20 August 2012

“So, have you considered entering politics?” We’d been running for about 2 and a half hours at this point but I was never going to run out of questions, and Richard had more answers than I had questions, so I gave up looking at my watch and trying to second guess how long we’d be running for. This was no longer exercise; it was an exercise in how to run your business from the perspective of an extraordinary man.

“Many people enter politics popular, but seldom do people remain popular in politics,” explained Branson.

Whilst we both agreed that governments lack the commercial expertise that entrepreneurs have in abundance, there is a conflict between politics and business in areas where they overlap, making it almost impossible for a business owner to take on the mantle of politician.

It was a subject that I might have touched a slight nerve with, as we were quickly talking about the Northern Rock and the frustrations he encountered during the first bout with Gordon Brown.

Richard never gave up on the Northern Rock. He kept that team together and, years later, his persistence paid off. For any budding entrepreneurs out there, it’s this persistence that will make or break you. We are all defined by our ability to knuckle down and remove all distractions and keep to the matter in hand.

So, with the headlines this week that Sir Richard Branson has lost the West Coast Rail franchise, you have to assume that this is just the beginning.

It’s also an extraordinary decision from my perspective. I am someone who lives in Manchester and uses the service regularly. I am immensely proud that I am able to travel using the Virgin brand and I know that it means quality at a value we can all afford. To replace British Rail with Virgin Rail was a master plan of years gone by.

I will never forget the first time I travelled on a Virgin Train. It was a bitterly cold Manchester morning. I was greeted by the friendly Virgin smile and seeing the guards in their thick grey cashmere coats, you knew that here was a business that values its people.

This is long before I met Richard in person, when my preference for his brand was earned naturally by a succession of best practices that I encountered whichever Virgin product I touched, tasted or travelled in.

Sure enough, the trains got faster, more organised, more comfortable and more affordable at a variety of levels.

When you consider what Virgin has done to the West Cost link between London Euston and Manchester, surely there has to be some credit and loyalty attached to the Virgin bid. In any normal business, this is called goodwill and when you buy or sell a business the goodwill is actually something tangible on the balance sheet.

The frustrating thing for us folk travelling from Manchester is that it’s this goodwill we value most. No one has asked us what we want. At UKFast, we spend a significant amount of money on the Virgin Train service to London. It’s just over 2 hours and has transformed business between the 2 cities, allowing us to pop down and see journalists and business folk who are too busy to head North. I am using it on Tuesday and Thursday this week.

Yet, left to a person in government who travels by chauffeur and probably hasn’t even used the service, Transport Minister Theresa Villiers accused Sir Richard of ‘amnesia’ about the poor performance Virgin had faced in the past when talking about the bids.

I take umbrage at this. Branson gambled on the British Rail link when no one else would do so, yet even with an established business and increased usage, O’Toole Of FirstGroup implies he has some better way of running the franchise more efficiently to make £750m more than Virgin’s bid.

I am not sure which is the wilder claim; O’Toole’s naivety that he can provide a better level of engagement over Virgin, or that he can do it whilst making £750m in the process.

Not to worry though; in comes the commercial acumen of the politicians. If it all goes wrong, and it proves too much for FirstGroup, the franchisee only has to pay the fee of £265million, a mere snip of the original exaggerated bid.

The only thing wrong with Sir Richard’s bid is that he underestimated just how disconnected politicians are with commercial reality.

Surely, the penalty for failing has to be larger than the sum originally promised.

And, in spite of all the polls, the Department for Transport told Virgin Rail on Friday that, according to its own scoring mechanism, Virgin lost on customer service and price, but was ahead on “deliverability.”

But, as a businessperson, deliverability is everything. The last thing you want in any area of your company is a flakey promise or exaggerated figures, because these are the things that cause long-term, irreparable damage.

If FirstGroup is unable to deliver on its wild promise of an extra £750million, the government ends up losing at a much greater cost than the numbers being bandied around here. So, if there is a risk involved, why do it?

Isn’t it time we were able to poll public opinion using the internet to make large decisions involving millions of people?

This isn’t me being radical or anti-government, far from it. I talk from the perspective of a technology entrepreneur wondering why we are not harnessing the power of people using simple tools.

Facebook was the brainchild of someone who started rating girls at his university using a simple program and within minutes he had hundreds of thousands of hits and a problem with the Dean! It would be very easy to do the same with politicians’ ideas or even politicians!

It’s food for thought and I am sure that, in my lifetime, we will be adopting this sort of strategy as governments often follow businesses, if albeit a little slowly.

An example of a simple poll on the Virgin vs FirstGroup battle came when the public were asked can FirstGroup deliver?

An overwhelming 92.68% said FirstGroup can’t and the amount it had paid was too high. In total, 16,046 votes to date.

Is it a coincidence that the 7.32% who said “yes,” is a similar number to the employees at FirstGroup and the department of Transport added together?

Branson loses out to FirstGroup with unpopular decision by Transport Minister Theresa Villiers to award the West Coast Rail franchise to FirstGroup, yet polls put Virgin as the people’s choice.

 

 

 

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