Putting the pro in procrastination
In manufacturing circles, ‘Just in Time’ (JIT) inventory control has become an accepted standard with most major companies. This is the supply chain logistics model that eliminates a huge percentage of the capital costs and administrative headaches associated with the traditional approach of stockpiling giant warehouses full of parts to feed into the future production process. In extremely over-simplified terms, the strategy is to let the car headlight maker or whatever bear the cost of inventorying their product and deliver it to the automaker ‘just in time’ for it to be installed in the vehicle and driven off the assembly line to be shipped off to a dealership.
When I first learned about JIT I remember thinking, ‘Wow, wouldn’t it be great if the process of executive decision-making could somehow be as well synchronised with the needs of a business as the supply chain.’ In other words, neither jumping into something with a knee-jerk decision way before it needs to be made nor procrastinating for so long that the opportunity may have evaporated by the time the nod comes down from on high. Certainly it makes for an appealing dream even if the human factor makes it a lot tougher to put into practice given decision-making’s dependence on the personality traits of the would-be decision-maker. In my experience there are essentially three different types of personality that show through when confronted with the need to make a business decision.
‘SCREW IT – DO I REALLY HAVE TO DECIDE?’
First and possibly foremost there is the serial procrastinator. I am sure everyone knows several members of this frustrating human subspecies. This is the one with a perennial approach of ‘Why make any decision today when I can put it off until tomorrow?’ – and as we all know ‘tomorrow’ never comes! I am not talking here about someone who takes as much time as possible to conduct due diligence on a project, I am referring to those individuals that seem mentally and physically incapable of ever making an on-the-spot decision no matter how obvious or straightforward the matter at hand may be.
So why exactly do people behave like that? One reason is almost certainly the fear that if they are pushed into making a quick decision, there is always a chance that it could turn out to be the wrong one. So it is much safer to delay as long as possible and maybe in the process someone else will step up and put their seal of approval on the initiative. That way if it goes wrong the procrastinator can always say, ‘Hey, that wasn’t my idea. In fact I always thought it was a very risky play.’ Alternatively if the thing turns out to be a raging success, having never gone on record as saying it wouldn’t work, the procrastinator will usually be the first one to jump on the bandwagon and grab their share of the glory with phrases like, ‘I always said it was a great idea.’ Sound familiar?
But it’s not just the big decisions that professional procrastinators struggle with, it’s often all the little day-to-day ones too. For a business to run smoothly the process can’t be held hostage to one person’s unwillingness to sign off on a lot of relatively mundane items that, when taken collectively, can suffocate progress.
‘SCREW IT – WE’LL DO IT – TODAY’
The second personality type is the one into which, by reputation at least, I am most likely to fall. As lots of Virgin colleagues past and present would likely tell you, my notorious ‘Screw it, Let’s Do It’ approach to decision-making can have its pros and cons. As the antithesis of the procrastinator, I have over the years made snap decisions to jump into some pretty big businesses. For instance, we got into commercial aviation with Virgin Atlantic and Virgin Blue very much on the basis of my gut feeling rather than on any huge files of carefully researched market data and financial projections: on these two I played the odds and won. On other occasions, such as our foray into fizzy drinks with Virgin Cola and a few other less high-profile ones like Virgin Bride, my instincts haven’t served us quite as well and we didn’t always emerge a winner.
Of course, a company’s size and ownership structure has a lot of influence on the ease and spontaneity of expedient executive decision-making. Making quick, instinct-based judgement calls of any importance is a heck of a lot easier when you own the company outright and it’s still sufficiently small and nimble enough to facilitate sudden changes in direction. Or as someone once put it, ‘It’s a lot easier to bet the farm when you own the farm.’ The minute you go public or get too big, it becomes much harder to take the ‘Screw it’ approach. That’s not to say that I don’t still try my hand at it on a fairly regular basis, but without the impetuousness of youth, aka the wisdom that comes with age as well as from learning by your mistakes, I like to think that I now have at least a couple of toes – not yet a whole foot – in the third category of decision-makers. And that would be . . .
‘SCREW IT – LET’S THINK SOME MORE ABOUT IT’
The third and probably smartest all-round approach is what I like to call ‘the art of orchestrated procrastination’. This is an acquired discipline whereby the first thing to be addressed as part of the decision-making function is timing. Is it a ‘carpe diem’ situation or not? If you don’t seize the day might the window of opportunity close or might it be filled by a start-up or existing competitor? If, however, you know that you have the luxury of some time to play with, then make it work for you and use it to understand the deal’s full potential – or not – as with a deal we looked at a few years ago with Goldman Sachs.
