UK: At the court of King Richard.
By Chris Blackhurst. Wednesday, 01 April 1998
UK: At the court of King Richard. - Branson's success is founded on marketing flair - and a talent for picking senior managers.
At 10 o'clock on a Friday morning, one of the imposing cream stucco villas that adorn Holland Park in west London is buzzing with activity.
Through the front door on the left of the house in a living room that covers half the entire ground floor, two men are deep in conversation. On the right, in the dining room, sitting around a huge table, a group of dark-suited Americans are opening their briefcases and producing files in readiness for a business meeting. In two smaller rooms at the back, a team of secretaries answer a non-stop stream of telephone calls. Upstairs, it is the same: more meetings and more staff hard at work. Even the conservatory in the garden is being used by a visitor, pacing up and down, making calls on a mobile phone. Only the bedrooms and the swimming pool in the basement of the house are silent.
This is corporate management Richard Branson-style. This villa is the nerve-centre of his sprawling Virgin organisation. From his home he oversees an airline, holiday company, train operator, record stores, music company, cinema chain, television production, financial services, soft drinks, bridal wear, cosmetics, model agency and radio empire. The man himself is not at home. As is so often the case, Branson is away - in this instance, on a whistle-stop visit to a far-flung outpost of his empire, but his absence could just as easily be explained by his desire to fly round the world in a hot-air balloon, a family holiday, or, as occurred earlier this year, being tied up for weeks in libel litigation against an aggressive competitor.
In his absence, at his house it is business as usual. Upstairs, in between the paraphernalia of Branson's children, Holly and Sam, in the press office his faithful aide-de-camp, Will Whitehorn, fields yet more requests for interviews with Britain's favourite tycoon. Downstairs, surrounded by pictures of Branson with his wife, Joan, and children, with his heroes like Nelson Mandela and awards for his airline, Brad Rosser, responsible for targeting new Virgin ventures, listens intently to yet another business proposition. This is the court of King Richard, a curious mix of informality and - the deadly earnest.
Virgin employs 15,000 people, producing a turnover of £2.4 billion a year from operations in 24 countries. Yet this corporate giant is run, not from a skyscraper with the Virgin logo on its roof, but from here, a house in a residential road in west London. This appearance of shoe-string informality, of course, is much of the Branson appeal. There are conglomerates run by faceless individuals stuck in ivory towers and there is Virgin, controlled by this role model for the Swampy generation. Once ranked only second to Mother Teresa as an icon by the young, Branson has no business equivalent.
Critical, though, to the ongoing success of the organisation are his deputies. These are the people who have the run of his house-cum-office, who run the day-to-day operations of Virgin, who enable him to seek new ventures, to garner publicity for the group, to ride in his balloon. The public thinks of Virgin and sees one man. Behind the scenes, the reality is different: directly below Branson is a raft of high-calibre executives who would grace any business. Often sober-suited and armed with heavyweight credentials, they supply the ballast to Branson's casual air.
Two outstanding qualities have propelled Branson to pre-eminence. While his success is based on marketing flair it is also founded on another virtue, of picking senior managers. 'Richard's skill is in finding people to do things for him,' says Whitehorn, Branson's spokesman and increasingly these days, his closest aide. 'He has a very lively mind with an ability to switch from one thing to another and he is very good at delegating.'
Senior Branson executives speak in terms of their group being a keiretsu, a Japanese-style umbrella organisation like Sony or Mitsubishi, of 20 businesses devolving to 200 individual companies, most of whom bear the name Virgin. Others are rather more disparaging, calling it a glorified franchising operation with Branson the linchpin and Virgin the brand.
The truth would appear to lie somewhere in between. Virgin companies are of two kinds: a wholly-owned subsidiary or one in which Virgin is a partner. Into the first category come the airline and megastores, into the second come the insurance and drinks businesses.
'You must remember that Virgin grew out of the music business,' says Whitehorn. 'Running Virgin is like managing artists. Richard sees each of his different companies as a different artist - we are like a management company.'
