Dear all,
Here is the full text of the Fourth Madhavrao Scindia Memorial Lecture deliverd by Richard Branson, the founder of Virgin Records and Virgin Atlantic, for the benefit of the group. Among other things he speaks about his people management skills and how he started the company..n his struggles..it's worth a look to understand how an entreprenuer innovates & makes a successful business of it..
Happy Reading!!..
Rajat
Losing My Virginity: Sir Richard Branson
18 November 2005
Thank you so much Mrs Scindia for the wonderful introduction, I am truly honoured and humbled to have been invited to participate in the Madhavrao Scindia Memorial Lecture.
I sincerely wish I had had the opportunity to have known Madhavrao Scindia, the distinguished man whose memory we are honouring today. It is clear to me that he was a charismatic visionary whose powerful legacy will continue to inspire Indian people. His dedicated approach to life and commitment to liberty remains an inspiration to all of us.
My early memories of India start with my first visit around 30 years ago. I remember India as a mystical and spiritual place with strongly ingrained traditions. There was little indulgence and people worked hard so that their children could aspire to great things.
Today as soon as you enter India you cannot help but be overwhelmed by the optimism.
India has transformed into an agile powerful democracy whose people have a strong sense of pride and purpose. People in India know what they want and what it is worth to them. Indian people today are confident, articulate and grounded. They know that the world is watching and that when India speaks -the world listens!
High quality education, a good work ethic and strong service sector have given Indian people choices and social mobility. Middle class families are eating out, going on family holidays and enjoying the consumer market. India is an astoundingly youthful market with over 50 per cent of the population under 24 and an emerging middle class market at least twice as big as the UK, and growing fast.
This government has begun unshackling the economy with regulatory reform in transport and communications, with all the noticeable benefits that this brings, and ambitious plans to deliver a high quality infrastructure that can serve the world's largest democracy.
The road ahead is challenging with high execution risk and further deregulation is required to welcome foreign investors, giving Indian consumers the benefit of their experience as well as their established brands! I am confident that time is fast approaching
Mother India will soon make way for her wise, modern and beautiful daughter and Virgin is a willing suitor! So I've confessed Virgin's undying love for India but will this love remain unrequited? I'll leave that for you to decide - the wooing's already begun.
The film you watched by way of introduction to the world of Virgin - always sits slightly uneasily with me - 36 years of my life crammed in to three-and-a-half minutes
it makes it all look easy. Doesn't it?
Now, I've been told that this evening I'm here to talk about "my vast knowledge" on leadership, building brands and successful marketing on a global scale. I'm here to tell you how 36 years ago, Virgin drew up a strategy for global penetration by the year 2010 and the fact that we always knew how to make Virgin a household name.
Sounds great doesn't it - aren't we clever! If only it were true! The best example of how far from the truth this is - is the now famous Virgin logo. When one night over a drink, sitting around on cushions in a basement, we came up with the name 'Virgin' instead of 'Slipped Disc' Records for our record company in the winter of 1969, I had some vague idea of the name being catchy and suitable to lots of other products for young people. But that was about the size of it.
A little known fact is that we weren't even allowed to register the brand name with the patent office for three years as they felt it was too "rude". I had to write long letters explaining that Virgin was the complete opposite of 'rude', before I finally got it accepted. Not the most auspicious start for a brand, but a start that I am, bizarrely some might say, proud of.
Virgin was abou hving fun
When Virgin Records became successful, we followed our instincts and only signed long-term artists who, in the music-speak of the late 1970s, would have been termed progressive. Initially the music reflected the "hippy" era and our logo of a naked lady back-to-back reflected it too. Then when punk came along we felt we needed a crisper image.
I was talking to our graphic designer one day, explaining what we wanted, when he threw the piece of paper he was scribbling on, on the floor and got himself ready for the serious business of designing a cutting-edge logo. Little did he realise that the piece of paper he thought was rubbish - which I fortunately picked up on the way to the loo - contained the scribble that was just about to become the, now famous, Virgin signature.
If I'm perfectly honest (which of course I always am!) the early days of Virgin were very much about having fun. I loved what we were doing in our record mail-order business, I loved our cool, laid-back record stores, I loved the people who worked for Virgin - we truly lived and breathed the brand as a family. And to be frank, being a teenager, I loved the girls!
It's amazing how many first dates the introduction: "Hi, I'm Richard Branson - entrepreneur" gets you! Unfortunately, the fish and chips, wrapped in that day's newspaper, I bought them for dinner and the fact that they had to eat them in the very smelly, grotty, squat, which served as Virgin's HQ in those days, meant that the dates very rarely had a successful outcome. The 'entrepreneur' line only worked until they were faced with the reality of the fledgling Virgin Empire in the early 1970s.