Some of our Virgin Money people wanted to jump on the deal but, never having previously heard of the commodity in which they wanted us to invest a sizable sum of money, I urged that we drag our feet for a while. Sometimes ignorance can be bliss. The more we looked at the deal the more questions arose, so in the end we decided we’d say ‘thanks but no thanks’ to the Goldman people who by this stage were becoming quite agitated about our foot dragging. Not long thereafter we felt very glad that we’d passed on the deal. At the time no one outside of financial circles had ever heard of the term ‘subprime mortgages’ but that all changed with a vengeance in 2007 when everything fell apart. Suddenly ‘subprime mortgages’ were on the tip of everyone’s tongue as one of the alleged primary causes of the disastrous real estate lending crash. As things turned out, Goldman Sachs was left wishing they too had never heard of subprime mortgages. In 2010 the US Securities and Exchange Commission (SEC) fined them $550 million (the second largest penalty ever paid by a Wall Street firm) for ‘having misled investors in a subprime mortgage product just as the US housing market was starting to collapse.’ Goldman also acknowledged that its marketing materials for their subprime product contained incomplete information. Guess who was one of those misled investors that had been looking at those very materials? On this occasion our orchestrated procrastination had saved us a lot of money – and probably a chunk of our good reputation as well!
THE ART OF THE DECISION
‘To do or not to do, that is the decision’ – and making smart informed decisions is why leaders get paid the big bucks. There is really no science to getting it right every time which is why (unfortunately) decision-making is not a process that can be programmed to come in ‘just in time’ across the board. Making a good informed decision is not that different to sitting on a jury – all reasonable doubt has to be removed before you can pass a verdict one way or the other. Thankfully, though, corporate decisions are seldom a matter of life or death!
Here are a few general rules that I have found help me to get to the point of taking the plunge (or not) within the appropriate time frames:
• Like me you may be someone who’s big on first impressions when you meet people but you can’t let the same thought process influence your decision-making. If on first hearing an idea strikes you as a really good one, you may well be correct, but you mustn’t allow that first reaction to influence your ability to objectively weigh the cons as well as all the pros when they are presented.
• Just because no significant cons are presented it doesn’t mean they don’t exist, so get someone on to digging them up and evaluating them while you still have the time – discovering them after you’ve launched the deal doesn’t do you any favours. Insisting that this kind of archaeology is conducted becomes doubly important if and when everyone is unanimously in favour of going ahead with the project. Nothing is perfect, so work hard at uncovering whatever hidden warts the thing might have and by removing them you’ll only make it better still.
• Avoid making decisions in isolation. Every decision has some degree of impact on your ability to adopt other future opportunities in what the experts call ‘the decision stream’. This one may be a ‘too good to miss’ opportunity but how will it affect other projects or priorities and, if now is not the best time to do it, what risks if any are there in putting the thing on hold for an agreed period of time? If you cannot manage this project in addition to another that’s waiting in the wings, which one gets the nod and why?
• Do everything you can to protect the downside. All wise investors go to great lengths to do this with their stock portfolios and when setting up a new business you should try to employ the same strategies. For example, when we started Virgin Atlantic, the only way I got my business partners in Virgin Records to begrudgingly accept the risks involved was by getting Boeing to agree to take back our one 747 after a year if things weren’t working out as we hoped. To this day, with giant, capital-intensive ventures like Virgin Galactic and our newly announced Virgin Cruises, we always spend a lot of time in finding inventive ways to mitigate the downside.
If you have the time to use the ‘orchestrated procrastination’ approach then do so. Without getting into the ‘paralysis by analysis’ mode, doing more rather than less homework on a project is seldom a bad thing. While looking at it more deeply you may find better alternatives or the marketplace may change – think of our Goldman Sachs example where the whole world changed!
‘SORRY, BUT THIS IS THE WAY I WANT TO DO IT’
I think it was Plato who said, ‘A good decision is based on knowledge and not on numbers.’ Try telling that to your CFO if you dare! If you are confident in your depth of knowledge on a given concept, however, there will most likely come a time (or times) in every major decision-maker’s career when you will pull rank and say, ‘Sorry, I don’t care what the numbers say, but we’re going to do it my way.’ Think Virgin Atlantic! You will have gone through all the right steps and every litmus test will have come back positively against doing the thing, but your intuition will still be blaring at you not to be confused by the facts and just go with your instincts. Call it ‘executive privilege’ or just plain pigheadedness (if it fails it will certainly be called ‘utter stupidity’) but it will happen some day and one way or the other your entire legacy may be hanging on the outcome. What fun!