The mistake people make, says Whitehorn, is to view Virgin as any other company. 'Virgin is not one com-pany. The public perceive it as a company but more and more we act like branded venture capitalists with Richard as a business angel.' Even the businesses he does not wholly own are managed by trusted Branson lieutenants. Just because he is not the majority shareholder does not mean he will allow the operation to be run by someone he does not personally know, and has vetted and appointed. His reasoning is simple: to do otherwise is to risk not only damaging that individual operation but also the whole Virgin name. Just as whenever Branson himself appears on television or in print there is usually a knock-on positive effect across the whole empire, so too, if one part is weak and prone to negative publicity, the rest suffers.
Typically, Branson will be heavily involved in the idea for a new venture.
Once the new business has been launched, usually in a blaze of publicity with Branson at its heart, he will leave it to a hand-picked deputy. The only one of his operations where he has maintained a close executive brief is the one dearest to his heart, the airline. Otherwise, he is available if required. Employees, even relatively senior ones, rarely encounter Branson. 'I never saw him in two and a half years, apart from at his summer party,' recalls a former senior manager in Virgin's publishing offshoot.
She adds: 'I did meet people higher up, usually when we were allowed to use the Holland Park house for a specific launch, but otherwise nothing.'
Like many Virgin employees she was attracted by the idea of working for Branson, a man she had long admired. What she found, however, was 'a wheel, with lots of spokes and him in the middle. I was on one of the spokes.' What surprised her was the lack of access to Branson - she only found out what he and Virgin were doing next from reading about them in the newspapers and watching television - and the lack of contact between the individual Virgin components. 'The spokes did not talk to each other either - many of the senior executives felt restricted and bored,' she says.
There was also, she maintains, the feeling that any one of the 'spokes', apart from the airline, could be sold at any moment. It's wrong, she says, to imagine Virgin as one giant happy ship buoyed along by its beaming captain. There was little sense of unity of purpose and direction. Individual businesses would carry on in their own sweet way from their own head offices - most of them are dotted around West London - occasionally reporting to the Virgin administration centre based in Campden Hill Road, while the people in the house around the corner in Holland Park did their own thing.
Lately, admit senior Virgin executives, more effort has been made to engender corporate togetherness.
Staff are offered discounts on other Virgin products, parties and get togethers are held more frequently and people are moved around the empire.
'One of the things happening more and more,' acknowledges Whitehorn, 'is that we are growing up as an organisation.'
Within Branson's court, some executives are closer to the throne than others. Around Branson is a handful of senior managers who range across the whole empire. Then there are the heads of his most important individual organisations, like the airline and retailing. They, too, form his inner circle of deputies. With his courtiers, he can behave as he pleases, granting audiences to anyone who takes his fancy, publicising himself and Virgin, going on jaunts, indulging his passions and whims, and plunging into new ventures. But without them, very simply, he would not be king.
Chris Blackhurst is deputy editor of the Independent
WILL WHITEHORN - CHIEF COURTIER
Hired originally as Branson's press spokesman, Whitehorn's role has evolved over the years and he is now effectively the number two at Virgin. Originally, Robert Devereux, Branson's brother-in-law, Simon Draper, his cousin and first business partner, Don Cruickshank, who took Virgin public and Trevor Abbott, Virgin's first financial controller, were far ahead of Whitehorn in the pecking order. But they have gone or, in the case of Devereux, their influence has diminished, while Whitehorn has stayed, earning Branson's trust and respect. Whitehorn worked in PR for Thomas Cook and British Airways Helicopters - the latter a useful training during its 'dirty tricks' spat with Virgin - before joining Branson's close friend, Chris Wright, the head of Chrysalis Records. It was there that Branson came across Whitehorn, whom he asked to join him. Within Virgin, he operates as a sounding board for Branson, while outside he is widely judged as one of the best public relations men around. No major decision is taken without Whitehorn's involvement but, at the same time, he is totally loyal to his boss. With Branson's wife, Joan, showing little interest in the business side of Virgin, it is now assumed that if anything happened to the king, his chief courtier would step in, to mind the shop for the Branson children, Holly and Sam.
ROWAN GORMLEY - CLASSICALLY TRAINED
One of the notable features of Branson's court is that while he is self-taught, operating to an individualistic, home-spun philosophy, he has surrounded himself with people who have enjoyed a classic business training.
Branson takes care of the razzmatazz and showbiz, they keep the group on the straight and narrow. One such is Rowan Gormley, managing director of Virgin Direct.
