ABCD

The line is the subtitle of “A-B-C-D”, a short chapter in Richard Branson’s 2012 book Like a Virgin. Asked about Virgin’s apparent vertical integration (many ventures under one owner), Branson half-jokingly says he prefers “vertical disintegration”. The ventures can look unrelated (a record label that started an international airline, then went into mobile phones and health clubs), but over time, he writes, the connections usually become clear. ABCD is his better name for Virgin’s “philosophy of growth”, and he compares it to a children’s dot-to-dot book: the first few dots are the hardest, and the rest gets easier once the picture starts to show.

Branson’s first example is Virgin Atlantic. When it launched in 1984, airline service was so bad that he saw an opening, and Virgin, then a record company, brought what it knew best: entertaining customers. Virgin Mobile did the same with customer service, letting parents set a credit limit on a teenager’s phone so no bill came with surprise charges. By sticking to three core brand values (customer service, good people, and innovation), Branson writes, Virgin has found very few businesses it cannot connect with. When Virgin enters a sector it barely knows, it hires insiders who think the business is ready for a shake-up.

Near the end of the chapter, Branson writes that he is always amazed, looking back, at how well the Virgin dots line up. Steve Jobs gave the general version in his 2005 Stanford commencement address: “you can’t connect the dots looking forward. You can only connect them looking backwards”. His own dot came from far outside computing: a calligraphy class he took after dropping out of college, with no practical use in sight; ten years later it gave the Mac its typefaces.

Charlie Munger turned that kind of breadth into a rule about mental models, such as compound interest from math or backup systems from engineering. In a 1994 talk at USC Business School, known today from transcripts reprinted on the web, he said those models “have to come from multiple disciplines”, because “all the wisdom of the world is not to be found in one little academic department”. A 2013 Science study of 17.9 million scientific papers measured the payoff and added a condition: the most-cited work rests mostly on familiar combinations of earlier ideas, with a few unusual combinations mixed in; papers built that way were twice as likely to be highly cited. Branson’s method has the same shape: the same core values, carried into each unfamiliar industry.