TRAIN SET TROUBLES
In the summer of 2012 I had just such a situation come out of nowhere when the British government shocked us with the news that Virgin Trains had lost out to a rival bidder, FirstGroup, in our effort to retain the operating rights to the £7 billion West Coast rail franchise.
We had run the franchise for fifteen years and in that time had grown our annual passenger numbers from thirteen million to thirty million, introduced new high-speed tilting trains and been voted the best-loved rail company several times. We had been quietly confident that our excellent bid and track record would carry the day. When we first got the shocking news, I was both stunned and baffled. I did a lot of listening and reading between the lines (no pun intended) as our lawyers and advisors outlined our position, which frankly didn’t seem very positive.
The lawyers told us there was no more than a ten per cent chance of winning an appeal, but listening to my own instincts, which have served me pretty well over the decades, I knew we had to fight the decision. It may have looked like sour grapes to many, but as much as I despise being on the losing end of anything, I always know when I’ve been beaten fairly and squarely by a superior opponent (except perhaps on the tennis court) and this decision qualified on neither count.
With nothing really concrete to back up this feeling, I stayed quiet for quite a while and did a lot more listening than talking while the people whose job it is to know about such things discussed our options. Everyone had a slightly different view on just how our very well formulated and extremely competitive bid could have lost out to FirstGroup but if even I could see that the bid they’d presented quite literally didn’t add up, then there was clearly something terribly wrong with the government’s decision.
It seemed to our team that the civil servants in charge of the process had either got their maths terribly wrong or simply hadn’t done enough of it. They had clearly just looked at the highest bid without enough due diligence into FirstGroup’s ability to deliver it. After fifteen years’ experience running the route, we felt we knew better than anyone what was realistically achievable in terms of passenger numbers, fare levels and service expectations. We also believed the measure of our success was not just by the numbers but also by the quality of the customer service we were offering our passengers every day. This was borne out by the 180,000 signatures that were collected within a couple of weeks of FirstGroup’s selection hitting the headlines. The petition was organised by our loyal passengers and sent to the government demanding that they reverse the FirstGroup decision and leave the service in our hands.
We tried to explain our concerns to the government but to no avail – all we got back was a wall of silence. But the clock was running and it was fast getting to the time for us to – as they say in the US – ‘put up or shut up’. For the second time in my career I was going to take Freddie Laker’s wise counsel and ‘sue the bastards’. Last time we’d taken on British Airways and won, but this time it would be the British government!
Accordingly in late August of 2012 we threw down the legal gauntlet and filed an application before the high court of London requesting a judicial review of the decision to award FirstGroup the contract. Obviously our filing didn’t seem to bother the Department for Transport too much, as they dismissively told the press that there would be ‘no delays in awarding the franchise to FirstGroup’.
The court hearing was set for the middle of October, but with only a few weeks to go the government had still not disclosed any of the information we’d requested on how they had reached their decision to award the franchise to FirstGroup. Fearing things were not looking good for us, some of our senior team were starting to get cold feet and came to me to recommend that it was maybe time to withdraw from the legal proceedings. ‘Let’s forget the lawsuit,’ they said. ‘Nobody ever wins judicial reviews and if we get a bloody nose in court it will be very damaging to the brand as a whole.’
To address these apprehensions we hastily convened a war room meeting at our family home in Oxford where we discussed our options over cups of tea and several rounds of biscuits. Despite the concern that we might not prevail in court, Virgin Trains CEO Tony Collins was convinced that there was something akin to a smoking gun at the Department for Transport. Patrick McCall, my key adviser on Trains, confirmed the numbers did not make sense. Others including Nick Fox, our usually cautious PR director, felt it was better to go down with a fight than slink away at the eleventh hour.
I knew it was a big decision to pit the company’s reputation against the might of the government, but something inside me just didn’t sit well and, besides, it has never been the Virgin way to just lie down and play dead. The room that day was pretty well split down the middle, but knowing our long-term partner Sir Brian Souter (then chief executive of Stagecoach) and his right-hand man Martin Griffiths shared my views, I made my decision. We would stick with it – and if we went down at least it would be with all guns blazing!