A South African, Gormley is a qualified accountant, nurtured by Arthur Andersen. He then moved into venture capital with Electra, one of the leading quality players. It was there he was spotted by Branson who asked if he would come and head corporate development. It was in that role that he oversaw the successful push into financial services. Again, like many of Branson's inner circle, he is young - still only 35.
BRAD ROSSER - TOUGH OPERATOR
Proof that an astute business brain lies behind the bearded grin and jeans comes with Branson's hiring of Brad Rosser, in 1994, as Virgin's corporate development head. Effectively, the group's new-business manager, it is Rosser who is charged with maintaining Virgin's relentless quest for pastures new. Hundreds of new business proposals cross his desk annually.
Fiercely bright, he graduated with a double first in accounting and finance from the University of Western Australia and won the university's highest award for academic achievement. Similarly, for his MBA from Cornell, he won the programme's top honour. He then worked for Alan Bond, the Australian tycoon, ending up in effect as his closest aide. After Bond's empire collapsed he went to work for McKinsey, where he identified possible takeover targets and carried out strategic and management reviews for a large retailer and a consumer products group. Rosser is tough and uncompromising. Intensely focused, he will only put ideas forward to Branson if, in his words, they meet certain criteria: 'The products must be innovative, challenge authority, offer value for money, be of good quality and the market must be growing.' Rosser is one of the handful of senior executives capable of taking an overview of the whole Virgin Group. He defines his role as 'identifying new opportunities and when selected, to implement them'.
By implement, he says he means, 'source funds and possible partners, find a management team and take a non-executive directorship'. Rosser sits on the boards of several Virgin subsidiaries, ranging from fashion to bridal wear to helicopters to the London Broncos, the Rugby League team owned by Branson. All this and yet Rosser is still only 34.
SIMON BURKE - NUMBER CRUNCHER
When Branson devoted much of his time and money to getting his airline right, his retail business remained solid. For this he has to thank Simon Burke. An accountant with Binder Hamlyn and then Coopers & Lybrand, he cut his teeth on flotations and corporate rescues. Burke joined Branson as corporate finance manager in 1987, aged just 29. Almost his first task was helping Branson buy back Virgin from the stock market in 1988. He then moved on to restructure Virgin's retail operations, selling a raft of underperforming record stores and by the time he was finished, Virgin's retail division comprised just 10 Megastores. He then expanded the operation, overseeing the merger with WH Smith's Our Price chain. This entailed Burke leaving Virgin for WH Smith. Significantly, he is now back, heading Virgin's entertainment group, pushing ahead with new store openings in Japan and guiding Branson's successful move into cinemas. Within Virgin, Burke is regarded as exceptionally bright and viewed with something approaching awe by even fairly senior managers. When asked why, one ex-employee explained it was because he was regarded as having brought order out of chaos, of having saved Virgin's retail reputation when it appeared to be fading. He is a calm, number-crunching foil to the more emotional, impulsive Branson and Whitehorn.
DAVID CAMPBELL - MEDIA STAR
Glasgow-born Campbell arguably has one of the worst or best jobs in media, depending on your point of view: running Ginger Media Group, Chris Evans' radio company. Though Branson has scaled down his radio interests with the sale of the radio station to Evans, he still holds 20%. More importantly for the brand name, the radio station is still called Virgin. Campbell remains close to Branson and is predicted to return to the fold full-time once Evans has found his feet. Further evidence that Branson is no slouch when it comes to picking people is Campbell's impressive credentials. He went to university in the US and went on to become Pepsi Cola's youngest marketing manager. Again, like several of Branson's closest team, he has been with him a long time, over 10 years, since joining in 1986. Before taking over the radio station he was a project manager for the communications division and acted as a troubleshooter in more than 30 countries.
MICHAEL HERRIOT - HOTEL OPERATOR
When Branson wanted to go into hotels and leisure, he simply recruited a seasoned manager - Michael Herriot, who has been with Virgin since 1989.
Older than many of his senior Virgin colleagues, Herriot, 55, was a hotel manager then an operations executive for Grand Metropolitan. Again exhibiting that Branson knack for picking people from a heavyweight City background - with all the experience of tight budgets, detailed reporting and the need for profits growth that entails - Herriot spent 10 years working for a hotels subsidiary of Mercury Asset Management before joining Virgin.
