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The FD Interview: Julie Southern, chief commercial officer, Virgin Atlantic

You know you’ve hit the big time once you’re boarding an airplane to travel alongside the prime minister. And the plane belongs to your boss. Richard Branson’s infamously sexed-up airline Virgin Atlantic has not been shy about putting its chief financial officer Julie Southern in front of the media and sending her into diplomatic battle where needed, most recently arguing its case when airports operator BAA needed drilling on its handling of the snowstorms in December and joining David Cameron on his cheerleading trip to Beijing (flying Virgin of course).

It’s easy to see why: in person, Southern effortlessly embodies the easy confidence, authority and individual style that its branding geeks have been trying to work into its recently launched TV advertising campaign featuring cabin crew – crimson-suited, club-land lovelies – flying through the air and flicking their perfectly coiffed manes in our direction. You’d expect no less bravado from a Branson company (his Virgin Group owns 51 percent of the airline while Singapore Airlines owns the rest).

Southern is right at home amid the showmanship, but there is a fiercely commercial finance head not far from the sharp shift dress and we-mean-business heels, and she has ensured Virgin Atlantic survived a decade of industry crisis, and remained an independent outfit. That is why Southern became its first-ever chief commercial officer last October – a role created with her skills in mind and after discussions between her, Virgin Atlantic chief executive Steve Ridgeway and its major shareholders. The CCO role sees her take group line responsibility for commercial strategy, fleet and network development, revenue management and pricing, sales and marketing, and legal affairs. She also retains responsibility for about 9,500 staff as head of the HR department which she already had as CFO.

In creating such a meaty role for her, the airline is making a bold statement of intent for the future of the former group FD of Porsche UK, who earned her finance chops as a commercial and management trainee with Mars before making her mark at WH Smith subsidiary HJ Chapman. Ridgeway and Branson will have their succession plans ready, and it is clear that Southern is gearing up to join the CEO club, after 10 years as Virgin Atlantic CFO.

All told, the change reflects how much stock Branson and Co put in Southern as the face of the business. Ridgeway says he wants to “utilise her strengths at the front end of the business, driving new relationships, revenues and ultimately our growth strategy”.

Taking the sales and marketing bulls by the horns is the first order of business. Southern reveals that Virgin has wrestled for some years with the provision of quality data to its sales people, who make calls on deals with only part of the information they need on clients as a result of this, missing out on better custom fulfillment and, naturally, better revenues. The business also suffers from silo disease – as so many do – isolating the sales and marketing teams from one another, and Southern recognises that she has a major hurdle to maximising revenues standing in her way.

“The two departments that I really need to work together well and give us the best chance of growing revenue are sales and marketing – and our commercial team, who manage all of our pricing and inventory, she says. “I have a strong role in breaking down some of the silos that exist between those teams, who want to achieve the same thing but come at it with different perspectives.”

Encouraging joint planning, much more communication, shared incentives and objectives will encourage them to understand that they share one goal, though working separately. “By working together, they’ve got a better chance of succeeding rather than getting frustrated with each other,” she says. “That’s a critical step for me to take in ensuring that we are optimal on revenue and we really represent ourselves well in the market.”

Does it take a different skillset for Southern, jumping out of finance and bashing parts of the business together that have a rich history of not having much to do with one another? “Going back to finance and my early days here, we were an extremely siloed organisation – so it’s a journey the whole business has been on,” she admits.

“Bringing people together isn’t particularly different in a CFO’s world and a CCO’s world: it’s about making sure you facilitate the right conversations and set clear objectives. You have to encourage people not to be afraid to work across silos and stray outside of their own areas if that leads to a better outcome for the customer. I wouldn’t pretend every conversation is perfect. And some of it is about just encouraging people – some things are very basic.”

And she admits the evils of email have caused their ructions. “Ever since I’ve been here, this has been something we have been working on,” she says. “We’ve realised that we get a much better outcome if we involve our people in our decision-making process.”

When it comes to sales data, Southern aims to invest in some technology to gather and disseminate the right information, and arm different teams with the skill to tease some commercial opportunities out of it. “We need to give the salespeople better tools. We’re starting to put together a cross-functional team of people who can bring greater analytical skills to help salespeople when they examine a pitch for business, or analyse how we might re-shape a deal,” she says. “It’s putting the right people together who can interpret that information: but the technology is still a work in progress. That’s where we need to move forward.”

A tinge of exasperation claws its way through her words. “I suspect it is one of those things where you don’t ever finish. It’s a complex challenge, because information resides in all sorts of places,” she says. “Being clear about what constitutes useful information is going to take some time.”

