There is no better way to learn how to
succeed in business than to learn from mistakes – yours or someone else’s. I
often come across case studies looking into how and why certain companies
smashed records, busted budgets and succeeded beyond all imagination. Those
studies have their uses, of course, but it’s the stories of businesses that
didn’t turn out so well that truly interest me. I learn much more from them.

One of the reasons Virgin’s enterprises
have been successful over the years is that we empower the staff to make mistakes
– and then learn from them. Since our management structure is very
decentralized, our teams are challenged to run the businesses as if they were
the owners. I have found that this creates a high level of loyalty, devotion
and innovation. When things do go wrong, the team members feel such ownership
of the enterprise that they usually roll up their sleeves and turn it around.

This ability to bounce back after a setback
is the single most important trait an entrepreneurial venture can possess. If
innovation is at the heart of your business, obstacles come with the territory.
How you react to and navigate those hurdles will make the difference between
failure and success.

I’ve been lucky enough to helm many
successful companies, but I’m the first to admit that I’ve also directed a few
that failed. You may have heard of Virgin Cola, a company we formed in the
1990s to take on the industry’s two big powerhouses: Coca-Cola and Pepsi. We
attempted to shake up the market in true Virgin fashion, but it didn’t quite
work. From the outset, we faced distribution issues – we couldn’t get Virgin
Cola on the shelves in the numbers needed to make an impact and achieve
economies of scale.

We certainly didn’t lack enthusiasm, but we
quickly learned that the two giants had a firm grip on the market. It was tough
to find their weaknesses. Taking on two of the biggest brands in the world,
both of which proved to be anything but complacent, was a tremendous lesson for
all of us. But still, one of my fondest memories is of our publicizing Virgin
Cola’s attack on Coke by driving into Times Square in a huge army tank and
taking aim at the Coca-Cola billboard!

A more recent example involves Virgin Money
(our financial-services arm) in Australia, where we introduced our first Virgin
branded credit card in 2003. The Australian banking industry is monopolized by
four major concerns: ANZ Bank, Commonwealth Bank of Australia, National
Australia Bank and Westpac Banking Corporation. Altogether, they handle 80 percent
of all banking transactions in Australia. Though we entered the market for the
right reasons and had a terrific product, we took the wrong approach with the
partner bank that issued the card, which eventually led to the business’s

It was a tough loss for many of our
customers. As a matter of fact, when I’m in Australia, I still meet people who
carry their old Virgin cards in their wallets! We vowed to launch an even
better card as soon as the right opportunity presented itself.

Which brings me to the next stage: bouncing
back. Nearly three years after the failure of the original Virgin credit card,
I have returned to Sydney both to relaunch a range of card products and to
start the Virgin Saver online savings account. The difference this time: We
have the right people and the right partner (Citibank) for achieving long-term

I suppose the secret to bouncing back is to
be unafraid of failure. Setbacks are discouraging, but you should always try to
channel that feeling into positive action. The key to Virgin’s continuing
success has been this simple idea: When we get something wrong, we try to
understand why and quickly make a change. Then we focus on what works and take
it to the next country or industry or sector.

If you can identify and learn from your mistakes,
you have a much greater chance of bouncing back from them – and succeeding the
next time.

(Richard Branson is the founder of the
Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin
Mobile and Virgin Active. He maintains a blog at
www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson.
To learn more about the Virgin Group: www.virgin.com.)

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