In truth, in the early days I didn't really look at myself as an entrepreneur
I never thought about what we were doing in those terms. I was brought up by my parents to try new things - never be disheartened if a madcap venture failed - to just get on to the next one and enjoy every minute of what life threw at you. We wanted to create things we were proud of, we were young, it was the '70's and the world was our oyster. We were genuinely not aware that the way we approached business was setting a new example in how businesses could be run.
The flight from Puerto Rico
In 1976, when Joan, my fiancιe, and I were on holiday in the British Virgin Islands, we were trying to catch a flight to Puerto Rico but the local Puerto Rican scheduled flight was cancelled. The airport terminal was full of stranded passengers. I made a few calls to charter companies and agreed to charter a plane for $2,000 to Puerto Rico.
Cheekily leaving out Joan's and my name, I divided the price by the number of remaining passengers, borrowed a blackboard and wrote: Virgin Airways $39 single flight to Puerto Rico. I walked around the airport terminal and soon filled every seat on the charter plane. As we landed at Puerto Rico, a passenger turned to me and said: "Virgin Airways isn't too bad - smarten up the services a little and you could be in business." "I might just do that," I laughed, having just made my first profit on my first flight.
It got me thinking. Airlines didn't think twice about bumping people. They didn't think twice about quality. They didn't care about their staff. The staff therefore didn't smile. The food was dreadful. The entertainment non-existent. I told myself 'Don't be tempted. Don't even think about it!'
But I was tempted. The idea grabbed me. It was exciting. And it certainly would be fun.
I called Boeing on my return. I asked how much it would cost to rent a second hand jumbo jet for a year. "What did you say your business was again?" they asked. "It's called Virgin. We sign great artists like the Sex Pistols, the Rolling Stones and Phil Collins." Believe it or not they didn't put the phone down on me. They listened to my enthusiasm and decided to take a risk on me. Their only hope was that with a brand name like that
.. we'd go the whole way! I was ready to give it a go. I met my partners in my record company to discuss it.
The discussion basically consisted of me saying: 'Starting an airline is not too big a risk. If people don't like it, we can always hand the plane back at the end of the first year. And it'll be fun.' Whenever I say the fun word they always groan - and I can assure you they groaned. They then pulled themselves together, shook their heads and said "Guess we'd better pick up the telephones and start selling some tickets then!"
I decided to call the airline Virgin Atlantic.
Warned about BA's 'dirty tricks'
I asked Sir Freddie Laker to lunch to talk about our new project. He was a great help. He had years of experience. Most of all, he knew the problems in starting a new airline. His airline had done well until the big airlines undercut him. They had the money to keep going. They could afford to make losses while they drove his new airline to the wall.
Over lunch, he told me how an airline worked. We discussed what I should look out for.
Freddie said, "Look out for dirty tricks from British Airways. BA's dirty tricks ruined me. Don't let them ruin you. Complain as loudly as you can. My mistake was that I didn't complain."
I don't like to complain. I don't cry over spilled milk. I just get on with things. But I made a mental note. "Watch out for dirty tricks. Complain loudly."
It wasn't long before BA unleashed their dirty tricks team against us. They tried to destroy us by ruining my name, illegally tapping in to our computer information and poaching our passengers. Sir Freddie said, "Sue the bastards!" and I took BA to court - and won a historic victory. When Virgin Atlantic launched in 1984, not one person thought it would survive for more than a year. The bosses of these 13 big American airline companies, that we competed with, said we'd fail. Now 21 years later all 13 of them are out of business - proving the number 13 is unlucky for some.
The fights that we have found ourselves in over the years have (strangely) done wonders to promote the Virgin brand. They have proved that we refuse to be walked over. They have proved that we truly believe in our brand, a brand that we are asking our staff and our consumers to place their belief in.
They have proved that, without exception, we are prepared to fight for that brand, no matter what the cost. That's how to build a brand - you've got to believe in it more than you believe in anything else. You've got to believe that your reputation is more important than the cold, hard reality of the bottom line.
Freddie also advised, "Don't make Virgin Atlantic a cheap, no-frills service. Make sure it's the best Airline flying in the world. The big airlines can undercut you, like they did to me. Instead, offer a better service than they do, at a good price. People want comfort on long flights. And don't forget the fun. People like to have fun. Good luck. Be ready for a great deal of stress."
People, not logos, make the brand
He was right, the beginning saw a lot of stressful times - times I felt that the big corporate sharks would achieve their aim in destroying us. Through it all, it was the people who worked for Virgin Atlantic (and our growing list of diverse companies) who kept me going.
