Think big, think bigger: What I learnt from Richard Branson

Richard Branson at NAC, Excel, LondonI was fortunate enough to see Richard Branson speak at the close of a three day event at the London Excel conference centre last week. There were reportedly 7500 people in attendance. He was interviewed by Michael Burke, and quite nervous.

“Create something that makes a difference to people’s lives”

That was his overall message, and he felt, the secret to his business success. In a way we could call that the blueprint for the difference between a millionaire and a billionaire. You can probably make a million by ripping people off, many do. But to make a billion, you have to provide something useful and be liked, you have to get on with people. Branson was clear on making peace with his enemies such as the chief executive of BA who pulled a dirty tricks campaign on Virgin Atlantic to try to bring the airline down. Branson took him out for lunch to shake hands. When asked if he had the same kind of “you’re fired!” attitude to Sir Alan Sugar, Branson replied that he would never aim to fire someone. If they’re not performing well he’ll try to find out why, perhaps they need to be moved to a different position. If the person is still disruptive and nothing can be done then obviously they’d have to move on, but that would be a last resort. Branson was keen to see Virgin as a family. A family that invites in the right people in the first place.

This is what Branson would have seen from the stage

“You wouldn’t fire your son or daughter from your family” he said. His opinion on companies and their relationship to their employees was important to him.

“A good leader will promote well above what people will expect. (We need to) …ask companies to think about much more flexibility about how their people work. As a leader, you’ve got to be a great listener.”

When 9/11 happened Virgin lost £300 million in a week. He had to make drastic decisions to save the business and that meant offering voluntary redundancies. He told the employees that they would be first back in when conditions were back to normal. He kept to that and within 12 months everyone who had left was back again. He was sad he’s had to sell some of the companies assets – some property and the music business, but that had been necessary to keep the main businesses going.

The most exciting, and moving, part of the interview was his description of the Virgin Galactic space programme. We’ve got to bare in mind that after this month, NASA won’t have an active space programme – but Branson will. You can just imagine him trying to convince his shareholders, not to mention his engineers that they were going to be the first private company to offer space tourism!

What became powerfully clear was that he was deadly serious. This was no hot-air ballon trip. For $200k you can book a seat into space. Branson thinks he can get the price down to $50k in the near future. But why do it? He pointed out that everyone who has ever gone into space has been transformed by the experience. He wants to offer that experience to as many people as possible. When you think that big, other ideas and opportunities spring off it. He said that a spin off from Virgin Galactic will be that in the future you’ll be able to fly from the US to Australia in around 2 hours. With the cost of space travel coming down so low, he imagines schools and universities being able to create satellites that Virgin Galactic will be able to launch into orbit. This is momentous stuff when you consider that passage on the Russian Mir spacecraft is currently in the realm of $100 million.

Not my helicopter, it was Richard’s…

Although he grew up in a middle class, well off family and attended public school, he felt that his success came from his ability to be self-sufficient from an early age. At one point his mother turned him out of the car and told him to make his own way to Grandma’s house. (“Today she’d be arrested” he said).

His opinion is that “Schools are almost there to make people conform” and that “we have to find our own way, to stand out and stand up for ourselves”.

So what was Branson’s secret? How did he do it?

“If I see something that’s not being done very well, I’ll try to do it better. Go for quality. Be the best at whatever you do. Otherwise there’s no point in doing it”

He was also flexible and creative when it came to coping with problems. He was not ashamed to talk about his mistakes and his failures. When his newly launched Virgin Music mail order company was launched he was faced with an elongated postal strike. He changed his plans to accommodate the new environment and instead opened his first retail store.

Finally he was asked what advice he could give to the audience (the question that Sir Alan Sugar had refused to answer the previous day).

He paused, smiled and then said his now famous catchphrase:

“Screw it, just do it!”

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Why HMV will die and how they could have survived

hmv oxford

Not much music in the window. They filled it with a display for Oasis' Don't Look Back in Anger single in 1995. Those days are gone.

HMV is the last recorded music retail outlet left in the UK high street. Over the past few years we’ve seen the demise of Our Price, Woolworths and Virgin Megastore/Zavii. Now, for the very same reason HMV are closing around 60 stores.

People usually blame the demise of our record shops on technology and the rise of iTunes and Amazon. But I believe there’s a deeper reason why the high street shops have failed.

The fact that it’s more convenient to buy music online is a misnomer. We’ve all fallen into the trap thinking that ‘convenience’, speed and price are the only factors involved in a purchase. That is of course true with a commodity. With a purchase that is not a simple commodity, price has little baring because its the buying experience and the added value that is important. This is how the music industry has played the biggest part in it’s own death, by stupidly turning music into a base commodity.

The rot started in the mid 1980s when the music industry began the great compact disc swindle. They persuaded us to buy all the music we already had on vinyl, citing the better quality (which wasn’t quite true) and the better durability (which wasn’t quite true) and the fact that the new medium was smaller and therefore more, ‘convenient’. Because it was smaller we lost the experience of the album cover art. Because CD singles and albums were the same size we lost the specialness of both mediums. Because it was so handy and cheap it was quickly devalued and able to be given away free with magazines. The digital nature of the encoded audio and availability of CD burners meant it became easy to duplicate. By removing all the awkwardness and weaknesses of the vinyl record, they had transformed recorded music into a cheap, valueless commodity.