The week before we were due to face down the Department for Transport in the high court, I was in New York on a business trip when my assistant Helen received a surprise telephone call from the Secretary for Transport’s office in London, asking her to set up a call with me for 7 p.m. that evening – midnight in the UK. I agreed to take the call and immediately started agonising over what it could possibly be about: where our own people had failed was he now calling to try and talk me into throwing in the towel?
At 7 p.m. on the dot the phone rang and I found out. With little or no preamble, Patrick McLoughlin, the Secretary for Transport, got straight to the point, and pulling no punches he very apologetically told me the department had made some terrible mistakes and they would not be seeing us in court the next week. As my pulse quickened he went on to explain that they had uncovered several ‘significant technical flaws’ in the bidding process because of mistakes by Department for Transport staff and as a result they were cancelling the bidding process immediately.
I believe I may have been dancing a highland fling around the room as he continued to stress that we and FirstGroup had done nothing wrong and that ‘the fault lies wholly and squarely with the Department of Transport’ and there were likely going to be some suspensions of the staff involved. After we hung up – excited that our hard work had been vindicated – I immediately started to wake up our team in London. I even woke the chairman up to tell him the glad tidings, and while I did have to bite my tongue on a couple of occasions, the words ‘I told you so’ never passed my lips. Instead I sat down in my hotel room with our social media head Greg Rose and drafted a blog thanking all the staff at Virgin Trains and our customers for their incredible show of support. We had listened to their advice, we had acted and we had won!
Over the next few weeks, as more details emerged, we learned that what the Department for Transport had identified as ‘the flaw’ was exactly what we had been trying to tell them all along – they simply hadn’t done their sums very well and had accepted some highly unrealistic assumptions about the growth of passenger numbers and inflation towards the back end of the franchise. Or more simply stated: they had failed to realise the level of risk they were taking on board by accepting the FirstGroup bid. Anyway, on the ‘all’s well that ends well’ front, we have since been given approval to continue running the West Coast line until April 2017, so the decision to ‘sue the bastards’ would appear to have been the correct one. I am in no doubt that none of these ‘flaws’ would ever have seen the light of day had we not gone for the judicial review – the thing I was repeatedly told nobody ever wins.
I have to say, though, that I had nothing but admiration for the way the Secretary for Transport handled what was obviously a very embarrassing screw up by his department. First of all, he was recently appointed to the position and so the way the bidding system was set up hadn’t happened on his watch. Secondly, as recently as a couple of weeks before the dramatic late-night volte-face, he had told the House of Commons that he was satisfied that the bidding had been handled fairly and with due diligence. As a latecomer to the scene he could only have done this based on the word of his people in the Department for Transport who had handled (or more accurately ‘mishandled’) the bidding. The Department for Transport could very easily have just issued a press statement with the news but Mr McLoughlin had instead decided to call me personally – probably not the easiest call he has ever made! He also didn’t hide behind the fact that it was his predecessor’s miscalculation or weasel-word his way around the situation. In addition to the mea culpa he’d given me during our phone conversation, in subsequent interviews he continued to use no-nonsense phrases like ‘completely unacceptable mistakes’ and ‘deeply regrettable’.
Too often decision-makers, whether in business or politics, are happy to step up to the microphone or meet with the press when there is good news to dispense but, fearing it might damage their standing with the shareholders or voters, the same people can be conspicuously absent when the news is less palatable. This mentality of ‘go to ground until the firestorm passes’ seldom does either the leader or their company’s reputations any favours and invariably only serves to add a secondary round of damages.
SHIP HAPPENS
In recent years the best (or should that be worst?) example of bad decision-making being compounded by more bad decisions could well be the peculiar behaviour of Carnival Corporation’s billionaire chairman and CEO Micky Arison when his cruise lines suffered two major accidents in the space of a year. When his ship the Costa Concordia ran aground on a little Italian island (that it should not have been anywhere near) killing thirty-two and seriously disrupting the lives of thousands of passengers and their families, where was Micky? All that matters really is that for reasons unknown he made no attempt to get there. As soon as he was briefed as to the severity of the situation – all he had to do was turn on a TV set to see the disaster that the rest of the world was watching – he should have had his corporate jet fuelled up and been on his way to Italy. Instead Arison buried his head in the sand and went to a basketball game to watch the Miami Heat (the NBA team he owns). Amazingly, even after the lambasting he took for failing to make his way to Italy as soon as he heard of the Costa Concordia disaster, it seems he isn’t one to learn from his mistakes.
