what was going to happen and who would be attending. He was right in every respect. He also told me that the government’s endgame was to destroy Virgin’s CrossCountry franchise and they were looking for an excuse to stop it. I wrote in my notebook: ‘
We argued that we’d worked hard and that punctuality was the best since we took over, revenues were up 40 per cent and passenger numbers up 50 per cent — and the government were now getting 87p in every ?1 of extra revenue.
In my notebook I wrote: ‘
It certainly was. Having done all the donkey work, taken all the flak and increased passenger numbers by 50 per cent in ten years — Virgin Trains lost the CrossCountry franchise. But that’s life in twenty-first century Britain. There are (he says, through gritted teeth) no regrets. And even if there were, in business, as in life, you’re better off just moving on. After all, we still had the West Coast Main Line.
Virgin Trains is criticised in some quarters for the supposedly easy money we’ve racked up in the form of government subsidy. I think those people should consider the time and effort we spent for very little financial return. Out of that subsidy money we had to pay Network Rail for running on their tracks, and as their problems increased, so did our access charges. When we signed off the first deal we never envisaged the increases. So, between 1996 and 2006, we did indeed receive ?2 billion in subsidy — and promptly waved it goodbye again, paying ?2.4 billion in track access charges, first to Railtrack, then to Network Rail; in other words, back to the UK government. Plus Virgin Trains paid higher charges to Network Rail than any other train operators — this when the subsidy was reduced by half from ?526 million to ?268 million at the end of March 2006!
Not long ago we put together a proposal to increase the size of each train from nine to eleven carriages so that the business could continue to meet the soaring demand. I explained to Douglas Alexander, then the Secretary of State for Transport, that while we could deliver on our franchise agreement, from February 2012 our passenger numbers would be pushing our current seating capacity to its limit. Our proposal was to increase delivery to ten and eleven cars at optimum time from around 2010. The total investment required would be around ?260 million, all to be funded by the private sector. We also proposed additional car parking and smart-card ticketing and in return we would like an extension of our franchise for a couple of years, please. I felt that our track record — excuse the pun — was enough to give us some chance of the government accepting this. But later in the year they rejected our bid to increase the number of cars. At the time of writing this book we are back in discussions over extending the trains again. I hope sense will prevail. But come 2010, if you ever find yourself standing all the way to Birmingham, remember who to thank. It drives me to distraction to think that the increasing popularity of our trains is being threatened by the government’s mean-fistedness and lack of vision.
At the same time we are hampered by the poor state of the line which has been undergoing a massive upgrade in the last four years. Our wonderful team — led so ably by Chris Green for many years and now by Tony Collins — has remained focused on delivering a great service in the face of these incredible hurdles. Despite these issues I’m proud to say that Virgin Trains has delivered on its promises — and it hasn’t been easy. First and foremost, we knew from the start what it was we wanted to deliver, and we stuck to our guns in the teeth of official discouragement and a negative press. We wanted the best-looking, most comfortable trains because we knew anything less wouldn’t wash with a public that had had to put up with a declining service for far too long. Our trains had to be efficient — as green as possible — because we had no idea what would happen to the price of energy, and there was no hint or sign that energy costs were going to come down in the long term. (How right we were!) Finally, we wanted the safest trains possible, because in the travel business, this is the bottom line: people are putting their lives in your hands. Nothing short of an act of God should ever put your customers at risk.
Our proposition, then, was fully considered in the light of our core business values, our medium-term strategic considerations and our long-term feelings about where our industry was headed. However overblown this sounds, this is what you should be doing all the time as you consider how to deliver on your business proposition. Never imagine that you are immune from big events. Make your small decisions in the light of the bigger picture, and you are at least pointing your craft in the right direction to ride out any storm.
Remember, also, that the world is full of people who want to put you right, who want to play the realist to your wide-eyed innocent. Governments are notorious for this sort of thing. Ministers are like mayflies. No sooner do they get to grips with what they’re supposed to be doing than they’re gone. Keystone of our liberties it may be — in business terms, it’s a disaster. In the UK in particular people who have no real tenure over the issues they’re handling let long-term considerations fly out the window. It’s not that they don’t understand them, or even agree with them; it’s that they despair of ever getting them past the Treasury quickly enough.
You can spot negative people and stultifying institutions a mile off. Have the courage of your convictions, and ignore them. Instead, gather together people you can trust — get
If you’re lucky enough to become an agent of change, it’s incredibly frustrating when other people fail to grasp your ideas — even worse when they reject them out of hand. But you can see why it happens. Change can be dangerous. Often, the bigger you are, the slower you move, the more dangerous change becomes. Of course governments are afraid of change: they know they’ll never be able to get out the way of it quickly enough. Neither can many big companies.
It’s no good saying ‘Prepare for change’ or ‘Embrace change’ or whatever other cliche the business books are peddling this season. The bald fact is, change, most of the time, is a threat. It’s the thing that wants to kill you. And let’s face it: one day it
In business, change always happens more quickly than you want — it steals up on you fast, when you are least prepared. This was certainly true for Virgin Records in the music industry.
For the multinational consumer electronic giants, survival depends on finding the next disruptive technology and getting it into the marketplace. Being the first to do so is admirable. But being the best is what really counts. I’ve always followed my nose; it’s never occurred to me to wait for others to make mistakes, just so I can learn from them. I can’t see the fun in it. Beyond that, though, I can’t really criticise: the ones in the vanguard are generally the ones who get shot.
During the 1980s and 90s, as the Philipses, Sonys, Panasonics and Hitachis of this world headed down blind alleys with products that failed to bite, the music industry was moving logically and unstoppably towards digital, downloadable music — a process that reached its apogee (at least, from the point of view of where I’m sitting now) in Apple’s iPod.
The digital music revolution was heralded by the arrival of the compact disc. The progression from analogue to digital recording was a revolution for the eardrums. In the mid-1970s, the seven-inch single was the gold standard for the pop music industry. All the pop bands (though not all the progressive rockers) wanted a number- one hit in Britain, America and then the rest of the world. To have a number-one hit was to arrive as a band or solo performer.
By the early 1980s our domination of the charts had helped Virgin Records become the world’s top independent music company. There was tremendous excitement about seeing a new record breaking into the charts, and the band’s virtually compulsory appearance on the BBC’s
It’s easy to get nostalgic about old formats, but there’s no historical justification for it. Since the nineteenth century, most recording technology has turned over on a thirty-year cycle. Thirty years after the wax cylinder carried music to wow the opinion shapers of the 1880s, brittle, shellac 78rpm recording discs revolutionised the listening habits of the masses. After the Second World War, the vinyl LP, the single and the EP (the extended play, containing two or three tracks on each side) made music listening considerably less fraught. Why, you could even send these sturdy, flexible discs through the post!
Those pundits talking now about how digital downloading is killing the major companies should remember that the last time the industry was in meltdown was — surprise, surprise — just less than thirty years ago, in 1982. The economic recession was having a deep impact. At the time, Virgin Retail had over a hundred record stores, in
