Strategic Railroading

When I joined IBM in 1970 as a Marketing Representative to sell computers, I was presented with a 10 inch plaque for my desk that simply stated “THINK”.  I still have that plaque on my desk.  Since that time of the commercial introduction of computers, corporate America has been proceeding through 3 stages of THINK as to their business environment. As addressed below, the U.S. freight rail industry has kept pace with the first two stages of Digital and Process Reengineering to a respectable extent, but the railroads have yet to fully embrace the 3^rd stage, Connectivity, which is extremely critical for railroads to manage their primary reliance on mobile resources, both individually and collectively as an industry.

1: Digital

With the marketing of computers in the 70s, IBM realized that its first primary challenge was to educate its clients’ executives as to the opportunity to use computers to replace the straightforward processes that were handled by clerks, e.g., payroll, inventory update, accounts receivables / payables, etc.  These sequential processes of updating data bases were readily handled by the predominance of magnetic tape-based, sequential record data bases. THINK back then was how to make the business case for top-level management to lease these intimidating physical electronic monsters (purchase was not an option at that time with IBM).

To take on this challenge of converting manual (analog) processes to digital ones, IBM was hiring two basic types of disciplines, i.e., MBA’s and teachers. The former (which I was) were used to provide the business case, e.g., the discounted present value of advancing a business process, and the latter were used to present the business case.  With the phenomenal amount of Sales School training that IBM provided to its marketing personnel at that time, these two disciplines were blended to provide an unprecedented marketing force. We didn’t have PowerPoint, of course, but we were well trained on paper “flip chart” presentations that permitted us to efficiently make our “bullet” presentations to client executives.

As a side point, IBM’s Marketing Representatives were also trained on basic marketing/sales concepts such as

• Shut up once you asked a question of the client so as to permit that individual to reach his / her own conclusion based upon what you had presented;
• Once the executive agreed to the sale, you introduced no additional thoughts;
• It takes 10 cold calls to close 1 deal;
• Do not disparage a competitor directly. However, one could state demonstrated truisms, e.g., “Burrough’s computers perform 1/3 slower on your accounts receivables as demonstrated by the benchmark test that we performed with your data.” If you violated this principle, then it was very likely that you were soon on the street.
• One never had alcohol at lunch  – unless the customer insisted, at which point you didn’t go back to your office or to that of your clients;  and
• One dressed based upon the dress code of the customer – as long as it was a dark suit and a white shirt.

While IBM set the high water mark for ethical behavior in the Data Processing industry (the phrase for Information Technology back then), if not elsewhere, there was no question as to the benefit of such behavior including a most important advantage that an IBM business card would get you pass the secretary of almost any executive. Those were the good ole days, in that marketing was above board. Again, an IBMer would be fired immediately if s/he violated IBM’s sense of business ethics; ethics that were and are still unmatched in the US business (and political) environment in my opinion.

At this point in time, THINK was more about hardware than it was about software. Within a decade or so, the perspective of THINK advanced to Stage 2 with the transition from sequential tape processing to that of dynamic, direct access to data via affordable disk drives and the associated advancement in software.

2: Process Reengineering

For the last several decades, the concept of THINK has been all about functional understanding of what a business process is attempting to achieve. Some readers may recall the rush to Process Reengineering in the 90s. Simply explained, process reengineering meant reTHINKing how processes were handled as to workflows given the use of computer processing and wired telecommunications that integrated otherwise disparate entities in a company. This was a holistic perspective of the company and, in selected cases, an industry. However, the ability to reengineer processes was most often directly related to the ability to use wired communications between the sub-entities for the purpose of distributed, but integrated processing. However, for industries that are primarily about managing mobile resources, e.g., railroads, process reengineering was greatly limited in that a wired path can’t be attached to a locomotive. As a side point, IBM had developed an extraordinary concept of Business System Processing (BSP), a.k.a. Information System Processing (ISP) that proceeded process reengineering by 2 decades to optimize data storage. I have a posting on BSP that can be found by clicking on the category of Strategic Railroad on the right side of the home page and paging down to It Takes an Industry: Process, April 14, 2012.

3: Connectivity

With the ubiquitous availability of wireless data networks now, whether commercial or private, the 3^rd state of THINK now also includes who “THEY” are that are involved in the functionality. This is an issue of connectivity, with a minor in functionality. For railroads this means tightly integrating the management of its trains, crews, locomotives, and maintenance with the back office systems based upon a very simple principle: “Where are my trains (I mean really where are trains other than just a block), AND at what speed are they traveling. This is all about running a truly-scheduled operation. The ultimate, but largely unachievable, example of this is moving block. But, short of that is the role of Proactive Traffic Management (PTM) that minimizes the consequences of traffic conflicts in dense corridors, and that can support “flexible block” operations versus the inefficiency of fixed block operations with traditional CTC operations. I have a posting on PTM that can be found by clicking on the category Strategic Railroading on the right side of the home page, and paging down to Degrees of Separation, December 26, 2012.

With the mandate of PTC, the freight rail industry has been forced to develop an industry-wide wireless network, which is clearly the true value of the PTC mandate given that our freight railroads are already extraordinarily safe. For those individuals that are still confused about the business benefits of PTC, please, please understand that PTC does not deliver business benefits. It is the availability of a wireless data network required for PTC implementation that can provide those benefits – as evidence by NS and BNSF, at least, that are achieving those fatuously proclaimed PTC benefits by some misguided individuals without the implementation of PTC.

An article of mine is scheduled to be published in the forthcoming C&S issue of Railway Age, and it will describe the pursuit of this stage, not just from an individual railroad standpoint, but also as what can be done to increase the efficiency of the U.S. freight rail industry. The underlying principle here is that a railroad is limited to its ability to run to schedule if the railroads with which it interconnects are not running to schedule, and visa versa.  In my opinion this Catch 22 can best be resolved by 2 means. First, railroads require PTM (with a glazing of flexible block), and Second, the annual bonuses of railroad executive must include a performance measurement as to Industry Efficiency. However, it is unlikely that the pursuit of industry efficiency will happen until there is a true Strategic Industry Railroading perspective that involves all of the Class Is.  So! Who will provide that industry strategy?  Hmmmmmm! It appears that there is a role for an independent consultant. Please call: (904) 386 3082.

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