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BRENDAN MCDERMID

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.

Now, you need to give those people the right tools. You need to make sure that all the little details of the company - you know, you're painting a picture - if you're setting up an airline, every single little detail needs to be right so that those people who are working for that company can be really proud of that company. But having a leader that really inspires those people is the key.

KM: You're a leader, undoubtedly, of 50,000. Why do people want to be led by you?

RB: Hopefully, because I've found - perhaps, one of the things I can do is find - I've found people around me who are the kinds of characters that I've just painted the picture of; who are great motivators of people. And the kinds of companies that we're running and the kinds of things we're doing - people who work for Virgin believe in [them] I mean, in every industry that we're in, we are actually doing something for the consumer that they can be proud of and, when they go out into the pub at nights and they're talking about, you know, "I work for Virgin," people, maybe, are slightly jealous about the fact they work for Virgin. So, it's almost a sort of self-perpetuating good problem.

KM: If you were the dean of a business school, what would you want to see on the curriculum?

RB: I think, as much practical experience as people can have, the better, and, I think, people do learn. Anyway, I'm dyslexic, so I know that I learn the most from practical experience. So, the more someone can make a school act practically, I think, the better.

I just have a funny story about being a dyslexic and building a group of companies. So, age 50, we're having a board meeting and I said something like, "Is that good news or bad news?" And, one of the fellow directors said, "Look Richard, come outside a minute." And he said, "I don't think you know the difference between net and gross yet." And, I said, "Well, yeah, I sort of got away with it for the last 40 years." So, he said, "Look, you know, let me show you. Here's a bit of paper and here's the ocean, here's the net in the ocean - the fish are in the net - that's your profit at the end of the year - the net that's caught the fish - and the rest is gross, that's your turnover." "Phew, got it! I thought we were doing a lot better than that. I thought it was the other way around."

Anyway. Sorry.

KM: I've been reading your books and you talk a lot about fun and I am just absolutely seduced by that idea of just having more fun. I think I enjoy myself occasionally in class but, you know, you're middle-aged, you have mortgages, you have all these … . Fun, it just seems like we love it, but how do we get more fun? What's your advice for [those in]middle age, where we have to work a lot?

RB: I think, again, I mean, if we're talking about it, it does come from the top down. I think that - and, if it doesn't come from the top down, people from below have got to shake people at the top.

If you go to a party and, the person who's hosting the party, if they stand in the corner of the room and they're sipping sherry, it sounds like you're going to have a pretty dull night, you're all going to be doing the same thing all night. If, on the other hand, the host of the party or the chairman of the company, you know, is the first in the swimming pool with his clothes on, you're pretty well guaranteed it's going to be a fun night.

And, so, I think it's important for leaders to not worry about being seen to let your hair down, not worried about getting out and getting drunk with your staff. And, most likely, if you are going to go out with your staff, have a little notebook in your back pocket because they'll tell you lots of things and you need to scribble them down over a drink because you'll never [remember them]the next day. But, anyway, that kind of attitude is important and I think companies need to have a lot more flexibility with their people.

If somebody's got a wedding - and Virgin companies are not perfect by any means on this - but, if somebody's got a wedding, for God's sake, let them go to the wedding. Don't make a big deal about it. You know, if somebody's died, let them take a few days off - just being human with people. If somebody wants to golf around the world for two months, okay, well maybe, on an unpaid basis, let them do it. That sort of flexibility is incredibly important because most of our time we spend at work.

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