Like a Virgin: Secrets They Won't Teach You at Business School

A-B-C-D

I am often asked about what appears to be a fairly high level of vertical integration within the Virgin Group’s scores of businesses – a situation in which many ventures are united under a common owner. My customary, half-joking response is usually that we prefer to see it as ‘vertical disintegration’.

Don’t get me wrong: I don’t mean to imply that our group is falling apart – quite the opposite! We continue to grow and enter new business sectors at a healthy clip. While a lot of these new ventures may appear to observers to be utterly tangential – as when we were an independent record label and we started an international airline; later we got into mobile phone services and health clubs – over time the synergies usually become apparent. So if ‘disintegration’ sends the wrong message, a better way to describe our philosophy of growth is the ABCD process: as in ‘Always Be Connecting Dots’.

It’s rather like those drawing books where children connect sequentially numbered dots, eventually creating a picture that wasn’t at all obvious at first glance. Connecting the first few dots is usually more difficult, and then, as in business, when the big picture starts to emerge, finishing the puzzle usually gets a lot easier.

When we launched Virgin Atlantic in 1984 there wasn’t any obvious connection between our company, which was then Virgin Records, and the airline industry. At the time the level of service being offered by the world’s airlines was just so awful that we felt there was a huge opportunity for a company ready to put some effort into doing things better. It just so happened that, as we were already in the entertainment business, we naturally brought what we knew best – how to entertain our customers – to an industry that was desperately in need of precisely that tweak.

We equipped our planes to provide great audio and video entertainment; assembled a fun, happy cabin crew who actually enjoyed looking after their customers; designed comfortable, contemporary interiors; and then sold the experience at a highly competitive fare. Suddenly the dots connected and Virgin Atlantic was the cool new way to travel and the talk of the airline industry.

When we first ventured into mobile phone services, we really didn’t know much about the business, but saw an opportunity to disrupt the market, particularly by focusing on the needs of young people. At the time most of the big carriers were focused on selling monthly contracts to adults. Parents of teenagers and college students were usually loath to let their kids have mobiles because they so often exceeded their talk and text limits, racking up big charges on their parents’ accounts.

Through Virgin Mobile, we returned the focus to the customer, instead of only competing on minutes and rates. We offered parents the option of setting a credit limit on a phone and keeping it topped up to that level, which meant that none of our customers had the experience of opening a phone bill at the end of the month and discovering unanticipated charges in the hundreds of pounds. As with the airline, we had seen an opportunity to take advantage of our strengths in customer service and simply connected the dots – as well as a lot of phone calls and texts.

Diversification is often a terrifying concept for executives at other companies and they usually have a story or three to tell about ‘here’s why we stick to our knitting’. If you listen to those stories, there’s usually a common denominator: even if you are the best knitters in the industry, when you enter a new sector that has no relationship to balls of yarn, you shouldn’t march in brandishing your knitting needles and declare, ‘This is the way we do things around here’.

When we boldly venture into new businesses about which we know next to nothing, we always hire people who know the sector well, but who, like us, also understand that it is ready to be shaken up. The right people will be capable of connecting even the same old basic dots in such innovative ways that a wholly different, quite distinctive, picture will emerge.

So there’s no great secret to our launching or partnering with what seem to be unconnected businesses. That’s not to say it’s easy, but by sticking to our core brand values of delivering superb customer service, bringing together terrific people and engaging in unbridled innovation, we have found that there are very few businesses with which a connection cannot be made and learned from. And these experiences strengthen the group as a whole, allowing us to make new connections.

Looking back, I am always flabbergasted at just how well all the Virgin dots line up with each other. We now have brand loyalists who fly with us, work out with us, use our mobile phone and broadband services, take our trains, drink our wines, watch our films and now can even bank with us.

We also once had a knitting company at Virgin. It was called Black Sheep and was run by my Aunt Clare but, as you may have surmised, we simply didn’t stick with it.

Remember A-B-C-D! You will end up in the most amazing places.