ONE CAN SEE WHY Richard Branson’s sexed-up airline Virgin Atlantic put its chief financial officer Julie Southern in front of the media, whether at the BBC to drill airports operator BAA on the snow debacle or joining David Cameron on a British business cheerleading trip to Beijing. In person, Southern effortlessly embodies the easy confidence, authority and style that its advertising campaign tries to convey with crimson-suited cabin crew flicking perfectly coiffed manes in our direction.
Southern is at home amid the showmanship, but the sharp shift dress and we-mean-business heels do not occlude a fiercely commercial finance head that ensured Virgin Atlantic survived a decade of industry crisis. That is why Southern moved out of the CFO role last October with her appointment as the airline’s first ever chief commercial officer (COO), giving her group responsibility for commercial strategy, fleet and network development, revenue management and pricing, sales and marketing, and legal affairs. She also retains responsibility for HR.
In creating such a meaty role for her – following extended discussions between chief executive Steve Ridgeway, herself and their shareholders – the airline is making a statement on her future in the business. After 10 years as CFO, she is gearing up to join the CEO club. The change reflects how much stock Branson and Ridgeway put in Southern. Ridgeway in particular wants her to “utilise her strengths at the front-end of the business, driving new relationships, revenues and, ultimately, our growth strategy”.
It is one of the more interesting promotions in the UK finance world of late, and the culmination of a career that has taken Southern from earning her finance chops as a commercial and management trainee with Mars, to finance at a WH Smith subsidiary and on to a role as group FD of Porsche Cars Great Britain, before coming to Virgin Atlantic as CFO. She certainly has crammed in the big brands.
The first order of business is internal relationships, making the sales and marketing teams work together, and providing the right data to the sales force. For years, Virgin has wrestled with the provision of quality data to its salespeople. According to Southern, the sales force often does deals based on instinct more than from
a fully informed position, and it suffers from the silo disease so common to bigger businesses.
“Encouraging joint planning, more communication, shared incentives and shared objectives will encourage sales and marketing to understand that they share one goal,” Southern tells Financial Director. “Bringing people together is not particularly different for CFOs and CCOs. It is about facilitating the right conversations, setting clear objectives, and encouraging people to stray outside their areas for a better customer outcome. We have realised we get a much better outcome if we involve our people appropriately in our decision-making process.”
In order to accomplish the goals she has set for herself and the business, Southern must invest in technology to gather and disseminate the right information, then arm teams with the skills to tease commercial opportunities out of it.
“We need to give the salespeople better tools,” she says. “We are putting together a cross-functional team to help salespeople examine their pitches and analyse how we might re-shape existing customer deals. But the technology bit is still a work in progress.” A tinge of exasperation claws its way through her words. “I suspect it is one of those things that you do not ever quite finish. You can take a simple word like ‘revenue’, and then you find that there are 20 different interpretations of it.”
Southern had crisis management training early, when two planes were flown into the towers of the World Trade Centre in New York on 11 September 2001, a year after she had started as CFO. And the industry has lived between crises ever since. The pressure of industry consolidation after 9/11 led to the decision last year to hire Deutsche Bank to review Virgin Atlantic’s ownership options, and Southern has been involved in discussions with potential suitors and partners.
“We often say to ourselves that we must stop using the word ‘challenge’ because it feels a bit like, ‘Here we go again’,” she quips.
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The airline set itself a goal to make double-digit growth every year after 9/11 – and it happened until 2007 – but otherwise, all bets were off at the time.
“None of us knew what was going to happen to aviation; there were no templates,” recalls Southern. “I don’t think I even went home for two or three months.”
She and her team led an unprecedented renegotiation of all Virgin Atlantic’s supplier contracts, which included deciding whether to take delivery of an order of Airbus A34-600 jetliners that was on its way. The shareholders were clamouring for a plan not to just survive, but to thrive – and the business was forced to make its first ever redundancies.
“We lost more than 1,000 people in six weeks; we did not even have any processes in place to do it. We had to invent all of that,” she reveals. “But it meant all the barriers were down. It really thrust me into being at the heart of that team.” And, as people stopped travelling by plane for some time, Southern had to manage a sudden nosedive in cashflow. “It was stressful. But I think we acquitted ourselves well,” she says.
There are not many examples of UK companies hiring a CCO and still fewer FDs who become CCOs (see box), so Southern does not have a peer group. But she says that she is happy rubbing shoulders with the wider senior management class. Encouragingly – especially for other FDs or CFOs who fancy the idea of becoming CCO in the future – Southern says that she sees more parallels than differences with the finance job for the modern, strategy-minded finance head.
“I have always had wide-ranging responsibilities and felt I was much more interested in general business than finance,” she says. “This job is more about networking with senior people across business, whether my job title is finance or commercial.”
Her new bird’s-eye view of the business brings her to a nice analogy.
“It is like delivering an aircraft seat,” she says. “It goes from a designer to an engineering and manufacturing process in three years, and certification is necessary before it gets on an aircraft, so there is a consumer angle, a crew angle, a maintenance angle.
“Unless those groups understand and are prepared to talk to one another, you will get a seat that looks great but does not work, or that works beautifully but does not look good. Everyone here is motivated to maximise sales, and once you start exploring those things with people, they start to see the good in working together, rather than simply protecting their own bit.”
What is a chief commercial officer?
The role of CCO is a mature one in the US, but still something of an emerging market in the UK. A CCO is responsible for ensuring a company’s customers
receive the right level of service and that all the facets of a business driven to this delivery are working as they should, across a region or globally. They are in charge of delivering commercial strategy to the customer, in sales and marketing. It is critical that an effective CCO is able to see how these departments knit together internally, and where – especially if they do not – how they could be made to do so, with the intent of drawing out hidden revenues and efficiencies that will deliver the commercial strategy.
A handful of notable British companies have hired a CCO in the last few years, including Heinz UK and recruitment business Premier’s Ireland operation.
Vodafone promoted its CEO for central Europe and Africa to its first-ever group CCO position last September. European companies like advertising agency Havas and aerospace giant Airbus have CCOs.
In 2009, John Abele, global managing partner for the marketing and sales officers practice for headhunter Heidrick & Struggles, pointed to a “dramatic
increase in organisations looking for a single executive leader at the right hand of the CEO, whose sole job is to drive growth and ensure integrated commercial success”. He believes companies are looking for a single person to own the commercial strategy and be able to look across all functions of a business and see how they feed into that strategy.
As the role evolves, companies are using it to hold onto star managers
with designs on the CEO job – it is increasingly seen as the CEO-in-waiting position. A CCO usually reports to the group CEO and works closely with the group CFO while cultivating relationships with creative teams or agencies: a diverse role. That said, very few FDs have become CCOs aside from Virgin Atlantic’s Julie Southern: most of them are drawn from sales and marketing.
October 2010 – present
Chief commercial officer, Virgin Atlantic
October 2000 – October 2010
Chief financial officer, Virgin Atlantic
July 2000 – October 2000
Executive director – finance, Virgin Atlantic
1996 – 2000
Group FD, Porsche Cars Great Britain
This article first appeared in the May issue of Financial Director magazine