The Person-Organization: Sir Richard Bransons Particular Style of Success - Essay Example

The Person-Organization: Sir Richard Branson’s Particular Style of Success Introduction This case provides an opportunity to explore the person-organisation frontier: how an organization imbibes the qualities of the individual and each starts identifying with the other after a point of time. It provides the right background to analyse the skills required for being a successful entrepreneur. The case also highlights the qualities of leadership possessed by Richard Branson. It looks at effective leadership in the context of a high performance organisation, how Branson is ready to foray into new, unrelated markets and make an impact. The case focuses on leadership in a creative, entrepreneurial organisation. Virgin has made many brilliant moves and weathered spectacular setbacks. The case offers insight into these and other management issues that have come to the fore in Virgin's history. Among them are: (1) recognition of opportunities for new entrepreneurial ventures (2) the rewards of timely entry and exit from any business venture; (3) tie-ups and management of strategic alliances; (4) the development of a corporate culture centered around youth and informality; (5) a common, unified approach for all Virgin subsidiaries/group holdings; (6) the management of creativity and identifying and encouraging “in-house” entrepreneurs ; and (7) diversification and entry into unrelated fields. 1. What examples does the case give of links between Branson’s strategy for Virgin and the environment in which it operates? [15] Branson’s strategy for Virgin group was to identify new opportunities where the group would be the first entrant in that field. The brand name Virgin has been associated with innovation, quality, fun, daring and success. In line with these principles, Richard Branson opened the first record shop in 1971 and launched the Virgin record company in 1973.In 1984, he launched Virgin Airlines, amid stiff competition from the state run airlines. Within a few years, Virgin Atlantic Airlines was very popular and giving stiff competition to the state-owned airlines. By 1997, the group was a force to reckon with in airline, travel and retailing operations. In each case, Richard Branson made use of the changes in government policies, new technology and new business opportunities. He launched The Virgin Record Company launched shortly after the UK government had abolished retail price maintenance, a practice that had limited competition and kept prices high . Branson identified the opportunity and began a mail order business offering popular records at a discount of around 15% compared to the price charged in the shops. When faced with a postal strike, instead of giving up and running into a loss, Branson seized the opportunity and opened Virgin Retail. In a short span, this was merged with a major retailer to form a “ Megastore”. Expansion and diversification are the key factors influencing the success of any entrepreneurial venture. Branson utilized these two aspects to ensure the continued and sustainable success of the group. The true worth of a business is realized when people recognize and trust the brand name, whatever be the product. Branson believed in building a business organically –rather than by acquisition . He believed in motivating his managers as “ in-house” entrepreneurs who would identify themselves with the company’s growth and lead the team towards further growth. Innovation is another key to any successful business. By putting all Virgin’s business on one easily accessible site, Branson hopes to cross-promote a wide range of offerings – ticket sales, wine, entertainment listings, financial services, and many more . Virgin is also using the web to streamline internal operations. Airline mechanics can use the internet to source local suppliers of any required part and have it available in hours- an impossible task with earlier technologies. The Megastores only stock the most popular products- the rest are held at a fulfilment house- ready to send to customers who order them, enabling the stores to offer a wide range of products. 2. What environmental influences have particularly affected the Virgin Group ? [10] Today, any successful business house takes it social responsibility seriously. Just as the Virgin group is identified with the young and happening, Sir Branson chose the burning issue of global warming to fulfill the group’s social obligations. In line with this thinking, the Virgin group set up the “Virgin Earth Challenge” to encourage scientists in the field of environment protection. The Virgin Earth Challenge was launched on 09-02-07 to save the earth from the greenhouse effect and encourage a viable technology, which would result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects. Sir Richard Branson and Al Gore announced this prize as a new Global science and technology prize. They believe that history has shown that such prizes nature encourage technological advancements for the benefit of mankind.  The Virgin Earth Challenge is a $25 million award to be given to the individual or group that is able to demonstrate a commercially viable design which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without any harmful side-effects.  This removal must have long term effects and contribute materially to the stability of the Earth’s climate.  Sir Richard also announced a panel of five judges for choosing the winner for the Virgin Earth Challenge. They include Al Gore, Sir Crispin Tickell, Tim Flannery, Jim Hansen and James Lovelock, all authorities in their respective fields. The timing of the announcement of the Virgin Earth Challenge was particularly apt given the recent findings of the Intergovernmental Panel on Climate Changes, which recently announced that temperatures on earth could increase by as much as 6.4C by the end of this Century.  