Comment

01.07.13

There’s no point railing against change

Source: Rail Technology Magazine June/July 2013

Jason Byrne, principal at consultancy Moorhouse, discusses some worrying problems in the transport and infrastructure sectors.

The news that a third of the Government’s 200 biggest infrastructure projects are either over-budget or delayed is obviously of concern to the rail industry. The National Audit Office uses a red-amber-green system to identify how projects are progressing. HS2 is currently flagged red, meaning it’s in the most serious category.

As the Government continues to invest in largescale transformational programmes it is crucial that the necessary strategy and direction is in place to enable them to successfully deliver these programmes. When Government policy is unclear, many transport operators and infrastructure providers have to walk the fine line of balancing their need to commit to major internal change programmes while seeking to hedge their bets as to the areas that will have the most impact for their business.

To help better understand how successful the UK transport industry has been at navigating complexity and uncertainty, transformation consultancy Moorhouse surveyed over 130 board members and their direct reports from a cross-section of UK transport operators and infrastructure providers, overseeing a total transformation budget of £2.1bn. The ‘Navigating Uncertainty’ research report revealed that:

• Fewer than a fifth of senior leaders in the rail industry (compared to a third across the transport industry as a whole) believed that the Government’s vision for the future of the UK’s transport network was clear.

• All rail respondents (compared to nine out of ten of the transport industry as a whole) indicated that Government policy impacts their strategy and investment decisions. Only one felt lack of a clear vision had not negatively affected their organisation.

• Just a quarter of those working in the rail industry (compared to a third across transportation) believed their organisation was effective at working with Government and influencing future transport strategy.

Furthermore, even as rail organisations commit to the internal change programmes that are necessary for transformation, they are facing a potential shortfall of project and programme management skills. This may come as a surprise to many as the research found that around two-thirds of respondents (63%) in the transport sector said they were ‘very’ or ‘extremely’ confident that they would have the right change delivery capability to achieve long-term strategic objectives. However, only around a quarter (27%) thought that this capability could come from the organisation. If every organisation needs external programme and portfolio management, then there simply won’t be enough people with the right change management skills to go around.

If these problems aren’t addressed, the industry will not be able to make long-term strategic decisions, impacting growth.

To help the rail industry achieve greater success in delivering strategic change it’s important to take a benefits-led approach to investment in change. Despite the rail sector’s overconfidence in the availability of the necessary change skills, many organisations are less confident when it comes to their internal capabilities. Fewer than half of respondents in the transport sector (48%) believe that their organisation is ‘very good’ at selecting the right mix of initiatives to efficiently deliver their strategy. Furthermore, only one in five (22%) were making the decision to invest based on fully qualified benefits.

A benefits-led approach supports organisations in selecting and prioritising strategic programmes. The research showed that £1.65bn is being invested without a comprehensive business case and around £1.5bn is invested without proper evaluation of return on investment (ROI). It is important to set a clear link between strategic priorities and the outcomes of each change initiative and track the benefits once the project has been completed.

Rail organisations also need to build a robust, flexible change delivery capability. As the industry continues to drive cost reduction and invest in infrastructure, change remains a constant and organisations must build in the capability to deal with this. Only 22% of respondents thought their organisation was good at managing interdependencies and even less thought they were good at optimising resource utilisation (16%).

In order to effectively build this capability, organisations should set consistent information standards and encourage insightful, timely reporting. This will enable proactive management of risks and shine a spotlight on any gaps or problems.

Over the last 20 years, the UK transport industry as a whole has become significantly more complex and the focus on change has intensified. The research highlights how uncertain the industry currently is and the need for rail organisations to reassess their approach to delivery of strategic change. Organisations that are able to manage change effectively will be further ahead of their competitors and be able to shape the industry to their own strategic advantage.

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