KARL MOORE : This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am speaking to Sir Richard Branson, the chairman of the Virgin Group [Ltd.] I will be joined on stage this evening by Chris Lannon, an MBA student from Halifax who has PhD from the University of British Columbia, and Barbara Dourley, who is from Toronto, an undergraduate, who is the president of the Management Undergraduate Society [at McGill]
CHRIS LANNON: Sir Richard, you spoke about the breadth of companies that are within the Virgin Group and my colleague, Mike, is wondering, when you're evaluating new opportunities to bring them into the Virgin fold, what are you looking for?
SIR RICHARD BRANSON : Well, I think there's no point us going into something unless we can really shake up an industry, make a major difference - unless it's going to enhance the Virgin brand. If there's any chance of it damaging the brand in any way, even if it's going to make us a lot of money - you know, cigarette companies or something like that - we just wouldn't, we wouldn't do it. And, because life's short, we want to enjoy the experience.
I mean, we're not - I've never - very rarely have I actually sat down and thought, you know, "Can I make a lot of money by going into this industry?" Almost all our new ventures have come about from - we can go right back to the beginning - Vietnam War - let's edit a magazine to try to have young people campaigning to stop the war and let's give young people a voice.
The actual business aspect of it, the paying the bills, you know, we had to sort that one out later and, hopefully, sell enough magazines and, you know, learn about the printing and the paper manufacturing, but that wasn't our principal interest.
And, almost every venture we've gone into, we've seen a gap in the market. You might be getting frustrated flying other people's airlines and, "Screw it, let's do it - we'll start an airline." And then, we try and make sure we can get the bills paid. And, actually, I think, it's the better way of doing it.
You know, if you think, "How can I make lots of money? Let's bring the accountants in. We'll work out some business plans," I mean, it's just the wrong way around. You get one set of accountants who'll say, "Yes, you can make lots of money." Another set of accountants with exactly the same input who will say, "No, you're going to lose lots of money."
It's got to be from your heart and do something which you're passionate about, which is going to be your hobby, and then it's likely to be successful.
CL: So, this might be a bit of an understatement, but you seem to have a slightly higher tolerance for risk than the average person - at least for me, anyway. How do you, sort of, assess that risk when you're looking at these new opportunities?
RB: I think, yes, superficially, it looks like we have a higher tolerance for risk. But, having said that, one of the most important phrases in my life is, "protecting the downside" and it should be one of the most important phrases in any business person's life.
So, okay, we made a big, bold move from going from music company into the airline business but I set myself a condition that I could hand that plane back at the end of the first 12 months if … people didn't like our business. And so, one of the most important negotiations with Boeing was, "We have the right to give you that plane back after 12 months." And that meant that I knew that I could put my toe in the water, I could see whether people liked the airline, but if didn't work out, it wasn't going to bring everything else crashing down. I'd be able to look my record company bosses in the eye and we'd still be friends because they'd still have jobs and, so, protecting the downside is critical and, so, we'll make bold moves but we'll also make sure we have ways out if things go wrong.
KM: Sir Richard, when you're looking to hiring and making someone a leader at Virgin, what are you looking for in terms of a leader - at the Virgin Group?
RB: Well, a company consists of one thing, really. If I buy a plane from Boeing, it'll be exactly the same plane that BA [British Airways]will buy, which will be exactly the same plane that United [Airlines]will buy, exactly the same plane that Air Canada will buy. So, what is a company? A company is the people that are working inside that plane, the people that are working on the ground. They're the people that make up a company. They either make this company exceptional or average and, so, if we're looking for somebody to run one of our companies, we want to be sure that they are fantastic motivators of people, that they love people genuinely, that they're looking for the best in people, that they praise people, that they never criticize people and that they treat the junior staff as importantly as their fellow directors if not more importantly. And, I think, that's what sets a good company apart from a bad company.