The Richard Branson method
The dividing line between large-scale business success or an early bankruptcy is sometimes just a thin layer of varnish. Richard Branson, eccentric entrepreneur and founder of the world-famous Virgin brand, makes this sincere confession in almost every interview that asks about the nature of his success. Sometimes you just have to be lucky that you manage to pay all bills just long enough in the initial phase of your new venture. However, Branson's successes are impossible to summarize as an accumulation of happiness. Behind the Virgin empire there is indeed an innovative way of thinking: the Richard Branson method.
From frustration to business model
We can hardly imagine it in the Spotify era, but there was a time when artists earned almost nothing from concerts and had to rely mainly on the sale of singles and albums. The true music lover spent large parts of his monthly income on extremely expensive LPs that were displayed as trophies on bookcases in many living rooms.
In that market, Richard Branson started his first company in the early 1970s: Virgin Records. The biggest frustration on the record market at the time was the price of an LP. By not selling LPs in stores, but via a mail order concept, Branson was able to bring the price down and make albums more affordable. It wasn't long before the company became successful and – ironically – opened its first store.
This business model – in fact the first model Branson ever set up – symbolizes the majority of the companies he started in his impressive career. Branson looks closely at a market or supplier, for example the record industry, and reveals where the greatest frustration lies: in this case the cost price. He then has the guts to devise a business model that removes that frustration.
Guts and determination: Virgin Atlantic
One of Branson's best-known companies is undeniably Virgin Atlantic Airways. When he was 28 years old and stranded at an American airport on his way to, yes, the Virgin Islands, he decided that things could be done differently (read: better). American Airlines canceled his flight and he, along with dozens of other victims, would have to spend a night at the airport.
Branson had no intention of doing so, turned to the charter department and divided the price of renting a private plane by the number of seats available. He returned to 'his' group of passengers and asked who wanted to fly to the Virgin Islands that evening for $29. That same evening Branson landed 'just' in the Virgin Islands.
It eventually led Branson to found Virgin Atlantic, an airline through which Branson sought to resolve his own frustrations he had experienced on flights with other airlines. With Virgin, he offered direct flights to cities that would otherwise be difficult to reach. Of course he paid attention to the price. He created a pleasant atmosphere, including through sympathetic staff, nice music during boarding and good meals on board. In addition, he introduced an understandable points system for frequent flyers, which he thus managed to bind to his brand.
However, Branson was not going to win in the aviation industry with just a good product. The fierce competition – mainly consisting of British Airways (BA) and American Airlines (AA) – had to be tackled. Over the years, Branson used slogans like “Mine's bigger than yours”, “4 engines 4 longhaul” and “No Way BA/AA” – referring to a proposed merger between AA and BA – on the side of his planes. He continuously referred to the competition with BA in particular, and did so in a way that aroused sympathy from the general public.
Profit within twelve months
Branson's management style has few laws of Medes and Persians. He has no permanent headquarters, does not hold meetings and has no technical knowledge about the products or services his companies offer. Branson's business is based on a conviction that there is a need for innovation in every industry, and that the party that innovates the best ultimately wins.
One of his few rules is that every company must be successful within twelve months, otherwise he will pull the plug. Virgin Atlantic, for example, wrote black numbers within a year – particularly for an airline. If you don't achieve success within a year, Branson argues, there's something wrong with your product and you're not going to be the best.
What is innovation to you?
To come back to the concept innovation: at Branson, that's a broad concept that can mean something different to everyone. Innovation is therefore applicable to every industry and does not necessarily mean that you come up with a completely new concept. Many market leaders tend to sit still and innovate too little; that's where Branson sees opportunities to outsmart the competition by right well to innovate and try to take over a market.
A good example is Radio Free Virgin. In the late 1990s, the Internet gained popularity among the general public and the first broadband connections became available. People could be online day and night, but there were still few applications that required this. Branson saw an opportunity that nobody saw at that early moment: He started a platform – Radio Free Virgin – where dozens of radio stations were offered as live streams. For the first time, radio listeners could bring stations from all over the world into their living room in an accessible way.
Don't follow the trend - Be the trend
In short, following the trend is not being the innovator. According to Branson, you will have to start a trend yourself. See opportunities for improvement in the world around you and don't be held back by a so-called lack of knowledge. Branson knew nothing about aviation when he rented a plane at 28 and, after all, he still knows nothing about aviation today. But he does know which innovations are needed to make a difference in every industry. That's why it's no coincidence that you're currently the best on a Virgin aircraft WiFi at the best price.
Branson's next step: affordable space travel for you and me. With Virgin Galactic, he wants to innovate space travel and make a flight beyond the atmosphere possible for everyone. That may sound a long way off, but for Branson it is simply the next logical innovation in the aerospace industry.
Constantly ask yourself which innovations would radically improve your industry, and make sure that you are the one who trend move. Otherwise someone else will do it.