Franchising – the brave new world

After posting my previous blog – ‘There is no perfect way of structuring a railway’, I realised that I had made a terrible gaff … so keen was I to get on with telling you about the ‘live’ speakers, that I left Patrick McLoughlin out! Oh dear, that’ll be my Knighthood down the swanny then …

So, Patrick couldn’t be with us on the day, but amongst his many other commitments, he had made it a priority to record a message for the audience – the headlines of which were very positive, whilst acknowledging that we have some way to go in the quest for improvement. Patrick states that we are looking to create a Rail industry in the UK through which the passengers gain through improved service, the industry thrives through improved business performance .. and the taxpayer gains through a more efficient use of public money. We have to keep challenging ourselves and raising the bar …

Anyway, where was I? Oh yes, lunch. A light lunch and a good catch up with Elaine Holt from RATP, and then back to the conference room for the afternoon session.

First up – Alex Hynes, MD, Rail Development for The Go-Ahead Group. Alex’s brief was to give a flavour of ‘running a franchise’ and what struck me immediately was his language … Alex talked about ‘challenges and opportunities’ and continued his presentation in the same vein, describing his experience in an extremely positive light, whilst acknowledging that things don’t always go to plan. In his words, bidding for a franchise is like ‘having a look through the letterbox, and then buying the house’ – and whilst acknowledging that there are obvious limitations, for example in relation to outputs or pricing, regulatory boundaries and Trade Union agreements, there are some key actions which can optimise the chance of success. Like some many things in business, these are not the actions of rocket scientists, but in the quest for success, the fundamentals are all too often forgotten.

Alex reminded us of the importance of sticking to the basics:-

  • Deliver on your promises
  • Control your costs
  • Grow your revenue – PROFITABLY
  • And, my personal favourite, get staff engaged It’s simple.

But simple isn’t always easy.

Alex was appointed Commercial Director at London Midland in November 2007; Lehman Brothers went bust in 2008 – and the income growth of the franchise collapsed in Easter 2009.

So, ‘business as usual’ becomes ‘business survival’ bringing with it the opportunity for the LM Team to be innovative and creative around the key business activities:-

  • Fares
  • Overheads
  • Mileage
  • Traction Energy costs
  • Retailing

The timetable development was particularly innovative – using fast tracks in a more productive way, meaning that more trains can travel and therefore more passengers can buy more tickets, helping the revenue growth.

It’s clear to me that there are many more innovative ideas pinging around in Alex’s head … he gave us a sneak peak at his thinking around the ticket-buying trends for example … and I for one am watching with anticipation to see what he does next.

But the question of whether he wears a headband on the treadmill remains a mystery …

Nicola Shaw, CEO of HS1 kept up the positive tone … and shared a particularly pertinent cartoon illustrating that, despite lots of spreadsheets and flowcharts, we all seem to be still waiting ‘for the miracle to happen’. There’s a gap which needs plugging if we are to ‘raise the bar’ in UK Rail … and for this, Nicola believes that we need new ideas, we need new entrants to the market who will shake things up, and do new things and we need people who will ‘keep pushing’ to make change happen.

What particularly resonated with me was Nicola’s point in relation to ‘history’. Since I have started working with the Rail sector, I have met some of the most passionate and interesting people of my whole career – but boy, you do like talking about the ‘good old days’ don’t you?! I believe that bringing talent in ‘from the outside’ would be really beneficial in many ways – however it can be really difficult to infiltrate the inner circle, which as Nicola stated, can make people ‘a little less in love with the industry’.

Paul Plummer, Group Strategy Director from Network Rail was next on the Agenda …

Network Rail have written their Strategic Business Plan … a light read at 20,000 pages, so thank heavens he had a summary of it in a glossy brochure to hand out! Included in that Business Plan, along with the ‘what’ and the ‘why’, it was refreshing to see a reference to the ‘how’. The ‘how we need to work’ element of improving business performance is often missed … when in fact it is quite possibly the element which makes the difference between success and otherwise.

For Network Rail, the behaviours they are focusing on, in order to deliver the service to their customers which will provide mutually beneficial opportunities for all stakeholders are:-

  • Customer driven
  • Accountable
  • Challenging
  • Collaborative

Again, the words are not new. Perhaps the behaviours behind the words need a greater focus?

Network Rail is a ‘delivery’ business, and the devolution of accountability to the 10 ‘Routes’ appears to be working well. I have personally met a number of the Route Managing Directors – all of whom have impressed me with their commercial approach to running their business; it’s a change of culture and approach and although it is early days, there are some really encouraging signs.

Who better to bring the proceedings to a conclusion than Mr Franchise himself – Peter Wilkinson. I have made no secret of my admiration for Peter, so excuse me if I get a bit overly enthused … but I am certainly not the only member of this particular fan club!

True to style, Peter began by acknowledging the success of his colleagues in the industry – quite rightly, he was immensely proud of the breadth of the audience in the room and the fact that the day had been so well received. He gave praise to the Operating Companies, and a special mention for the first class engineering skills of Network Rail – citing the engineering complexity of the development of Blackfriars station as a truly world class achievement.

And what everyone was waiting for … he provided a very clear list of the areas which the Bidding Teams need to clearly demonstrate if they are to be successful in the new franchise world:-

Be engaged – early
Be innovative – this is key

And a key point, it’s not all about price.

A Q&A session followed, with all the speakers from the day taking to the stage as a panel … although it had to be said, Peter got more than anyone else!

I am genuinely impressed, and encouraged by the fact that the Department held the Rail Opportunities Day in the first place, what was even better was the way it was positioned, the positive tone from every one of the speakers and the reaction from the audience in return for the open and transparent communication from the stage.