The report submitted by the Intergovernmental Panel on Climate Changes is one of the most comprehensive reports to date from a UN Agency. This report highlights the disastrous effects that a seemingly small raise in temperature could have on our planet. With a small rise of 2.4C in the atmosphere, coral reefs around the world would become extinct; a rise of 3.4C would result in the rain forests turning to deserts; an increase of just another degree would result in the ice caps melting and severe heat waves across the globe displacing millions!! The Committee further predicted that sea levels could rise by 5 metres, if temperatures reached + 5.4C. This would also result in tens of millions of climate refugees.  For the first time in history, a raise of 6.4C and its disastrous effects was mentioned within UN predictions. If this were to occur it would result in most of life on our planet being exterminated. (http://www.virginearth.com/) 3. What common themes link the different businesses in the Group ? [10] The Virgin Charter is an agreement between Virgin Management Ltd. [really the Holding company], and ALL the subsidiaries. It defines the role of the centre in relation to the subsidiaries in matters such as taxation, legal affairs, intellectual property and real estate. It also outlines closer links in areas previously left to individual units: I.T., people, purchasing . Thus the Charter sets out ways for the many Virgin companies to tackle common activities with a common, unified approach. The common theme for all the subsidiaries is that “Business should be “shaped around people”. The Virgin group encourages creativity and innovation in its workers in an informal environment. The brightest ideas strike you when you are relaxed and feel at home. Branson has encouraged loyal and motivated managers, creating in-house entrepreneurs who were “far more motivated to build a business “ with which they and their staff identified. A natural extension of this is the notion building a business organically –rather than by acquisition. Thus, each small unit, though is a part of the conglomerate, yet, is capable of performing independently. As the group itself is into so many diversified fields and growing constsntly, the need for acquiring new companies is seldom felt. 4. Describe the generic strategy which Virgin has followed at different periods in its history . [10] The generic strategy that Virgin has followed at different periods in its history has been one of identifying new opportunities, adapting and attuning the current or new business to these opportunities and innovating to be the first and most successful player in that field. Virgin has also followed the strategy of timely entry and exit into any business field, be it records, Low cost airlines or Megastores. Another factor for its success has been its customer-friendly approach and emphasis on best quality at lowest prices. This has today helped in brand - building and recognition of Virgin as a quality brand name. Making use of changed government policies and entering or exiting an area of operations is also apart of the generic strategy followed in the history of the Virgin group. 5. What other businesses would it need to work with to Benchmark its performance ? Explain Benchmarking. [15] "... benchmarking ...[is] ...'the process of identifying, understanding, and adapting outstanding practices and processes from organizations anywhere in the world to help your organization improve its performance.'" —American Productivity & Quality Center "... benchmarking ...[is]... an on-going outreach activity; the goal of the outreach is identification of best operating practices that, when implemented, produce superior performance." —Bogan and English, Benchmarking for Best Practices Sir Richard Branson, wants "all customers to have a red experience." By that he means, "be a maverick, challenge the rules. I want to be Robin Hood in every sector from airlines to record distribution." He intends for his companies to create in their customers a sense of belonging based on their experiences with his brands. Benchmark refers to a measure of best practice performance. Benchmarking consists of recognizing best practices followed by other businesses in the industry and adopting them into one’s own business. To benchmark its performance, Virgin would have to work with its partners and competitors to identify these best practices and then adopt them into its own business process. Success could be measured accurately through adoption of Six Sigma techniques. There are essentially three types of benchmarking: strategic, data-based, and process-based benchmarking. They differ depending on the type of information you are trying to gather. Strategic Benchmarking looks at the strategies companies use to compete. Benchmarking to improve improvements in business process performance generally focuses on uncovering how well other companies perform in comparison with you and others, and how they achieve this performance. This is the focus of Data-based and Process-based Benchmarking. (http://www.isixsigma.com/offsite.asp?A=Fr&Url=http://www.prosci.com/benchmarking.htm) 6. Why does Branson use joint ventures with other companies to realise the Virgin strategy ? Are there any disadvantages in this method of working ? [15] A joint venture is the best way to leverage the strengths of the participating companies or partners. Each company has its own business strategies and strengths. A collaboration with a partner ensures success in all the areas. If one company is relatively new in a field or has a small scale of operations, it could make up for it by collaborating in a joint venture with a large, established player in the field. The joint venture of Virgin’s music record company with a major retailer led to the opening of “Megastores.” The success of the Megastore concept was exported to major cities throughout the world, frequently through joint ventures . Virgin Mobile was launched in November 1999 as a joint venture between Branson's Virgin Group and Deutsche Telekom's One2One (now T-Mobile), it broke new ground by becoming the UK's first mobile virtual-network operator. A few disadvantages that might crop up in joint ventures could be: 1. Distribution of profits. One partner might start feeling that his company is not getting a fair share of the profits while the other company is eating into a major chunk of it. 2. Clash of interests: While unlikely in the short-term, a clash of long –term interest and goals for the participating firms might crop up, threatening to break up the joint venture. 