Recent troubles facing many train operators have underlined the need for transformative change. Urgent intervention is needed to restore services and reset the industry on route to a more profitable future.
In this video our Partner, transportation and infrastructure expert, Phil Bulman discusses how UK rail can achieve financial sustainability.
The need for a burning platform in UK rail – transcript
Hello, my name is Phil Bulman, a partner in Vendigital and welcome to this short video. It’s part of a wider series that we have written that came out of a senior rail leadership roundtable that we held late last year.
The discussions around that session were all focused on a really big challenge for the industry at the moment – how to achieve financial sustainability. And hopefully, you’ll see a link below for the main paper if you’re interested to read that. It highlights the challenge and then it focuses on ten initiatives, opportunities that came out of those discussions. Things that can be done to support that financial sustainability.
Quickly just setting the scene. We did the analysis from OOR data and it showed that the revenue pre-COVID have been topped up by governments, to the tune of 4 billion to balance the books.
During COVID, that 4 billion grew to 16. But then, when we model a future scenario, it still shows even at 75% pre COVID revenue level that it would leave still a 12 billion need for support. So 8 billion more than the government’s ever given prior to prior to COVID.
So clearly a massive challenge. But I just want to focus on the first of those ten topics in this video, which were called creating a burning platform to act differently. So how many times have you made a New Year’s resolution and actually managed to achieve it?
Gym memberships is a great example, and it’s very common and a well-known statistic in the industry that 80% of memberships made in January, are then subsequently cancelled within five months. Why is this? Clearly, it’s got something to do with the benefits that people expect from joining that gym being outweighed by the pain of the change that they’ve got to make.
And if you look at typical change curve, you can see that it starts with shock and denial, and there needs to be a real strong motivation to get people through those negative first steps on the change curve to get into that positive territory and the new world that everybody would desire.
And if I look at our industry today, I can see two forms of that motivation. The first is very well known around the industry. It’s been there for a good few years now, a general drive for productivity and efficiency within the industry, demonstrating value for money.
In our discussions with the rail leaders at our event it was clear and apparent that in parts of the industry, there’s a real sense of entitlement within some of the workforce. That the motivation for change, as opposed to a burning platform, maybe it feels more like a storm in a teacup – that “We’ve had this for a while, It’ll blow over. And actually, will it really affect me.” Certainly not burning platform.
But the second is, in stark contrast, very characterized by the recent actions of both government and DfT with the train operating companies. I’m sure it’s well known they’ve been given the challenge in most areas to cut 10% of cost in 2022 and in some cases a real existential threat that if they don’t achieve these cost cutting, that it could lead to them losing contracts.
But the challenge with this approach is it could feel more like a raging fire in the next room that leads perhaps to irrational or poor decision making because of the pressure that it puts people under. We can see that in the press, with some examples already coming out that actually the only way to achieve that is to start cutting passenger services and reducing investment. Now that’s obviously a downward, potentially downward spiral that nobody would want and certainly doesn’t address the real structural issues and costs that sit within our industry.
So what is the solution? Now for us there’s a third way which lies between these two extremes, but there’s two key ingredients that are needed to give that motivation for positive change.
The first clearly is that need for change, that motivation. So there needs to be a burning platform. But it needs to be communicated at all levels so that it’s really understood and people buy into why we need to do something differently.
And then the second really critical factor that we’ve learned from our experience in these kind of initiatives is the need for a structure and a mechanism that allows people to explore that change, develop those ideas in a safe, positive way and then be given power to influence how they’re tested and proven and then finally implemented.
And that really for us is the key element to successful change. It’s that burning platform to act differently that leads to a positive change. I’m planning to write some more on this topic and specifically go through some of the key success factors that are critical in any kind of program like this.
I hope it’s been useful, welcome comments and ideas. Please do post and comment – would welcome some debate around this and would love to hear from any of my network.
Most importantly, I’d like to leave you with a challenge to think through in your organization. How could you create that right burning platform for your organization that drives positive change to act differently?
Thank you very much.
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Here are some of our findings from a recent survey around a lack of sector alignment and incentivisation to deliver change in the rail industry.