Richard Branson: The King Of Strategic Diversification

The Virgin boss is the prime example of a diversified success


In 1984, Virgin Atlantic's inaugural flight left Gatwick Airport for Newark.

Now arguably Virgin's most recognizable brand, it's easy to forget how left-field a decision it was to get the airline up and running. Before 1984, the company's portfolio was almost entirely dominated by music-related ventures, with Branson's last meaningful business move prior to starting Virgin Atlantic being the purchase of London's 'Heaven' nightclub.

The early eighties were highly successful for Virgin Records. Having signed Janet Jackson and the Rolling Stones, the label was establishing itself as a major force in the music industry. When Branson revealed he had set his sights on starting Virgin Atlantic, the company's senior directors were up in arms; why was Branson losing focus at a time when they were close to having a stable of stars, guaranteed to bring in millions in revenue every time an album was released?

The first time Branson filled a plane with passengers wasn't actually in 1984. After having a flight to the Virgin Islands cancelled, he chartered a plane. Not the billionaire he is today, Branson couldn't afford the journey alone. Undeterred, he found the passengers who were supposed to be on his flight, and sold off each seat on the chartered plane for $29. He, along with the rest of the cancelled flight's passengers, made it to the Virgin Islands that night.

It's hard to tell whether the story is embellished, but if true, it stands as further evidence that Branson is as an impulsive, yet creative entrepreneur. For James Clear - author and strategic advisor - Virgin Atlantic, above all of Branson's brands, is the most indicative of the businessman's mindset. In one of Clear's 'ten pillars of getting better' he states: 'We believe that successful people start before they feel ready and fight when it gets hard.' He believes that this philosophy is essential to successful entrepreneurship and Branson's career, as 'you will never know 'enough' nor is the timing ever 'perfect' when you start a venture.'

After attending a panel session with Branson, Clear, while impressed by the candidness of the Virgin boss's answers, didn't believe he possessed a superior intellect, but that his 'screw it, just do it' mentality was what made him stand out. More than anything, his willingness to start a new venture before he or his company is ready defines him as a businessman - someone who's happy to take risks if the reward is great.

The EasyGroup - most famous for its airline easyJet - has adopted a similar strategy, but with the airline acting as the organizations's platform. The company, for example, now operates in the hotel industry and owns a number of gyms in London. In fact, Amazon and Google have also earmarked diversification as the key to organizational growth. Amazon still pumps almost every dime it makes back into product development and R&D, and the successful release of its Prime service shows that it's working. Jeff Bezos announced that Apple and Google products would no longer be available on Amazon because of their incompatibility with Prime, further evidence that the company is willing to sacrifice short-term profits to promote diversification. To add to this, Google's creation of Alphabet was specifically done to drive diversification according to its founders, allowing executives to concentrate on non-core initiatives.

This approach, however, remains uncommon in today's marketplace. For many, it makes strategic sense for companies to stick to what they know, and if diversification is needed, that change is at least linked to a core product in some way. And you can't just say that because Branson's approach worked for him, it's going to work for you - luck and timing always play an important role. For every example of success, there's one of failure. Snapchat's recent decision to move into online payments with 'Snapcash' has proved unsuccessful, with some even claiming it threatens to damage the wider Snapchat brand.

What Branson's actions do show, however, is that diversification, as a strategy, can work and is being adopted by some of the world's most profitable companies.


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