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 demise.
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 success.
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.)