Paper Tigers

As a fresh, professionally unencumbered MBA in 1970, I joined IBM as a Data Processing Representative (computer salesman of main frame and sensor- based computers). IBM was an extraordinary company with absolute business ethics with zero tolerance as to business ethics errors, including misrepresenting the products, both hardware and software. However, the competitors were not always so in their pursuit of a portion of the market. They disparaged suppliers without objectivity and made non-credible proposals as to performance. Fortunately, more often than not, IBM would close the deal by bench-marking its systems against the Paper Tiger proposals of the competitors’ inferior products and services. One of IBM’s advantages included the ability to make a proper business case given its emphasis on hiring MBAs for its sales force. Those ethical principles have guided me through by professional career, both as railroad management and as an independent consultant – meaning that my consultancy Strategic Rail, llc (SR) neither represents nor accepts commissions from suppliers for what we design for our railroad clients.

Moving forward 4+ decades, SR was awarded a project to design a new traffic control, traffic management, and enforcement (think PTC) approach for Kazakhstan’s railroad, Kazakhstan Temir Zholy (KTZ). At that point KTZ, as is true for most if not all Commonwealth of Independent States (CIS) – ex Soviet Bloc countries, was suffering from an antiquated CTC installation of 40-50 years ago. The cost of maintenance and the effect on throughput was choking the railroad. Fortunately, SR had just completed a similar study for the Egyptian National Railways (ENR), where SR designed Virtual CTC (VCTC) for 80% of that most antiquated railroad to replace British Empire train control methods known as token and token-less block. Hence, I had a clear vision of how to win the project. It only took one statement to be awarded the project when I met with KTZ’s VP Engineering at the time.

The VP spoke no English, and my Project Coordinator and translator was late for the meeting. As I sat across from the VP waiting for my colleague, I simply stated “NO Balises”. His eyes lit up, and he called in his translator. Via the translator I continued to explain that VCTC required extremely little wayside infrastructure by excluding balises, signals, track circuits, and control points. My colleague arrived, and we continued to explain VCTC in detail. It was then that the VP informed me of an implementation of ETCS-3 that was underway on a new corridor across the country. Via my colleague, I said to him that he had been sold a Paper Tiger explaining that the supplier was purposely misleading KTZ and collecting $100 million or so for what they were hoping they could deliver by using KTZ as a developmental corridor: ETCS-3 at that point didn’t exist in revenue service to my knowledge – and still doesn’t to any extent that I am aware of now.

Over the following months as SR proceeded with its engagement, I would occasionally say to the VP: “The ETCS-3 supplier is lying to you.” as translated by my colleague. That statement finally took hold with KTZ as evidence continually mounted. Finally, the supplier was booted off the property (after being paid a significant amount of the project budget), Additionally, the supplier’s local representative(s) was reportedly charged for criminal business practices. This is not surprising since the corridor involved could have been handled by manual block, at least for the short term, and VCTC eventually for a fraction of the cost of ETCS-3 and conventional CTC.

There were three primary issues in this situation. First, arguably most important, the supplier was not ethical in its presentation of what it actually had. Second, there is that issue of questionable marketing techniques. Third, the supplier was there to sell products and not solutions, and they were looking for an ETCS-3 opportunity. Undoubtedly, the selling of products versus solutions is prevalent across the globe, and major conventional suppliers get away with this given that most railroads across the globe are owned by their respective governments and without the proper resources to evaluate what is truly needed. Not surprisingly, a supplier is not going to design and sell a low-cost system as to both capital and maintenance – not a good short or long-term revenue plan in their opinion. Hence, traditional, conventional suppliers hold many railroads captive to what they offer, and the transportation requirements to support the wealth of these countries are suffering accordingly.

Beware of Paper Tigers. They are not an endangered species.

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