Strategic Railroading

Arguably, the most frequent Teddy Bear (i.e. fatuous, rationalizing statements) coveted and expressed by railroaders and suppliers alike is “We have no time for strategy. . .  too much going on.” As a consultant that focuses on the strategic deployment of technologies aligned with the appropriate changes in the business processes (a.k.a. strategic railroading), I have been able to maintain my cool in such conversations by chiming in with “Really?”, and with some semblance of respect, I believe. But, what I want to do, really, is reach across the desk and slap the guy silly while calmly screaming “What in the world are you thinking here?” … or … “You need to let go of those next-year’s bonus issues for a moment.” … or … “So, I guess you don’t own, or plan to own, stock in the company?” Granted, I have a self-serving interest in getting this individual to think beyond the horizon of his bonus plan. And, if s/he did so we could have a win-win … Really!

Approaching a railroad or a supplier to talk about technology and process strategies, either individually or ideally together, is not a simple cold-call situation for which I was well trained 40 years ago during my span with IBM.  Back then IBM was challenged with getting business executives to understand the value of computers to handle simplistic clerical efforts, e.g., updating inventory, accounts receivables, and processing payroll. Back then, the primary functions didn’t change with the use of the computer. The clerks just disappeared. Therefore, any business executive with a clerical workforce was a possible mark for a computer salesperson that could spin business cases. As such, a major part of IBM’s training was on how to make and present the business case using real-world adaptations to the principles that the thousands of MBA’s that were hired had learned in class. We talked about inventory turnover, return on investment, internal cost of capital, discounted cash flows, regression analysis, and even econometric modeling. BUT, we didn’t talk about changing the underlying business processes beyond that of the back office; we didn’t get into the functional operations of the company. The point here is that making a cold-call on an  executive back in the 70’s was not the same as hitting on Operations management of today that don’t understand what technologies can do for their core business processes.

Today, there are four primary challenges to advance railroad operations in sync with a strategic technology plan.

The first challenge is identifying which positions in the individual railroads and across the supplier community would be willing to talk about technology and/or process strategy?  Unfortunately, to my knowledge, there is not one position associated with operational (non IT) technologies in any of the railroads or the suppliers that have any form of the Greek root strategia in its title. Additionally, as I have pointed out in other postings on this blog, there aren’t even technologists. That is, while the railroads and suppliers have scores of technicians that push technologies at any costs, there aren’t those individuals that could do so in a pragmatic, cost-effective fashion, with or without modifying the underlying processes to take advantage of what the advancing technologies can do.

The second challenge is that the focus of the Class I railroads to meet the Positive Train Control (PTC) mandate deadline of 12/31/2015 has been the black hole of technicians. They have been totally and reluctantly drawn into the challenge of interoperability, or so it would seem. Actually, what has really happen is that they have willingly escaped into their respective caves to do what they really like to do; design the ultimate technology platform, whether or not it is required.  No one is watching, challenging, or redirecting these guys because they are the High Priests of what can has to be done … and no one else really understands, and therefore challenges, the underlying principles of their religion.

The third challenge, therefore, is getting railroad operations management involved so as they will take charge  of advancing their railroads via advancing technologies based upon sound business logic that is both pragmatic and cost-effective; business cases that include terms like return on investment, discounted cash flows, regression analysis, etc. Again, there is no position in the railroads currently that could be reasonably charged with this responsibility: It certainly isn’t the CIO. What is needed is a Chief Technologist or something like that … maybe Chief Strategic Technologist, whatever.

Lastly, the fourth challenge is that of involving and evolving the suppliers. With only one exception in the past 2 decades in North America, they have kowtowed to the tactical issues that drive their railroad customers so as to make their bonuses. The bottom-up approach to marketing products and services in the rail industry is a very traditional approach and rightfully so for the past 100 years because the technologies have been, aaahhh … traditional. Now, wireless data offer a paradigm shift in operations, just as IT has evolved over the past 40 years, and to bring the possible advancements to the industry will require top-down marketing.  That simply isn’t happening today … and probably won’t until the PTC issue has subsided sometime after the < 2016 deadline.

The good news is that I am starting to hear rumblings from railroaders and suppliers alike that the PTC interoperability issues are out of control.  Indeed, it is possible that perhaps some railroads won’t buy into the 220 MHz network as it being the universal wireless data panacea. Indeed, the requirement for a Communications Management Unit (CMU) on board to handle multiple wireless paths, as first addressed in my quarterly journal Full Spectrum a decade ago, is hopefully being revitalized. Maybe, it never really died in the minds of some, especially when the 220 MHz network began being slammed down the throats of several Class I’s two years ago.

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