3. Identification of new opportunities: One of the partners in a joint venture might suddenly spot a new business opportunity and want to pull out of a Jv and invest in another Jv with another company. 4. Taxation and legal hassles: When compared to a single holding, there are various complications arising out of joint business venture, related to taxation and legal affairs. 5. Restricted growth : Both partners might feel that the individual units were operating at better margins, when compared to a joint –venture. 7. Using relevant published theories, comment on Branson’s leadership style. [10] Beginning with a student newspaper when he was 17 and a record label when he was 20, Sir Richard Branson has been a go-getter and trendsetter in whatever he has done. Branson has built the Virgin Group into an international conglomerate of some 350 companies, many of them still tiny but all of them combining for more than $8 billion a year in sales. "I keep a notebook in my pocket all the time," he says, "and I really do listen to what people say, even when we're out in a club at 3 a.m. and someone's passing on an idea in a drunken slur. Good ideas come from people everywhere, not in the boardroom.” http://www.inc.com/magazine/20050401/26-branson.html The theories which explain his success are: He strives to be the best rather than the biggest, working towards making profits in small pieces of large markets. Now able to use the success of his brand to attract investors and negotiate controlling shares and the management of the company, Branson leaves his partners to supply the majority of the capital. http://www.managementtoday.co.uk/search/article/407379/2002-service-excellence-awards-winner-virgin-mobile-retail-and-consumer-services/ “The most successful leaders, we are told by the highly respected authors of 'The new global leaders', simultaneously play two roles-one charismatic, the other architectural. In other words the first has the vision to energise, inspire and motivate; the second has the strategies to improve organisational design to draw the best out of people. The issue of power and retaining it versus sharing it is, the authors argue, what distinguishes great leadership from dysfunctional leadership.” Altman.W Leadership Under the Microscope http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?tp=&arnumber=880857&isnumber=19059 8. It could be said that Innovation and Creativity are central to Branson’s success in all his ventures. Explain how this could be managed . Innovation and creativity are central to the success of any business, not just Branson’s success in all his ventures. Looking for new areas for entering business or new approaches to improve existing business are the key factors behind any successful enterprise. However, just innovation or creativity would not be able to achieve success for a business. This innovation or creativity has to be leveraged, packaged, and marketed at the appropriate platform to the right audience. To maximize profits, the right environment has to be identified, the right collaborations have to be signed and the right marketing has to be undertaken. While launching any new product, which has been developed through innovation and creativity, the requirements of the target group must be kept in mind. The product must be able to give maximum satisfaction to the customer at minimum cost. Once a company gets recognized for the quality of its products, it is easier to enter new avenues and launch new products. However, to be sustainable, the business must maintain quality, a customer-friendly approach and always strive to come up with new products. If a brand name is known for its innovation and creativity, it is easier to enter into collaborations or joint ventures in new markets. Consumers can identify the brand name with certain qualities and a ready to experiment the new products launched by that particular brand. Launching new in-house products in retail stores is a case in point. The manufacturer saves on initial investments in land, capital and labour. Virgin Group’s stand-alone businesses are examples of how beautifully innovation and creativity have been managed to derive maximum benefits for the business and maximum satisfaction for the consumer. Conclusion To sum up, Sir Richard Branson’s particular style of success could be attributed to the qualities and skills he possesses as a world-class entrepreneur. He is self-motivated, daring, a risk-taker, a go-getter, a wonderful manger rolled into one. He has the vision to perceive new areas for his business, recognize and make use of opportunities, collaborate for maximizing profits and maintain the top position in any field he chooses to enter. He believes in motivating his team to be in-house entrepreneurs, giving them a free hand in running the business units and allowing them a share in the profits. He has changed the way business is carried out, and will always be looked upon as a role model by present and future entrepreneurs. References: http://www.ecch.com/casesearch/product_details.cfm?id=8382 http://www.virginearth.com/ http://www.isixsigma.com/offsite.asp?A=Fr&Url=http://www.prosci.com/benchmarking.htm http://europe.isixsigma.com/library/content/c050601b.asp http://www.managementtoday.co.uk/search/article/407379/2002-service-excellence-awards-winner-virgin-mobile-retail-and-consumer-services/ http://www.inc.com/magazine/20050401/26-branson.html Read More