The Williams-Shapps (May, 2021) report outlines the creation of a new organisation and working practices which aims to simplify the way railways are run and governed in the United Kingdom. The incoming changes are likely to be disruptive to operators but offer the opportunity to rethink ways of working.
This analysis aims to distil the reports most relevant points for Train Operators and highlight some of the key incoming changes. It also offers some thoughts on how to gain a head start on the shift to the The Great British Railway.
What’s driving the change?
- The current Franchise model costs too much and is too complicated; Too many bodies makes for fragmented decision making, opportunities for inefficiencies and unclear lines of accountability;
- The pandemic has shifted the ways in which populations use the trains;
- The cost base for keeping a train service operational has not moved but fare revenue generation has reduced dramatically;
- The Government aims to save £1.5b a year after 5 years.
What does this mean for your train operating company?
The most forward thinking Train Operators will use the incoming changes as an opportunity to challenge existing processes and culture to deliver an improved service. Improved service provision in-turn will increase the likelihood of operators successfully winning contracts. The Williams-Shapps report is a high-Level strategic narrative; the following is Typhoon Consulting’s interpretation and opinion that has been shaped by our experience working alongside similar industries undergoing similar large scale changes.
Key highlights of the Williams-Shapps Report
What will the new GBR organisation look like?
The new organisation and surrounding changes outlined in the report are vast and complicated, with many moving parts. Much of the report is open for interpretation and is recognised as such. To move towards a clearer picture and plan of delivering the changes, the Government has begun the set up of a ‘Rail Transformation Programme’ within the DFT and with Industry leaders. Typhoon believes this will act as a command centre for strategy setting, transformation planning and delivery management and we expect the DFT to work in conjunction with Industry leaders to define what the future will look like.
- The new organisation will absorb Network Rail and rail functions currently held under the DFT.
- The report interestingly makes a point that GBR will maintain close relationships with members of the supply chain including rolling stock suppliers.
Here is what we think it will look like:
Opportunities For Improvement
The William-Shapps white paper has seismic impacts for train operating companies, the opportunities to grow, collaborate and innovate are also substantive. Below we suggest key areas of change that TOCs should be focusing on.
Cost Reduction
With the shift from franchising model to a contract model – whereby a TOC will receive fees set by the GBR to provide a service – cost reduction will become increasingly relevant. Fewer passenger trips have the potential to result in lower than expected allocation of funds. TOCs can utilise a variety of methods to minimise running costs such as assessment of cost base, reduction of staff overhead, IT streamlining and simplification, increase of automation to reduce errors, and upgrading technology to increase efficiency of front-line staff. Train companies should be looking at ways they can interrogate their data to help solve capacity issues, for example to help balance the supply and demand of drivers across routes.
Operations
The formation of a new governing body, and changing reporting structures will cause a shift and transition of internal operations. Current organisational structures and role responsibilities should be reviewed ahead of the incoming changes to support transition planning. An in-depth assessment of IT architecture, internal processes, and interactions of units across the organisation, will provide clarity about all internal levers of change. A clear understanding of organisational roles and responsibilities will allow for better decision making once the GBR strategic direction becomes more apparent.
People & Culture
Typhoon believes that resistance to change can be reduced by careful involvement of all affected parties. Strong leadership, governance and stakeholder management will be required to navigate this transition period. A communications strategy should be developed for disseminating key information and strengthening both internal and third-party relationships. A clear understanding of capabilities should be developed on which future reskilling and training can be based and a new community built.
Passenger Service Contracts & Incentivisation
The review outlines five performance linked avenues for incentivisation. These metrics are unlikely to be new for operators. The white paper does however make the point that incentives will be ’scalable’ and used in different ways across contracts.
The following two incentives however will nudge operators to become modern organisations that place emphasis on the customer. Operators that focus their change initiatives in these areas will be putting themselves in an advantageous position for winning contracts.
Collaboration & Innovation
Operators will also receive scorecard linked incentives in response to their collaboration and innovation measures. This provides the opportunity for operators to connect and partner with other travel suppliers as well as liaise with local areas, schemes, authorities and councils. Mapping the local travel ecosystem and building local relationships with other transport suppliers may lead to competitive advantage.
Due to high levels of regulation, speed of innovation within rail is generally lower than other industries. The ShappsReport excitingly recognises this and as such will incentivise operators to invest in transport innovations such as faster connectivity, AI, predictive analytics and sustainable green strategies. Choosing the correct suppliers and managing these relationships effectively could become the difference in winning and losing contracts.
Customer Experience
Operators will be incentivised for improving customer experience. Knowing your customer through assessing satisfaction scores, local and regional differences as well as safety and accessibility status will provide unique insight which will help define the strategy for improving quality of service. Capturing, understanding and assessing your customer data will be pivotal in guiding how you develop your your service improvement initiatives and strategy.
How Can Typhoon Support You On This Journey?
Typhoon Consulting can help Train Operating Companies navigate through industry wide step change.
We can help your organisation assess its current state, design and co-create a vision for the future, deliver change plans and provide lasting assurance.
About Typhoon Consulting
- Our experience of working closely with multiple Train Operating Companies to deliver change and enable innovation has shaped our understanding of operators key functions (e.g. Timetabling, Resourcing and Train Planning). We understand what good looks like.
- Whilst having a network of colleagues within many TOC’s we also understand the current landscape of supplier technology and services. For example, we have hands on experience with innovative operational software that is set to redefine ways of working for operators.
- Typhoon Consulting’s ADDA delivery framework is shaped by best practice and first-hand experience of making change happen in the mobility and transportation industry.