12” long playing records or a three minute 45 rpm single are completely different objects to the equivalent CD. They are bigger, heavier, have bigger almost poster-like artwork. They are fragile. To play a vinyl record you have to remove it carefully from the sleeve, place it on the spindle, lift the needle into place. After 3 or 20 minutes or so you have to lift the needle again and turn the disc over. With vinyl you are engaged and that’s the key: listening to music is an experience, not a commodity.

In the mid 1980s, Our Price Records changed their name to Our Price Music because they were now stocking tapes and CDs. They somehow felt they weren’t ‘records’. A small point but a relevant one in the separation of ‘music’ from the medium it came on and at the same time from the experience. It’s interesting that new bands, even today, stubbornly refer to their product as ‘records’ not CDs. A compact disc or vinyl disc is the medium for the ‘record’, which is the important thing.

At this point in an argument like this people usually cite the old chestnut of the ‘march of progress’ and the ‘advancement of technology’ and that we shouldn’t live in the past but embrace the future. This is rubbish. If technology was more important than experience we would not have restaurants or cooking, we’d just take a variety of nutrition pills. We would not have clothes fashion, we’d all wear silver fabric jumpsuits. The experience is important and that’s what we cling onto. That’s what we pay for. That’s why cinema attendance has never been so high even though it’s more convenient to watch DVDs at home on your 40” TV. That’s why music concert and festival attendance has never been so high when we can all put our iPod headphones on an listen to whatever we want whenever and wherever we want.

The irony is that the secret to the safe survival of the music industry was right there all the time, inside the music industry with the songwriters and musicians that make new music. The technology involved in recorded sound has advanced unimaginably since the early 1960s and yet all new rock bands that start making music aim to make that music using methods and technology that goes back 50 years. That’s why rock bands play guitars that may be newly manufactured, but their design and set up is a facsimile of the instruments that the Beatles, the Stones, or Led Zeppelin all played. In the 1990s VOX amplifiers brought back their old fashioned looking range of amps because all the bands wanted their stage to look like what all the classic bands stages looked like. Amplifier manufacturers ditched the advanced electronics and transistors to return to the values and tubes of the 60s because the musicians wanted that authentic value sound. And of course every rock band wants their records to be released on vinyl.

Of course not all new music follows this pattern and amazing sounds and new forms of music have been created with new technology too. The point here is that the music industry failed to realise that all music is not the same. The dance halls are filed with electronica, young girls fill their iPods with the latest pre-fab teenybopper and festival goers want their bands to be live and authentic. These are just three types of music which are created and consumed in completely different ways by different types of people for different types of people. And yet HMV and the like tried to sell it all in the same way, and when that started to fail they filled their shops with DVDs, computer games and iMacs, betraying the music audience they used to serve and appealed to no-one.

It’s probably too late for a single company like HMV to recover, but it’s not too late for the music industry. They need to re-discover that music is an experience. Some of those experiences can be packaged and sold at a profit and some cannot. They need to stop treating all music as the same thing. The genres are consumed in such different ways and yet the only way they’re differentiated in a music shop is by having their CDs in a different rack.

High street shops have something that iTunes doesn’t have: a physical shop that you can walk into. Music shops (and bookshops) seem to moan or panic as if such an advantage is a noose around their neck. If retail was dead, how come Apple Inc. opened their hundred or so shops worldwide and get a footfall of almost two million people per day for products that is easier to buy online. The answer is that they have created an experience that you can’t get online.

If the music shops realised that certain genres of music have an audience that would relish having a shop experience they could have transformed their retail units to accommodate them. By getting rid of all products that people would rather buy somewhere else they could have re-stocked vinyl records (a niche but growing market). They could have hosted classic album listening sessions. They could have hosted live bands. They could have built a model around the long-tail (selling many different obscure materials rather than stocking just few obvious titles). They should have realised that the markets these ideas would appeal to have the money and inclination to want it. It would mean abandoning the X Factors, Pop Idols and the charts (you can’t compete with the commodity of the download) and embracing an older audience. It would mean only the music genres that have the strongest experiential and lifestyle elements: possibly including new emerging urban sounds, some types of dance, classic rock, blues, jazz and folk (basically all the music forms created from the ground up by people, not manufactured to a formula by music industry management).

They say you can make excuses or you can make money, you can’t do both. The problems any business faces today can’t be blamed on technology or changing markets, or government policy or the world banks. They can only be blamed on an inability to creatively change the business model to follow the money. The reason businesses can’t cope with change is that their stuck in one way of thinking with an inability to be more creative when solving business problems. That’s way those record shops have gone. It’s not because people don’t want music or don’t want a shop, but because the shops failed to supply the experience the audience wanted through stubbornness, greed, ignorance and by keeping on doing what they’ve always done and expecting different results.

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