Richard Branson - Research Paper Example

? Richard Branson The leadership styles adopted by leaders worldwide are related to a series of factors; usually the personal perceptions on business– as a commercial and a social activity – and the social environment are likely to influence the leader’s decisions either in the short or the long term. On the other hand, most leaders worldwide tend to adopt leadership styles, which have been already tested in practice – referring to the practices used by the leaders of well known organizations; furthermore, leadership policies reviewed in the literature may also be used by leaders who aim to secure the effectiveness of their decisions, i.e. to reduce risk in their business choices. There are also leaders who do not follow existing leadership practices; rather, they develop their own leadership style avoiding to be influenced by the traditional perceptions on leader’s role. Such case is Richard Branson, the founder and Chairman of Virgin Group. Since the establishment of his first enterprise, the Virgin Records in 1972, Richard Branson has been made popular for his style of leadership, which is considered to be unique. The aspects of the leadership style of Richard Branson are analyzed below. It is made clear that the success of Virgin Group is not related only to the carefully planned strategies on which its activities are based but mainly to the leadership style of Richard Branson. The management practices of Richard Branson have become a valuable example for leaders worldwide; in fact, it is primarily the entrance of Richard Branson in the business sector that has proved his capabilities and skills as a charismatic leader. In his first involvement in business activities, Richard Branson did not show signs of a strong willingness for success; maybe it was exactly this fact that led to his differentiation from other entrepreneurs worldwide who focus only on the profit. Even now, Richard Branson supports that there are many values and interests in life and the achievement of profits should not be a priority (Dearlove 2010). The entrance of Richard Branson in the business sector can be identified in 1971 – when the first Virgin Record store was established in order to respond to the relevant needs of students (Murray, Poole and Jones 167) – before this initiative Richard Branson has been involved in the publication of ‘a magazine for students’ (Murray, Poole and Jones 167). Because at that period the trends of the market regarding the buying of records were rather negative, Richard Branson introduced certain strategies aiming to attract the attention of young people; free coffee and extremely friendly environment were the two main parts of Branson’s strategy in order to attract customers (Murray, Poole and Jones 167). The above strategies had positive results; indeed, the company managed to achieve an important growth proving Branson’s capabilities to establish a successful enterprise in a market sector, which was underdeveloped. One of the most important characteristics of Richard Branson as a leader is his ability to handle crises. This fact was revealed in the crash of one of the firm’s highspeed trains in Northern England, in 2007 (Reuters, February 24, 2007). The investigation developed by the local authorities revealed that Virgin could not be held responsible for the crash since the accident was caused because of a faulty track (Reuters, 2007). During the period that the case was under examination, Richard Branson had to face a strong criticism regarding the measures taken for the safety of Virgin trains. This issue is analyzed in the study of Regester & Larkin (2008); reference is made to the exceptional ability of Richard Branson to cover all issues highlighted by the journalists; in fact, the day of the crash Richard Branson was in holidays and he returned immediately in order to check the situation closely. The media welcomed the specific initiative noting that ‘even the chief executives avoid being involved personally in cases of crises’ (Regester & Larkin 191); the above statement was published in Independent. Guardian also was also supportive towards Richard Branson emphasizing on his rush to visit the place of the accident in order to check – by himself – the potential causes of the crash (Regester & Larkin 191). The above accident is one of the events that have proved the PR skills of Richard Branson. Through the approach used for being involved in the case, Richard Branson managed to attract the attention of the public to a different issue – from that under examination, i.e. the potential responsibility of the firm; this issue has been the response of the driver; in this way,’ instead of a story on a public disaster, a story on the heroism of the driver was developed’ (Regester & Larkin 191). The ability of leaders to handle crises is, with no doubt, of critical importance for their success of their firm in the modern market. It should be noted here that the effective handling of crisis is not only related to the PR skills of a leader; it is also related to his ability to choose the appropriate conditions in order to act. In the above accident, the successful handing of the crisis was achieved not only by differentiated the central point of the public interest but, mainly, by acting with no delay when the crisis appeared. The success of Richard Branson as a leader has been also related to his practices in regard to the expansion of his business. By continuously trying to expand his firm’s operations Richard Branson has proved that he supports innovation and is opposed to the stability, a practice used by leaders today in order to minimize risk. The specific issue is highlighted in the study of Lessem (1998); in the above study it is explained that one of the most critical decisions of Richard Branson in regard to his business, has been the entrance of the firm in the stock exchange market, a decision involved in high risk – taking into consideration the firm’s structure and performance at that particular period – early 1980s. However, the problems that had to be resolved were more than the challenges that the firm was expected to face by entering the stock exchange market. In 1984, Virgin entered the stock exchange market, a strategy which was expected to increase the firm’s profitability; up to that point of time the performance of the firm was overall satisfactory but its profits were limited; as a result there was no cash availability for attempting the expansion of the firm in the global market – one of the key targets of Richard Branson. Apart from the benefits expected, the decision of Branson to get his company listed in the stock exchange market had also certain risks; the change in the firm’s ownership structure was the most important one. Branson would not have any more the freedom to act absolutely independently. He