Case Study on Entrepreneurship: Richard Branson

This is a story that begins on July 18, 1950 in Shamley Green, Surrey, England. Growing up in a traditional family, Sir Richard Charles Nicholas Branson struggled throughout school due to an as of yet undiagnosed problem of dyslexia. He excelled in sports, serving as the captain of both his school’s football and cricket teams, but it was in business that he found his true calling. Despite failing in two early ventures — growing Christmas trees and raising Australian parrots — he was determined to create his own successful business.

When he was 16 years old, he dropped out of school to move to London and launch Student Magazine, which did see relatively more success. But, it was in founding the Virgin mail order record company three years later that his life would become something of real significance. His success in selling mail order records led to the opening of a record shop on Oxford Street in London, and soon after, Branson’s very own record label, Virgin Records. In a relatively short period, what Branson started as a mail order company had become one of the more significant record labels in the U.K. From thereon out, Virgin Records would continue to know much mainstream success.

Early Leadership Lessons

As much as the Branson name is tied to the Virgin brand, it is also connected to the success of 350 very different operations. Branson is as a person is related to who he is as a leader and the identity of his companies. Branson believes that his leadership style has its origins in his upbringing, where his parents taught him to stand on his own two feet. At age six, his mother would shove him out of the car and tell him to try to find his own way home. At age 10, she put her son on a bike to ride 300 miles. These lessons built character as well as endurance, says Branson, and also leadership qualities.

Branson believes he learned leadership through trial and error, since founding his first company, Student magazine, at age 16. What is the most important quality of a good leader? “Having a personality of caring about people is important,” he says. “You can’t be a good leader unless you generally like people. That is how you bring out the best in them.” He reinforces that message with all his CEOs and top managers.

Beyond Branson’s philosophy of leadership are the actual nuts and bolts. How does a man who owns 350 companies get it all done? Branson places enormous value on time management skills. As chairman of a large group of firms, Branson says he spends about a third of his time on trouble shooting, another third on new projects, both charitable and business, and the last third on promoting and talking about the businesses he has set up. He also makes time for family and vacation. How Branson allots his time relates closely to the values of his corporation. “I’ve had to create companies that I believe in 100%,” says Branson. “These are companies I feel will make a genuine difference. Then I have to be willing to find the time myself to talk about them, promote them and market them. I don’t want to spend my life doing something that I’m not proud of.” Branson leverages that philosophy even further by using his business skills and those of his employees and managers to tackle social issues around the world.

He learned early on to develop his delegation skills. “As much as you need a strong personality to build a business from scratch, you also must understand the art of delegation,” says Branson. “I have to be good at helping people run the individual businesses, and I have to be willing to step back. The company must be set up so it can continue without me.”

Branson has been tagged as a “transformational leader” in the management lexicon, with his maverick strategies and his stress on the Virgin Group as an organization driven on informality and information, one that is bottom-heavy rather than strangled by top-level management.

A Young, Fun Culture

In order for this process to work, employees must be happy. Branson says his philosophy of “look for the best and you’ll get the best” helped him build an empire recognized for its young, fun culture. “For the people who work for you or with you, you must lavish praise on them at all times,” Branson says. “If a flower is watered, it flourishes. If not, it shrivels up and dies. Its much more fun looking for the best in people. People don’t need to be told where they’ve slipped up or made a mess of something. They’ll sort it out themselves.” Branson feels strongly that if an employee is not excelling in one area of the company, he or she should be given the opportunity to do well in a different Virgin Group job. Firing is seldom an option.

Motivational strategies extend to innovative ideas. The key to encouraging innovation within the Virgin ranks, suggests Branson, is to listen to any and all ideas and to offer feedback. Employees often leave companies, he reasons, because they are frustrated by the fact that their ideas fall on deaf ears. Interaction between employees and managers is fundamental. For the companies in which he serves as both chief executive and chairman, Branson writes his staff “chitty-chatty” letters to tell them everything that is going on and to encourage them to write him with any ideas or suggestions. He gives them his home address and phone number. He responds with a letter personally, even if he doesn’t follow up and deal with the details. Sometimes people come to him with personal problems, while others have suggestions for improvements in their companies. Either way, they get the chance to be heard.

And then, of course, there are occasions when the boss needs to connect with employees while leaning up against a bar. “Some 80% of your life is spent working,” says Branson. “You want to have fun at home; why shouldn’t you have fun at work? I think leaders have got to make a bigger effort to make sure the people who work for them are enjoying what they’re doing. If a chairman of a company visits Seattle, that chairman should take all the staff out in the evening and have a few drinks together, talk together and party together and not be embarrassed about the staff seeing the weaker side of you. They don’t lose respect for you because they see your human side. They actually gain more respect for you.”

Building Trust

Branson has developed a level of trust with his top managers by setting the direction and then stepping back to let them navigate. “I come up with the original idea, spend the first three months immersed in the business so I know the ins and outs and then give chief executives a stake in the company and ask them to run it as if its their own,” explains Branson. “I intervene as little as possible. Give them that, and they will give everything back.”

Trust in managers and employees is particularly important as Branson looks to build Virgin. Adding more companies to the cache makes it that much more difficult to be everywhere at once. Yet, for Branson, expansion is always a priority. “Virgin is an unusual brand,” he notes, because it is a “way of life” brand, unlike Western brands like Coca-Cola or Nike that focus on one type of product. Virgin challenges big businesses in completely different sectors. “In Nigeria, we’ve been asked to set up a national airline,” he explains. “In India, were going to build a phone company. In South Africa, the financial services industry is still stuck 30 years back with incredibly high prices. Were looking at getting in there and shaking up the industry. In America, were looking at space travel. Around the world were looking at taking the brand into a number of different industries. Our criterion is, will it fulfill the Virgin yardstick of being good value for the money? Will it enhance the brand by bringing great quality? Will we have fun doing it and can we make it profitable? If those criteria work, then we’ll seriously look at a new industry.”

When asked what motivates him to grow now that he has money and fame, Branson says he sees his own life as the long university education he never had. “Every day I meet new people, challenging them and being challenged.” Virgin is poised, he believes, to make a real difference. “Because I don’t see Virgin as a company but as a way of life and I fully enjoy it, I don’t think Ill ever retire,” says Branson. “The world is a big place – and were going into space, which is an even bigger place. In the next stage of my life I want to use our business skills to tackle social issues around the world There are issues that rage that should never have gotten out of control. Malaria in Africa kills four million people a year. AIDS kills even more. There are numerous other problems, as well. That’s something I plan to do. I don’t want to waste this fabulous situation in which I’ve found myself.” . On 21 September 2006, Branson pledged to invest the profits of Virgin Atlantic and Virgin Trains in research for environmentally friendly fuels. The investment is estimated to be worth $3 billion.


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