October 4, 2004
News & Opinion: Virgin Brands
Fast Company has an article about Richard Branson. As you know, his company Virgin is into all sort of things from bridal shops to airlines. The 350 companies under the Virgin brand took in $8.1 billion in revenues. Recently I ran across the best description I have seen for how Branson decides what new companies to start. This is from Corporate Religion by Jesper Kunde [out of print]:
Virgin's success in what would be considered suicidal ventures by most other businesses stems from the fact that the Virgin brands are not rooted in a product category, as is the case with traditional brands (e.g. Coca-Cola). It has its roots in a person and in certain very abstract, qualitative values that have been evelated above the product level
Against the Establishment
A product or a service can only come under the Virgin umbrella if it matches the company's founding values and profile. Thus the focus is not directly on product specifications, but on the "linkage potential" to a range of emotional values. Virgin's policy is that new areas must, as a rule, fulfill four of the following five criterea: A Virgin product must be (1) the best quality (2) innovative (3) value for money (4) a challenge to existing alternatives (5) "a sense of fun and cheekiness".
The branch structure determines whether a product area is of interest to Virgin. Ventures into new areas of business are always approached with a "David and Goliath" mindset. Virgin identifies a new area of business that meets the majority of the criteria specified above. The new sub-brand is immediately pitted against the established market leaders - and instantly enters into the consciousness of the young, anti-authoritarian target segment. As Branson himself is on record saying:
"We like to use the brand to take on some very large companies, whom we believe exert too much power."