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Sir Richard Branson shares his uplifting and successful philosophy

Kurt Marko Profile picture for user kmarko October 2, 2017
Summary:
Is the testosterone fueled management mantras so typical of Silicon Valley the only way to succeed in today's world? Sir Richard Branson thinks not.

Branson-informal
Sir Richard Branson talks at Veritas event

We don't normally cover adjacencies and especially motivational speakers at tech conferences. Most of them are full of it. Sir Richard Branson is different, reflecting perhaps a deep unease among those who serve their businesses.

When reflecting on the current state of business leadership, it's incredibly easy to succumb to the sweet self-righteousness of cynicism when one sees a CEO 'retire' with a $90 million pension after running a company that mismanaged the most sensitive personal information of 140 million people.

Indeed, once someone hits the CEO jackpot, failure rarely has serious (at least financial) consequences, as witnessed by another CEO that earned an average of $900,000 per week for running a former tech bellwether into the ground, destroying 90% of the value of a once-$50 billion company.

In the face of such massive malfeasance, it's easy to believe that every chief executive is only out for personal profit maximization, not the good of customers, employees or shareholders. Then, along comes an inspiring entrepreneur like Sir Richard Branson to restore your hope in humanity and remind you that there are global leaders demonstrating that it's possible, indeed preferable to do well by doing good.

Branson gave a stirring keynote at the recent Veritas Vision conference in his first public appearance since losing his home on the Virgin Islands to a hurricane.

While he opened by discussing the devastation inflicted on the Caribbean by this season's relentless storms, the bulk of his speech covered his uplifting and successful business philosophy that's focused on doing well by customers, employees, other business stakeholders and the environment and how embodying such values isn't incompatible with business success. His corporate empire proves quite the opposite.

Although he has a gripping life story full of personal adventure and business daring, none of Branson's advice is particularly original, which makes it all the more galling that more executives don't follow it. Branson's maxims can be boiled down to the Golden Rule for business: treat customers as you would like to be treated (or even better) and solve problems in ways that exceed expectations.

One of Branson's taglines, doing well by doing good was first attributed to Benjamin Franklin and it's been used by countless others.

One need look no further than the business and life lessons gleaned from Warren Buffett that includes his homespun guidance like empowering employees, building a positive business culture, keeping focused on the long term, learning from mistakes and serving customers, not the bottom line to see that leaders with an optimistic, uplifting and humane business philosophy are capable of generating immense wealth, both for themselves and their employees and investors.

Finding a need and filling it

Key to Branson's success is an unrelenting focus on fulfilling customer needs, ideally in ways that exceed their expectations. He recounted the story of how his foray into the airline business came quite by accident, the result of a common misfortune of airline travel, canceled flights. As Branson tells it, he was traveling in the Caribbean and

They didn’t have enough passengers to warrant the flight, so they cancelled the flight. I had a beautiful lady waiting for me in BVI and I hired a plane and borrowed a blackboard and as a joke I wrote Virgin Airlines on the top of the blackboard, $39 one way to BVI. I went out round all the passengers who had been bumped and I filled up my first plane.

Taking perhaps a bit of poetic license, Branson says that after the flight, one of the passengers facetiously told him that all he needed to do was work on his in-flight service and he might have a future in this airline business. That got him to thinking and soon after he called Boeing which found an unused 747 to rent and Virgin airlines was born.

Branson's books and website are full of inspiring quotes culled from others, but this one from John Maxwell perhaps best summarizes the empathetic, humanistic philosophy he shared on stage,

Tend to the people, and they will tend to the business.

By which, he means people in the broadest sense: empowering employees to make decisions and do their best work, caring for customers with delightful products and services, and being considerate of the broader community and environment when making business decisions. As Branson puts it in another blog post,

A business is about people. A business is about making connections. A business is about finding solutions. A business is about creating opportunities. A business is about making things happen. A business is about going the extra mile. A business is about love.

The proven successes of an empathetic, customer-centered philosophy

Of course, Branson isn't the first to build a successful company on a foundation of unwavering customer commitment. A famous example from my own backyard is the Albertson's grocery chain, founded in 1939 by Joe Albertson in, what was then tiny, isolated Boise, Idaho. Over the intervening decades, through a combination of organic expansion and M&A, Albertson's has grown into the third largest grocery chain in the U.S. Until his last days, Joe Albertson frequently recounted a business philosophy that was instilled in his employees from top to bottom,

Give the customer the merchandise they want, at a price they can afford, complete with lots of tender, loving care.

These weren't just hollow words for Albertson, even in his wealthy later years he lived this philosophy. As a Boise resident, I often remember seeing him when I visited the original store location where he and his wife would greet customers, ask if they found everything they wanted and often help bag orders.

That kind of customer-centered approach engendered tremendous loyalty and helped the company grow at the expense of less mindful competitors.

More recently, the company most associated with an obsessive focus on customer wants and needs is Amazon. Much to Wall Street's dismay, CEO Jeff Bezos routinely prioritizes product development, thin margins and business expansion over profitability.

It shouldn't have been a surprise since, much like Warren Buffett, Bezos is quite open about his strategy and business philosophy in his annual shareholder letters. For example, in his most recent 2016 missive, which harkens back to the competitive paranoia Bezos coined as Day 1 thinking, he writes,

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.

In Amazon's first annual letter, which he appends to each year's update, Bezos makes clear that the company "will continue to focus relentlessly on our customers" and "obsess over customers." In contrast, Day 2 thinking is marked by complacency and milking cash cows. In Bezos' view,

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

My take

Doing right by the customer and instilling an empowered, positive work culture that employees both prioritize the customer experience and are devoted to the company and its mission, is a proven way to long-term business success.

However, it's easier said than done for public companies. What each of the examples I've cited have in common is a business under the control and unquestioned leadership of a strong founder who can resist short-term Wall Street thinking that prioritizes quarterly profits and earnings growth over long-term competitive advantage, customer and employee loyalty and business sustainability.

Operating according to the Golden Rules of business is much more difficult when a diverse set of often transient stakeholders like mutual fund and hedge fund investors wield significant financial control. Indeed, the strategic advantage of founder-led companies, along with the ready availability of large sums of private capital, is a major reason why so many to today's most innovative and disruptive companies, like Airbnb, Uber, Pinterest and Dropbox have resisted IPOs even as their valuations swell into 8-figures.

Branson made a compelling case for the compassionate corporation, but as this Brookings paper details, law and business school curricula still reinforce a single-minded purpose that has developed since the time of Reaganomics. "It is common for corporations to direct their attention to serving shareholder and management interests, and to achieving the highest short-term financial return" which leads to "a decline in broad social and economic values in favor of viewing the corporation solely as a vehicle for personal financial enrichment."

Systemic changes in business behavior will take more than noble messengers like Branson and Buffett, but require a measure of capital and investment market reforms.

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