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Published 12 June 2012 05:06, Updated 13 June 2012 06:53
Over the years we’ve started many Virgin businesses out of frustration at the way things were done in established sectors. Whether it was airlines, mobile telephones or financial services, we’ve stood out by focusing on ways to improve people’s lives through better service, innovation and value.
Sometimes a small detail, such as more transparent pricing or a friendlier staff, gave us our edge. Our humour and tone also helped attract and keep customers. I try to keep bureaucracy to a minimum and remind my teams that business, as well as life, should be fun.
When you’re starting out with a small business and an enthusiastic team, it’s relatively easy to keep the focus on details and high-quality service, with a light touch. But how can you retain the passion and attention to detail after your business becomes established, successful and larger? In past columns, I’ve mentioned how we grew our music businesses by splitting them, creating smaller units so we could maintain that vibe and hunger. By the time we sold to EMI, Virgin Records was made up of several small independent labels, which fostered healthy competition among them for new bands.
This approach wouldn’t work with some of our other companies that require scale and size to compete against much larger rivals. So we’ve had to adapt our businesses to maintain Virgin’s innovative spirit, especially when we have grown through acquisition or international expansion.
Recently I hosted a conference with a number of fast-growing British companies. One of the speakers was Richard Reed, a founder of Innocent, the British maker of smoothies and fruit drinks. Richard founded the business with two friends, Adam Balon and Jon Wright, in 1998. Since then the business has grown to £200 million (about $312 million) in annual sales, and Coca-Cola has become a majority shareholder. Still, the founders have managed to retain that spirit of innovation and fun that marked their beginning.
It’s fascinating how they managed to keep their magic formula after the big investment. I’ll try to summarise what they did because I believe their experience provides many lessons for entrepreneurs around the world.
First, know your mission. At Virgin this was often about shaking up the established markets and providing something of great value and service. In Innocent’s case it was about creating great juices to help people lead healthier lives – and doing this in a fun way.
Second, make sure you get the basic structure right. Know what you are going to do. Many times partners can provide the back office, the infrastructure or the raw materials. By building strong relationships with such suppliers, you are free to scale the operations without heavy calls on your capital.
Third, get the right team at the top. It’s hard to get this right first time. Many small businesses fail to grow because they don’t identify team members who can no longer keep up. It’s sometimes necessary to part company with senior managers, painful as that may be.
Fourth, a strong purpose and a sense of ethics give the company a solid foundation. In Innocent’s case the focus was on leaving the planet a little better than they found it. This simple but effective message resonates with both staff and customers, whether they number 10 or 500 people.
Fifth, no matter how big you are, details count. Just as I remain obsessive about travelling on our planes and visiting our businesses with my notebooks to chat with staff and check the little touches that make our experience unique, Richard Reed and his partners do the same. They regularly check everything from the lids on their bottles – which ask customers to “enjoy by” and not “use by” a certain date – to their distinctive Astroturf office carpets.
Finally, listen to your customers and act on what you hear. I’ve always asked our staff for their views and now I track our social media to see how our business and brand are doing. Innocent makes a virtue of seeking their customers’ views. They use the feedback to inform growth and keep them connected.
Not one of these steps is hard to do on its own. The key to making the transition smoothly from a small business to a big one is stringing all six steps together to make it happen.
Next week. Bell Partners accounting founder Anthony Bell