Business Stripped Bare

people together and is enjoyable can be rolled out across every business — just don’t let anyone use the charity’s money to pay for the drinks!

A poor leader can make life hell for so many people. Leadership is not about a person sitting at the top of the tree, making all the decisions and expecting everyone to do as they’re told. That’s hardly leadership: it’s more like dictatorship.

I have huge admiration for the British version of the TV show The Apprentice, in which people compete for a single job with Alan Sugar. The camerawork is slick, the editing is clever, the music is great. The power of television is immense, and if it’s capable of inspiring people to treat business with excitement and enthusiasm, that can only be a positive thing. Frankly, anything that can be done to inspire young people to give it a go has to be worthwhile.

But I have one issue, and that’s with the way Alan has to say, with a frown, at the end of each episode: ‘You’re fired!’ It’s in his contract because it makes good television. And it’s cobblers. The whole competition is structured around the fear of being fired. While this does make it interesting for the viewer, it is not, in my opinion, how businesses should be run.

Where The Apprentice is successful is in its wider portrayal of the modern business world. There are few jobs for life any more. As individuals we need to be positive and sell ourselves. Most of those taking part in the show will have a better grasp of this than is apparent on camera. They know that failure is not something to fear. They know there are other options, other places to work.

So here it is important to stress that there is a fundamental difference between an entrepreneur and a manager. They are often contrasting people and it’s crucial to realise this. Although I’m sure there are entrepreneurs who could make good managers, my advice would be: don’t try to do both.

Entrepreneurs have the dynamism to get something started. They view the world differently from other people. They create opportunity that others don’t necessarily see and have the guts to give it a go. Yet an entrepreneur is not necessarily good at the nuts and bolts of running a business. I admit that this is not my true forte — and recognising this weakness is essential for the entrepreneur. The annals of business are littered with stories of the driving force trying to run the business on a day-to-day level — and failing dreadfully.

Good managers are worth their weight in gold. People with the acute psychological know-how to smoothly organise and handle the pressures of an ongoing business venture are the glue that binds the business world. My notebooks are full of contacts and names of people who have been recommended or whom we seek out to come and be Virgin business managers. Cherish them, and give them a proper stake in the business, because they deserve a big share of any success. Once the entrepreneur has the company up and running, they often need to pass the baton on to the manager. The creator’s job is to find someone with expertise who understands the vision and is prepared to follow the path.

The entrepreneur’s job is effectively to put themselves out of a job each time the new company is up and running. Then they can step aside and free themselves up to be entrepreneurial in a different business. It is generally asking for trouble for an entrepreneur to stick around for too long, trying to cover both roles.

In a small business, you can be both the entrepreneur and the manager while you are getting it going. But you need to know and understand everything about that business. And I really mean everything. An emerging entrepreneur should sign every cheque. Examine every invoice, and you’ll soon appreciate where your money is going. Even in a big business like the Virgin Group, I sit down now and again and sign every single cheque that goes out, and I ask my managing directors to do the same. For a month. Sign everything for a month every six months and suddenly you’re asking: ‘What on earth is this for?’ You’ll be able to cut out unnecessary expenditure quite dramatically when you do that.

As a small-business person, you must immerse yourself 100 per cent in everything and learn about the ins and outs of every single department. As you get bigger, you will be able to delegate, and when people come to you with their problems, they’ll be surprised how knowledgeable you are and how much practical advice you can offer. The reason you’re knowledgeable is because in the early days of the business, you learned all about it. This is how business leadership is achieved. There are no short cuts. Remember my earlier description of Brett Godfrey at Virgin Blue who insists that all of their senior managers spend time doing the different manual jobs like luggage loading. (I needed a physical after my stint!)

And as the business gets bigger, you will have to decide if you’re a manager or an entrepreneur. If you’re a manager you can stay with that business and help it grow. If you’re an entrepreneur, you need to find a manager. Then you should move on, enjoy yourself and then set up your next enterprise.

Nothing in business is quite like the early, frenetic days of an ambitious start-up project. There’s always an amazing buzz about this kind of thing. It’s high-octane and high-risk and it builds a tremendous spirit and camaraderie which takes everyone through some very trying times. I’ve seldom seen people work harder than in the initial stages of a new venture. Once a business matures and is established, it can become more challenging to retain that excitement. What we do at Virgin is not let businesses get too mature. If you can keep the businesses relatively small, people will know each other within the organisation and feel like part of a team.

It’s then down to the leadership of that organisation to keep making sure that people are challenged and motivated. Jack Welch, a great business leader, who transformed GE into one of the world’s leading corporate powerhouses, was constantly evolving tools and methods in search of continuing growth. He encouraged managers to start each day as if it was the first day in the job. He said that managers were often afraid of change — and they must embrace it. I agree with Jack on that.

We never let people sit on their laurels, and we keep on trying to improve things. The minute Virgin Atlantic was voted ‘The airline with the best business-class seats in the world’ in the UK Airline awards, our designer was already beginning to work on the next seats in order to beat our own expectations rather than our competitors’. You must either stay ahead of other people, or stay ahead of yourself, all the time. If you really put your mind to it you are normally going to find a better way. You have to keep on questioning the way people do things.

Looking back over the personal notebooks I have kept for more than thirty-five years, I don’t think there has ever been a letter from my office which criticises the staff or an individual. Now and again I’ve disagreed with something and suggested changes in behaviour. But the Virgin Group has always tried to look for the best in people. That way, you get the best back.

A plant needs to be watered to flourish and people need encouragement so that they can flourish. If this sounds precious, so what? It’s true. When someone says something nice about any of our Virgin ventures, I feel great. I’m flattered. When someone has a go, it knocks me back. We’ve developed a thicker skin over the years, but I hope we haven’t lost the sensitivity to do things properly. If witless criticism can deflate me, after thirty-odd years of business success, then what a fool I’d be to go around ticking off other people. People say business is a cut- throat affair. Certainly it’s a tough game — we talk about ‘the competition’ for a reason. And, yes, sometimes people play dirty. But nothing in my years with Virgin has eroded my habit of saying thank you to people or praising them. I was brought up in England by parents who praised and encouraged me a lot. Why would I behave differently to others?

Right across our business we have a philosophy of encouragement. Our people are very rarely criticised. If someone makes a howling mistake, usually they don’t need to be told. They know.

One of my weaknesses is that I find it very hard to tell someone that their services are no longer required in the business. It’s an unpleasant obligation, and one you absolutely must not shirk. If you’re a small company, it is vital to do it personally. You really have to see the person face to face rather than get someone else to do it. I think, generally, a personal explanation of the situation is appreciated, and it helps the individual you’re letting go to move on.

Of course, if you actually enjoyed firing people, there’d be something wrong with you. Jack Welch made a point of continually weeding out the people at the bottom. Alan Sugar and Donald Trump aren’t afraid to fire people either, though I doubt they go about it quite the way The Apprentice would have us believe. There’s a machismo about the way some managers talk about hiring and firing that I find downright repugnant. A senior person at Apple rather proudly says in his speeches about firing people that ‘I’d rather have a hole than an asshole.’ My philosophy is very different. I think that you should only fire somebody as an act of last resort.

If someone has broken a serious rule and damaged the brand, part company. Otherwise, stop and think. Indeed, these days you have to. There are a lot of legal and employment issues to take into consideration before you even go down that route. This can be frustrating, but to be honest I don’t think it’s the nightmare that some