Will the guiding mind be New Network Rail?
The new “Guiding Mind”?
Have you ever used a hedge-trimmer to make jam?
No, me neither - but I don’t think it would work very well. A hedge trimmer is brilliant for trimming hedges but that doesn’t make it good at everything.
I mention this in the context that it is rumoured that the Williams report envisages creating a new arms-length body to run the railways, to be led - according to the media - by the existing Network Rail leadership team.
If that is right, it is critical that the organisation itself isn’t a heavily rebranded Network Rail.
Network Rail is an engineering organisation with a lot to be proud of.
It has focused rigorously on safety for the last fifteen years, and has achieved the safest railway in Europe.
But organisational culture runs deep, and the idea that an organisation of 42,000 people can suddenly change direction and become customer-obsessed is fanciful.
If the new Guiding Mind is to be focused on customers, it must not be Network Rail rebranded.
Culture is King
Accountants are fond of saying “Cash is King”.
Having attempted to lead a startup with virtually no revenue for 15 months, I can confirm that they’re absolutely right.
But if Cash is King, then Culture is Crown Prince.
The Guiding Mind structure is being set up to attempt to remedy customer failings of the existing structure. The idea is that train companies will become customer-obsessed because the Guiding Mind tells them to.
But, of course, for that to happen, it goes without saying that the Guiding Mind must be even more customer-obsessed.
And that’s where it worries me that it might be Network Rail rebranded.
That’s partly because Network Rail would enter its new role with an asymmetry of knowledge. While Network Rail knows a lot about engineering, it knows very little about fares, product management, revenue or growth.
If lots of people like me were suddenly put in charge of the whole railway shebang, we’d prioritise fares, product and customer service at the expense of engineering because it’s what we know. The consequences wouldn’t be good. Likewise, I worry that Network Rail would inevitably continue to care about the things about which it has deep institutional knowledge.
And, bluntly, having a Guiding Mind organisation dominated by engineers makes me a tad nervous.
Rob Brighouse: an engineer who gets customers
My experience of working in the railway is that for every Adrian Shooter or Rob Brighouse (the two engineers I worked under at Chiltern Railways; both obsessed with the customer) there are two that believe that because they understand - precisely - how the railway works, that means they understand the railway. Often with an expectation that customers should fit neatly into the role they have allocated them.
This can be somewhat self-fulfilling.
Just as the railway cannot thrive without engineers, I would also argue that it cannot thrive without people like… well… people like me. In the three organisations I’ve worked in (National Express, Chiltern Railways and Snap), my constant drive has been to achieve revenue growth by delighting customers. Whether through adding plug sockets to coaches, creating a ‘premium economy’ style Business Zone (so solicitors could travel in a first class seat but submit a standard class expense claim) or creating an algorithmic marketplace to reward outstanding service, my focus has always been on delighting customers to attract more of them. Engineers wouldn’t have pushed these projects because they weren’t their priorities.
If New Network Rail is to take on a fundamentally different role, it needs people like me in it. Not only people like me. But enough people like me to create the kind of creative tension needed between commercial and engineering.
But the problem is that people like me won’t join a New Network Rail. It won’t feel like a place for people like us.
The vicious circle is that if Network Rail doesn’t attract people like us, the culture won’t change, which will make it hard to attract people like us. And, of course, most engineers will be cool with that, because they wouldn’t want people like us in it anyway.
Now this is not a problem for Network Rail with its current remit as it’s not its job - currently - to care about fares, product and customer service.
It only starts to matter if the easy route to creating the Guilding Mind becomes to rebadge Network Rail.
If Network Rail is asked to take on a completely different task from that which it has historically undertaken, it will become a hedge trimmer being asked to make jam.
Reasons to be cheerful
While the leadership of the Guiding Mind is to be shared with Network Rail, that doesn’t mean it is inevitable that the Guiding Mind will adopt Network Rail’s culture.
There is some precedent for this kind of thing. Scotland has been run by an alliance of the operator and Network Rail for the last six years. Both companies retain their own organisation structures but Alex Hynes leads both of them. After an early experiment with an engineer in charge, it’s notable that the alliance has achieved success with an operator at the helm of both. I’m not close to ScotRail (I’m not sure a holiday in Plockton in 2019 gives me sufficient knowledge to comment) but my understanding is that ScotRail has not been subsumed by Network Rail culture and the arrangement seems now to be considered settled fact. That was certainly not guaranteed; witness the implosion of the comparable South West Trains alliance.
While it is the Network Rail leadership team that will be tasked with creating the Guiding Mind, neither Andrew Haines nor Sir Peter Hendy are engineers. Both have run major customer-facing transport operations (South West Trains, bits of First Group, TfL) and understand the role of the infrastructure provider is to provide infrastructure to help the operator serve the customers.
Sir Peter Hendy, in particular, has experience from TfL of leading a public sector body with a direct management line from the staff on the frontline through to the Mayor at the Board table.
But the Guiding Mind will be a much tougher gig. For a start, there’s no equivalent of the Mayor: a politically accountable figurehead with whom the buck stops. When Sir Peter got agreement from the Mayor, he knew that it meant something (I realise that the Mayor in question was Boris Johnson; just park that thought for the purpose of this article…) as the Mayor was solely accountable and was going to be judged by the voters largely on the basis of his achievements in transport. The last thing the Guiding Mind wants at the head of the Board table is Grant Shapps. Transport secretaries are dependent on the Treasury, transport secretaries’ key audience is the PM for the next reshuffle not the voters and transport secretaries typically last just 18 months.
But without political authority, where will the Guiding Mind gets its authority from? The obvious place is budget but that means that the NR budget needs to move to the Guiding Mind - without importing the NR culture with it. That’s going to be a really hard piece of surgery to pull off.
You and who’s army?
The experience of Scotland shows it can be done, but it will require significant effort.
This will be made harder by the fact that the White Paper is rumoured to envisage the entire weight of Network Rail being subsumed into the Guiding Mind, but the operations staying out on a series of management contracts.
Whereas Alex Hynes is at least MD of two relatively equal organisations, that won’t be true for the new leaders of the Guiding Mind.
There are roughly 100,000 people employed across NR and the TOCs. Of these, 40k are employed in NR and 60k in the TOCs. The Guiding Mind will absorb the 40k but probably only a tiny handful of the 60k.
The default is that Network Rail, when folded into the Guiding Mind, will execute a kind of reverse-cultural takeover.
As per my post yesterday, there is a reason why the most valuable company on earth (Apple) doesn’t feel the need to have engineering as a directly managed function but keeps customer service in-house. The railway is about to embark on the radical experiment of doing the precise opposite. Get it right, and there is value in the Guiding Mind having direct control over Network Rail’s resources. But, somehow, the Guiding Mind, when it incorporates all 42,000 of Network Rail’s staff, needs to builds a culture around customers.
Sir Peter Hendy and Andrew Haines have the biggest challenge of their careers ahead of them. It’s hard to think of anyone better placed to do it: Britain’s ability to meet its climate obligations depend on their success.