I was determined not to let them down, determined that the sense of fun, the belief that nothing was impossible and importantly that it was my responsibility to stay true to their belief, that Virgin genuinely stood for something different. That we would never become the same as all the rest. We saw off these hard times - together. Without good people a business is worth nothing.
A very wise man once said: "A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider to our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to do so."
Now I'm not one to argue with the father of modern India, Mahatma Gandhi. But, at Virgin we've always done things slightly differently!
We've always had a policy of trying to put our staff first. In our opinion the staff should come first, the customers second and your shareholders third, and if you take that approach then you'll find that everyone wins in the end. Happy staff result in happy customers - lots of happy customers result in happy shareholders! It's not a logo that makes a brand it's the people who represent that brand every day, day in - day out. They are the people who really define your business.
The humane face of business
To me this is what truly makes a brand. The brand is something that the whole team have got to believe in, something they are proud to talk about. Herb Kelleher of SouthWest Airlines in America was a pioneer of this approach - he believed that working for SouthWest Airlines was not a job, it was a crusade.
Under his guidance the "higher-calling" that drove SouthWest employees was "how can we protect the people who fly our airline? How can we protect small businesses? Are we doing what's best for the senior citizens who count on us for low fares?" This is why the people of SouthWest Airlines have become politically active over the years. They believe that politics is the business of protecting peoples' freedom and when you look at their success its important to understand that SouthWest employees have, not only bought into the company in terms of stock, but also bought into the principles for which the airline stands.
So this is a more humane way of running a business.
It's an ethical way of running a business and it's a sensible way of running a business and building a truly great brand. It's giving your employees motivation to deliver a wonderful service to the community and its doing something that everybody can be proud of. The alternative approach is to try to run your business through monopolising or driving out your competitors through sheer dominance of your market.
Here's a quote from a chief executive of another airline which Virgin have had a few run-ins with over the years. The chief executive once said, "I've never come across a businessman who did not pursue monopoly. What you pursue in business, in my experience, is monopoly for yourself and maximum competition among your suppliers and therefore there is nothing wrong in any chairman or any company eliminating competitors. Competition is about eliminating competitors; it's not about competing. That's what business is about. It's about the elimination of competitors."
Subsequent to that chief executives' speech, that particular company did drive a number of competitors out of business but they also ended up ruining their reputation, damaging it for many years by behaving in, what many people believed to be, an inhumane and unethically responsible way.
Capitalism works
The public genuinely care about how the companies - in which they choose to invest their trust, their loyalty and their money - behave in the market place; for many companies out there it's worth remembering this! And if they don't remember this, governments must come down hard on them, however hard it may be for a politician, to take on a big corporation. For real competition is what makes people strive to deliver a better product.
If monitored properly, capitalism works. Every other system has been tried and has failed. But capitalism still brings with it extreme wealth to a few individuals and companies. To become top of your profession as a businessman is no more difficult than going to the top of your profession as a nurse, doctor, journalist or politician. But the difference is that reaching the top of your profession in business brings excessive wealth with it. And, therefore, with wealth, comes responsibility.
Therefore, those who do command huge wealth have an equally huge responsibility to use that wealth constructively, to look closely at how they can possibly redistribute that wealth for the collective good.
For example, if somebody sells a company, they must not leave that money wasting away in a bank account. They should use that wealth creatively to change society, to start new companies, expand their existing businesses in new regions of the world, therefore employing more people and bringing opportunity to areas which may previously have been exploitative and monopolistic.
Wealth should be used to challenge the established way of doing things and try and make a difference.
If one's running a company, there's not only an ethical responsibility but importantly there are human responsibilities. I fear that the majority of major companies forget this fact or hold it very low on their list of priorities. I've always believed that there's no point in going into business unless you're going to make an enormous difference.
People who work for a company have got to feel passionately about their jobs and feel as though they're involved in what the company's trying to achieve.
They must be proud of working for their company, look forward to going to work everyday, feel part of the brand, feel part of the mission.
Loose change ushers in a big change
Years ago I found that every time I came home from a flight I would put my loose foreign change in my top right hand drawer and completely forget about it. It was only after the drawer was beginning to sag that I thought of all the other bedside cabinets across the country, which must be suffering the same fate. Why shouldn't we try to collect that foreign change off people on our planes - our staff loved the idea, they really felt they were making a difference.
We are now collecting millions of pounds every year for charities across the world. But the most rewarding thing was the fact that other airlines followed suit and now hundreds of millions of pounds a year is being collected for worthwhile causes. Once again the benefits of competition and of getting your people motivated by facilitating their desire to help others less fortunate.