RORY McCARTHY - KINDRED SPIRIT
Rory McCarthy is the nearest there is to a Branson kindred spirit - a superb entrepreneur and multi-millionaire who also loves daredevil exploits. Branson's balloon partner, McCarthy left school at 18 and started his own motorcycle despatch company. Within a year, in 1979, the company was sold and he moved to the Caribbean. He returned as a professional hang-glider pilot and set the world hang-gliding altitude record by dropping from a balloon at 36,700 feet. Bored, he turned to the City and became a trainee with W I Carr, the stockbroker, but left to start his own company Siam Trading, now the McCarthy Corporation. This company holds 33% of V2, Virgin's new record company and 50% of Virgin Helicopters. McCarthy is a mixture of business partner, best friend and soul-mate for Branson.
JONATHAN ORNSTEIN - AVIATION WIZARD
Ornstein is straight from the Branson mould, a proven wizard at making air travel exciting and profitable. He runs Virgin Express, Branson's low-cost carrier in Europe. Most of his career has been spent in the cut-throat world of domestic US airlines, where he turned round West Air, then transformed the fortunes of Mesa, growing its revenues from $11 million to over $350 million and its workforce from 165 to over 3,000. In 1994, he was asked by Continental to head its shuttle operation, which had just posted annual losses of more than $40 million. Within six months, he had the company breaking even and 12 months later, it was in the black. So impressive was his achievement in turning round the shuttle carrier that the board of Continental decided to postpone its planned sale, preferring to keep it - at which point, at the end of 1995, Ornstein accepted an offer from Branson to develop a budget operation for Virgin. In April 1996, Virgin bought the low-fare carrier, Euro-Belgian Airlines, which formed the basis for Virgin Express.
Since then, twice the number of routes and passengers have been added.
Based in Brussels, Ornstein is said by Virgin insiders to be at the forefront of Branson's future aviation plans.
SIMON GLASGOW - RETAIL STAR
Like Rory McCarthy, Simon Glasgow is fairly new to Branson's court and like McCarthy he comes with a proven genius for making money. After working as salesman for IBM he moved into sports retailing, developing a small chain in Switzerland. He became co-owner of ATOC, a company that imported Timberland shoes into the UK. At the time, Timberland had only one customer, Harrods. When he sold ATOC to Timberland in 1988, the shoes were sold in 250 outlets. Branson swooped and Glasgow is now charged with launching the Virgin Clothing brand.
GORDON McCALLUM - NEW BOY
The newest recruit to the top team, Gordon McCallum is group strategy director. Another McKinsey product, like Brad Rosser, he has been asked by Branson to take Virgin into banking. His recruitment, like Rosser's, illustrates that for all Virgin's glitz and glamour there is a strategically managed business in the background - staffed by people capable of making as much money from the staid world of financial services as from records and travel.
VIRGIN ATLANTIC TEAM - THE SIX PACK
The running of Virgin Atlantic, Branson's pride and joy, is entrusted to six people all of whom work closely together. The most senior is Roy Gardner, executive director, flight operations. In 1984, Gardner was recruited by Randolph Fields, a US-born barrister, to help him run a budget airline.
Fields, who had just seen Laker collapse, was convinced there was room for a cheap fare service across the Atlantic. Gardner had been Laker's technical manager. But when Fields later revealed his choice of Branson as business partner, Gardner thought he was mad. He was convinced that Branson was too unconventional a figure for the industry which had already seen off another in Sir Freddie Laker. Fields convinced Gardner to stick with Branson and he has done so, making him one of the airline's longest-serving employees. Another one in at the start is David Tait, in charge of overseas operations and, like Gardner, another Laker veteran. The six operate from the airline's headquarters near Gatwick and are more independent than the rest of Virgin.
The other four are: Paul Griffiths, who looks after Virgin Atlantic's commercial side; Nigel Primrose, its finance director; Steve Ridgway, customer services and Frances Farrow, corporate services. Of the six, only Farrow, previously a commercial solicitor in a City law firm, has a wider role, acting as Branson's in-house legal adviser across the group.
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