Southern had the sort of training in crisis management that money can’t buy when two airliners were flown into the towers of the World Trade Center in New York on 11 September 2001, the year after she started as CFO. “None of us knew what was gong to happen to aviation; there were no templates. We were in unchartered territory. Bizarrely, it was actually a fantastic experience having recently joined the industry; it forced me to quickly get deeply into the business,” Southern recalls. “Having to deal with it meant that everyone had to roll their sleeves up and throw the rule book out. I don’t think I even went home for two or three months.”

Southern led an unprecedented and swift renegotiation with all of Virgin Atlantic’s suppliers, including taking a call on whether to take delivery of an order of A34-600 jetliners that were on their way. The shareholders were clamouring for a plan – not only to keep the business alive, but to see it prosper. And toughest of all, Southern says, the business had to make redundancies, its first ever experience of doing so. “And we had to do it quickly – we lost more than 1,000 people in six weeks which was extraordinary given that we didn’t even have any processes in place to do it. We had to invent all of that,” she says.

“But it meant that all barriers were down. We were a team of people fighting to ensure that the airline came out of it as a strong business,” she continues. “That really thrust me into being at the heart of that team. That crisis made people feel quite unsure about travelling for a while and that has a big cashflow implication, so we worked very hard to manage that. It was a very formative experience. And at the time it was stressful, but we all acquitted ourselves well.”

There aren’t many examples of British companies hiring a CCO, so Southern doesn’t have a peer group. But she says that she is happy rubbing shoulders with the wider senior management class. At the core of the CCO gig, she sees more parallels with the finance job than differences. “I’ve always had wide-ranging responsibilities and felt I was much more interested in general business than finance. This job is more about networking with senior people across business whether my job title is finance or commercial.”

But the CCO job is a change of mindset and a move towards sustainable growth in new areas, after a decade in survival mode in the post-9/11 era – though Southern says Virgin Atlantic had a deliberate strategy to produce double-digit growth every year, “which we did up until 2007. Since then we have been concentrating on slightly slower growth, filling out the capacity we had put in previously.”

Change has been one of the only constants for a besieged aviation industry which has resulted in many of the bigger players allying with competitors. Branson made a point of saying that his airline would remain independent, giving Southern her raison d’être in her early days as CFO. That looks to be changing, however. Last year, the company hired Deutsche Bank to review ownership options for Branson’s share, following regulatory approval for British Airways and American Airlines to run the key transatlantic routes together. The man himself has said that it is not yet clear if the board will seek to merge with another airline or simply set up alliances.

Southern has been privy to discussions with proposed suitors both as CFO and CCO. And she is pragmatic about the possibility of a non-independent future in an age of natural and man-made crises squeezing her market on a regular basis.

“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. “But while the world is shifting around us, there is still a strong desire to travel. We are in an industry that seems to face a new challenge every year, but we’ve found that if our product is something people want to buy and we fly to places people want to go, people still have a preference to choose us.

“You’ve got to think about the opportunity at the other end of the route: you have massive opportunities to go into markets where they haven’t had the same opportunity to travel, where the economy is at a very different stage of development. And thinking about that stuff is new for me.”

Southern’s bird’s-eye view of the business and the Chinese walls she has to break down bring her to a nice analogy. “It’s like delivering an aircraft seat,” she says. “When we develop a new seat, it typically takes three years. It has to go from a designer working in an unconstrained creative world, through an engineering and manufacturing process with all the certification that’s necessary before it gets on an aircraft. When it’s on an aircraft, it has to be fit for purpose – so there’s a consumer angle, a crew angle, a maintenance angle while it’s in operation. 

“Unless those groups are prepared to talk to one another, you might get a seat that looks great but doesn’t work, or a seat that works beautifully but doesn’t fit the customer requirements. Once you start to explore those things with people, they start to see the good in working together. Everyone here is motivated to maximise sales, but they are looking at it through a slightly different end of the telescope at the moment.”

 

CV

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

Previous roles
Finance and operations director, HJ Chapman
Chartered Accountant, PricewaterhouseCoopers
Graduate trainee, Mars

 

What is a chief commercial officer?

The role of CCO is a mature role in the US, but still an emerging market in the UK. A CCO is responsible for ensuring a company’s customers receive the appropriate level of service and all the facets of a business driven to this delivery are working as they should, across a region or globally. The CCO is in charge of delivering commercial strategy through this attention to the customer, in sales and marketing. It is critical that an effective CCO is able to see how these departments knit together internally, where problems arise if they do not, and 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 growing handful of notable British companies have added a CCO in the last few years, including Heinz UK and recruitment firm Premier’s Ireland business. Last September, Vodafone promoted its CEO for central Europe and Africa to its first ever group CCO position. European companies including 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 may work closely with the group CFO while cultivating relationships with creative teams or agencies. That said, very few FDs – aside from Virgin Atlantic’s Julie Southern – have become CCOs: most of them are drawn from sales and marketing.

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