Mates Condoms is perhaps another example of how using business acumen, and listening to the concern and everyday fears of your staff, can be hugely successful when used for the benefit of others. Some years ago when it looked like AIDS could become a problem, we set up a not-for-profit condoms company to try to encourage people to use condoms.
Also we wanted to encourage Durex, who had 98 per cent of the market, to spend more on promoting condoms and through awareness attempt to curb the spread of this disease. We even got the BBC to run an advertising campaign for the first time in their history - a very proud and historic moment for everyone who worked at Virgin.
Moves like this meant that people working for Virgin companies felt even prouder of the company they worked for. So although these things may cost us money, in an indirect way through staff morale, they were also good for business - good for the brand.
Running a condom company also brings some interesting complaint letters. I once received a letter of complaint from a young lady to whom I wrote back a grovelling apology. Only to receive - almost nine months later - a beautiful picture of mother and daughter asking me to be Godfather! So through founding Mates I also managed to find myself another Goddaughter - if only all complaints had such adorable results!
Ambassador for the social side of the brand
When the world of setting up new businesses for Virgin - a world that I love! - starts to occupy all of my waking thoughts, I try to remember the words of President Roosevelt, a hundred years ago, when he rebuked men of vast wealth who "do not fully realise that great responsibility must always go hand in hand with great privilege", in the same way that he believed "that great countries have great responsibilities".
Trying to keep these sentiments at the forefront of my mind, today not only is my role to travel to many new and exciting territories (including India!) expanding the Virgin businesses but I also see my role as being the ambassador for the social side of the brand. Born through the desire of our thousands of staff across the world, Virgin Unite has brought me closer to my desire of using the Virgin brand to make a real difference to the world.
Never a brand to choose the well-trodden road of those who have come before, Virgin Unite is there to tackle the tougher social challenges by leveraging all our global resources, especially our people. One of the challenges we felt we needed to take on was what we call 'the BIG 3
malaria, TB and HIV / AIDS. Over 16,000 people die every single day from these preventable and treatable diseases in Africa alone. We will never make poverty history and build healthy economies until we stop the BIG 3 from decimating entire generations.
The 0% Challenge
The worst of the BIG 3 is AIDS, which is winning the battle in many countries - around the world AIDS is winning the war. This does not have to happen in India. India truly is a great country and it too has great responsibilities.
India is changing in positive ways but we have to keep the momentum going in this great sub-continent. India stands at a critical point in its epidemic - HIV is poised to explode. As the second most populous nation in the world, even a small increase in India's HIV / AIDS prevalence rate will represent a significant component of the world's HIV / AIDS burden. Last year alone, there were more than 600,000 young people who were newly infected with HIV here in India.
So those are the horrific statistics linked to HIV / AIDS in India - but what I want to talk about is a new statistic, the '0% Challenge'. Getting all of us to work together towards ensuring that our employees and their families have:
0% new HIV infections
0% mother to baby HIV transmission
0% deaths from AIDS
We have the tools to make this happen with proven prevention education, condoms, antiretroviral drugs and other drugs to stop mother to baby transmission. We can no longer sit with these tools in our hands and watch thousands and thousands of mainly young people die needlessly.
A couple weeks ago, we visited a wonderful clinic in South Africa where these tools were in place
were being used
and they have proven that no one needs to die from AIDS. I call it the 'living' clinic. This was such a sharp contrast to my previous visit to the 'death' clinic, where people came to die and where we saw rows and rows and rows of dying people. As human beings we cannot allow anyone to die unnecessarily. As businesses (and individuals) we have a wonderful opportunity to stop the HIV / AIDS crisis from continuing to grow in India.
The starting point for businesses is taking care of our own staff and their communities with the '0% Challenge, but we can go well beyond that and use the innovation inherent in entrepreneurialism to change the way we approach social issues.
We at Virgin pledge not to let one of our staff die of AIDS, in India or anywhere else in the world. We ask every other company to join us in this pledge.
Yes, it is a war but a war that I truly believe can be won - if we all overcome territorial, religious, cultural and social barriers and work together. Every single business needs to look at their core resources and see how each of us can play a role in ensuring that HIV / AIDS does not win the war in India and the rest of the world.
It is our responsibility not to turn a blind eye to what is going on but to reach out our hands, lift them from their knees and stand together shoulder to shoulder to defeat this scourge.
So, before I answer questions, let me end on a slightly more uplifting thought
Where next for the Virgin brand (apart from India, of course)?
Over the next few years I hope to see Virgin bring our unique brand of fair, innovative and quality consumerism, to all countries across the world. With this feat in mind, a feat I believe we'll achieve, I started to ponder what happens then. You all know where this is going, don't you?
mmm
Sod it, I thought, let's look in to going to space!
Virgin Galactic was born