would have to inform the shareholders on every key strategy of the organization; the transformation of Virgin in the stock exchange market can be considered as a major test of the following two facts: a) was the firm strong enough – in terms of its resources and infrastructure in order to respond to the pressures of the stock market? And b) was Richard Branson adequately prepared to share his views and visions with the shareholders? In accordance with Lessem (375) Richard Branson could not bear the strong emphasis on accounting and finance frameworks neither the full alignment of a firm’s leadership with the ‘formal management techniques’ (Lessem 375). For this reason, he continued supporting his own leadership style, which was gradually accepted by the shareholders – in fact, no major opposition was developed by the shareholders against the management practices of Richard Branson and this fact was mostly related to the firm’s successful performance in the British and the international market. In other words, the continuous growth of the firm – through the management decisions of Branson – has been the basis for the acceptance of his leadership style by the shareholders. The PR skills of Branson – referring mostly to his ability to persuade on the value and the necessity of ideas/ plans, might have helped him to gain the support of the shareholders but there would be no such issue if the firm had not managed to respond to the market needs after its entrance in the stock exchange market. In the context of the academic literature, the success of Branson’s leadership style has been also emphasized being related to the firm’s development globally – despite the challenges that the firm had to face since its entrance in the stock exchange market. It should be noted at this point that the leadership skills of Richard Branson are not valued and appreciated only by the shareholders but also by the public; moreover, it seems that the recognition of Branson’s leadership skills have been followed by the appreciation for the Group’s products/ services; in a research made on the brand name of Virgin it was revealed that most common perceptions of people in UK on the products and services of Virgin are related to the following terms: ‘fun, innovation, success and trust’ (Boddy 308). In the context of the current market pressures – because of the financial crisis – the leadership skills of Richard Branson have been made clear once again. Currently, the businesses of Branson worldwide are expanded in a variety of sectors, including ‘the airline industry, the credit cards, the healthcare industry and the express trains’ (Weiss 143). This fact results to a competitive advantage of Branson towards his rivals; the decline in the performance of a particular industrial sector would not be able to cause severe damages to the Virgin Group since the market sectors in which the firm operates are many and different in their characteristics/ trends; this differentiation in the nature of business activities, another indication of the leadership capabilities of Branson, can be considered as a safety net ensuring the protection of the Group from extreme market turbulences. On the other hand, the high range of the firm’s activities has led to the following problem: the effects of the Group’s operations on the environment are increased. Richard Branson had to identify a solution in order to minimize the relevant risks. A major challenge has been the limitation of the cost involve in the relevant project. At this point, Richard Branson has proved, once again, that he is a charismatic leader. Instead of making a market research for identifying sustainable practices of low cost that could decrease the effects of the firm’s operations on the environment he, rather, decided to use the problem as a chance to further increase the Group’s profitability (Weiss 143). More specifically, he decided to support the expansion of the Group in ‘the fuel business’ (Weiss 143); this sector could also be used for supporting the firm’s operations in its other sectors – mainly the airline industry and the express trains. Towards this direction, Richard Branson decided to invest on ‘a formula of an ultra clean fuel which could power the firm’s jets but also its tracks and cars’ (Weiss 143). Also, he decided to support the promotion of a series of green-policies across all the Group’s operations. In this way, two different paths for development of the Group were set: a) the production of an ultra clean fuel that could be used successfully as an alternative to existing fuels would be highly welcomed by the market – especially in regions and industries where the pollution of the environment is high; this fuel could be also used for powering the Group’s jets, vehicles and machines – reducing significantly the cost of the Group’s daily operations, b) sustainability across the organization would be increased, leading to the limitation of costs – by saving energy required for the development of various organizational activities; in the long term the potential entrance of the firm in other related sectors, for instance the alternative energy market, would be decided taking into consideration the relevant market trends. In accordance with the above, the ability of Branson to develop plans in order to handle crises is significant; moreover, it is made clear that his leadership style is not limited to the suggestion of policies for the limitation of practical management problems – referring to ‘the Branson’s suggestions for minimal management layers and no bureaucracy’ (Morschett, Klein & Zentes 217) – but it has many different dimensions being characterized particularly by the increased ability to identify chances where other managers assume that there are no solutions available – as explained above. Works Cited Boddy, David. Management. Upper Saddle River, NJ: Pearson Education, 2009. Dearlove, Des. The Unauthorized Guide to Doing Business the Richard Branson Way: 10 Secrets of the World's Greatest Brand Builder. West Sussex: John Wiley and Sons, 2010. Lessem, Ronnie. Management development through cultural diversity. Oxford: Routledge, 1998. Morschett, Dirk, Klein, Hanna, Zentes, Joachim. Strategic International Management: Text and Cases. Wiesbaden: Gabler Verlag, 2009. Murray, Peter, Poole, David, Jones, Grant. Contemporary issues in management and organisational behaviour. South Melbourne: Cengage Learning Australia, 2006. Regester, Michael, Larkin, Judy. Risk Issues and Crisis Management in Public Relations: A Casebook of Best Practice. London: Kogan Page Publishers, 2008. Reuters, Faulty track blamed for fatal UK train crash, 24 February 2007 < http://www.reuters.com/article/2007/02/24/us-britain-crash-idUSL2335117720070224> Weiss, Joseph. Business Ethics: A Stakeholder and Issues Management Approach. Florence: Cengage Learning, 2008. Read More