience. What if we got rid of check-in lines? What if we turned the airplane into a living room? How can we give control back to passengers? What should we put in our toilets? How can airplane seating express freedom? And how can we express that freedom from the moment passengers reach the ticketing area?
Flying is generally a passive experience. From the moment you enter the airport, you are told what to do. Claim your boarding pass here. Put your luggage there. Stand in line, take your belt off, remove all liquids The onboard experience is no better. If you're lucky, the cabin crew flips on a heavily edited movie that no one really wants to watch. And that's followed by a trolley of unhealthy snacks that blocks you from the loo.
What you don't have is freedom. The Virgin America team believed they could find a way to give it back to you, and they did. (Sorry, they're geniuses but even they couldn't make check-in go away.) They designed a liberating experience, one in which you could genuinely do what you wanted with your flying time. You want to work on your laptop? Open it up and go, there's plenty of room. Running out of power? Plug it in, charge up your computer and play a game while you're at it. Want to chat with your cousin who is a few rows back? Try seat-to-seat chatting on the inflight entertainment screen using the QWERTY keyboard at your armrest. Feeling peckish? Order a sandwich from your seat, and a flight attendant will deliver it to you when you want it. Want to listen to music? Create a music playlist? Watch a movie ... in Mandarin Chinese? Go for it. It's all there right in front of you.
You will not get bored on our flights.
So innovation has to be appropriate for your business. It must fulfil a need, and it must give you an edge over your competitors. Our food-ordering system was an extension of our service philosophy, the idea that the cabin crew wanted to give passengers control. No airline in the world but Virgin America offers on-demand food ordering. We decided that free airline food was a failed model. Free is not necessarily good; customers have low expectations and the airline is pressured to slap down the absolute bottom-quality snack. But our team asked some questions and offered a simple solution: if you pay a little bit, you will get what you want. Customers had passively accepted the norm of free peanuts and then nothing at all ...
The Virgin USA brand team did some research on Virgin's US customers and learned that they tend to be open, ambitious, very social and up for trying new things. It says something about you if you choose to fly with Virgin. You can think of flying as being trapped on a plane with strangers but we think our passengers have more in common with each other than they would with passengers on a legacy carrier. The team liked the idea of giving people a real opportunity for community creation, whether it's on the entertainment system or chatting with the person next to you or texting someone a few rows away.
We knew broadband was coming but couldn't time it, and we needed a stopgap to invite people to chat and interact in the cabin. So Charles put chat rooms and seat-to-seat chatting in the inflight entertainment system, with keyboards at every seat. It's a totally new way of stretching out and interacting while being in a confined space. And through those little seat-back entertainment screens, we created a social community. It didn't hurt that our small new airline's tight-knit cabin crew was friendly, remembered repeat passengers and helped to make each flight feel like a party.
While the commercial team was about to order millions of dollars' worth of planes, the brand team was at the next desk demanding a brighter shade of white from the seat supplier. The supplier had never had this sort of request before; in fact, seat-back colour choices ranged from ten shades of beige to the same of purples and greys ... but no white, and definitely no whiter-than-iPod white.
Lighting on planes tends to be harsh and grim, so Adam designed a mood lighting system with special controls that was custom-developed for us, a first for aeroplanes. Because no whiter-than-iPod white option was available, we gave the seat-backs a unique coating, giving the lighting a sleek surface to reflect off and washing the cabin with soothing light; it was a deliberate visual experience to give the impression of space and freedom.
These simple details are the stuff of Virgin. If that's what business professors call innovation, fine. Innovation is often what you didn't know you wanted until you got it. Now the other airlines look outdated and neglected, so they will have to catch up to our innovation. And so the cycle of competition goes.
Like any Virgin company, the Virgin America team were surrounded by, learned from, and influenced amazing specialists. Colleagues are your best resource at Virgin companies: open and thoughtful people to bounce crazy ideas off – which don't seem so crazy when the person next to you shares your vision and can help you realise it. The Virgin brand demands people like that, people who are going to ask tough questions and demand excellence and something different.
Could the team have worked as effectively in a different setting, a different company? They were indeed extraordinary but the circumstances were equally unusual. The team weren't motivated by getting ahead – there was no corporate ladder and they weren't inspired or intimidated by a bureaucratic hierarchy. They were empowered and they owned the product, and they would have to live with it once it launched. Because the brand is known for being a leader and going against the grain, there's a bit of pressure to innovate – n
ot just for the sake of innovation but truly to deliver something better.
Virgin America also benefited from being the underdog. The airline was a start-up minnow fighting the legacy sharks that wanted to keep its planes grounded. This do-or-die mission was motivating.
Innovation doesn't necessarily mean being first or biggest, but being the best. We weren't the first carrier to introduce low-cost fares to Americans. We aren't interested in flying into every airport in all fifty US states. We want to offer travellers an excellent flying experience to a small but growing number of urban point-to-point centres. We have a model that gives us the flexibility to navigate these turbulent times. We want people to enjoy flying again and that's why Virgin America continues to focus and innovate on the customer experience.
Customers are talking about Virgin America. They're writing in their blogs about a vacation and how it started with a flight on Virgin America and how much fun they had on their flight or how clever the safety video was. They're uploading on their Flickr pages snapshots of themselves on our planes or the inflight entertainment screen.
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