Almost a year later another of Arison’s huge cruise ships – the ironically named Carnival Triumph – was towed into Mobile Alabama after a fire had destroyed the ship’s generators and left the passengers stranded at sea for five days in disgusting conditions with no power, refrigeration, water or toilet facilities. After his appallingly bad decision a year earlier, there was Micky (again) opting for basketball over comforting his customers. The day when he should have been dockside in Mobile handing out blankets and compensation cheques to angry passengers, he was instead tweeting that tickets were still available for an upcoming Miami Heat game!
When a CEO or president speeds to a disaster site there’s really nothing tangible they can do to unravel or rewind what has taken place. Similarly, in ninety-nine per cent of cases they are unable to immediately answer the most common question of ‘Who or what do you think was responsible for the accident?’ The first thing one learns in any good crisis management training is not to offer opinions, speculation or hearsay until such time as the experts confirm the cause – something that usually takes months or even years. All a company’s leaders can do is to show that they care enough to be there and demonstrate their sympathy for the victims and support for their own people who are handling the situation. When, on the other hand, a leader like Micky Arison decides to stay home and watch the story as it unfolds on the world’s media, that sends a very different and equally clear message that is hard to interpret as anything other than ‘I really don’t give a damn.’
As the tragic tale of Malaysia Airlines’ flight 370 demonstrated, no two emergency situations are ever quite the same. At the time of writing there is still no answer on the fate of the aircraft and everyone on board but the airline’s handling of the incident has been the focus of some pretty damning criticism from despairing relatives and the media. While some say the airline’s representatives were clearly unprepared to deal with the 24/7 demands of journalists from all around the world, the amount of contradictory information and speculative statements coming from them was quite extraordinary. In such awful and unprecedented circumstances my heart went out to everyone involved – including the embattled CEO of the airline. All I will say is that if, God forbid, such a situation were ever to happen to them again, I am sure they would handle it a lot more effectively.
Touching wood as I write this, for someone who has been in the transportation business for the last three decades with companies moving millions of passengers a year I am extremely fortunate to have been faced with only one serious accident resulting in a fatality. That came back in early 2007 when a Virgin train came off the tracks in the north-east of England. When it happened I was on a ski vacation in Zermatt, Switzerland with my family; a little after nine in the evening a text came in telling me there had been a ‘code black’ rail accident, which indicated it was serious. After a few hurried phone calls had established that the derailed carriages had plunged down a ravine, I was merely told to ‘prepare myself for the worst’. I decided on the spot that there was only one thing for me to do and all I think I said was ‘I’m on my way’ – something I was about to discover was easier said than done. It was snowing heavily at the time, which meant that what would have been my first choice of transportation, a helicopter, was not an option. The snow had already closed our closest airport at Sion and Geneva was about to shut down as well. With no other alternatives, other than staying put, I rented a car and set off on a gruelling five-hour drive through the snowy night to the airport at Zurich – which I prayed would still be open. It was, and I managed to catch the first flight out at 6.30 a.m. to Manchester, where I was met by Tony Collins and our head of public affairs Will Whitehorn, who jointly updated me on the accident’s status as we drove to the crash site.
I was greatly saddened to hear that Margaret Masson, an elderly female passenger, was confirmed as dead at the scene, and yet when I got to see the mangled wreckage I was also relieved that there had not been more fatalities. My decision to come without delay was certainly borne out as the right one when I made my way to the hospital where injured passengers were being treated. I met with as many of them as possible and then spent time with the clearly devastated Masson family, with whom I expressed my deep sorrow over their loss.
We learned a lot from the accident, which was quickly determined to have been down to a maintenance problem with the track – something completely outside of our control. Without knowing who or what was responsible, I never gave a moment’s thought to anything other than getting myself to the scene as quickly as possible. Faced with such an unenviable situation, any senior corporate officer who decides to delay their arrival at a crisis scene can usually take credit for making a ‘just in time’ decision, as in when they eventually get there it will be just in time for the media to castigate them for not showing up earlier.
In the course of our lifetimes we will all make a multitude of decisions big and small, good and bad. In some cases they will be hailed as brilliant and in others condemned as wrong or questionable. When the going gets tough, though, as in the case of a major accident involving your company, as the leader your job is to gather as much reliable up-to-the minute information as is available, step up and take the bull by the horns. Whatever the situation, indecision is not an option, and as I believe Micky Arison might now agree, in most cases ninety per cent of life is just showing up.