Network Rail - Waterlogged or Sinking?

Network Rail says bad reputation means that it just can’t get the staff

Excerpt from The Times July 22 2011 – by David Robertson

Chief says company is seen as a stain on the CV

Network Rail has claimed that it is struggling to hire talented managers because some people believe that their careers could be damaged by the company’s reputation.

David Higgins, chief executive, said, at Network Rail’s annual meeting in Birmingham yesterday, that ensuring the company had high-quality people to manage the UK’s rail system was the single biggest issue he faced. ………..

Mr Higgins said: “We are just not an attractive organisation with all the turmoil that has been going on. We are not seen as a good company for people to have on the CV.”

This recruitment crisis has been brought to the fore as Network Rail moves from a centralised management model to a regional one.

It is recruiting ten route managing directors, who will have oversight for a particular rail network. These route managing directors will be supported by five or six key executives who will be responsible for areas such as safety, maintenance and punctuality.

“We have been out in the market to get route MDs but we have been unsuccessful. We may get only one out of ten route MDs externally,” Mr Higgins said. “We need 60 or 70 people as we devolve route responsibility. We have to go to people in our organisation and take a risk with them. We have enough experienced people to monitor them. Finding quality people is the single biggest issue this company faces.”

We all now know that the biggest single factor affecting difference in business performance is the people in the business - their behaviour, attitudes and values. Network Rail has a long history of leadership that has demonstrated zero competence in this area; its culture remains stuck in its past.

Until they deal with this, nothing will change - nothing can change.

It does not have to be expensive Mr Higgins - but it will be mighty uncomfortable. Sadly, changing the organisation chart and recruiting new faces will change nothing - except to damage the recruits' careers (as they obviously have spotted).

So, Mr Higgins, you need to start with the attitudes, behaviours and beliefs of your top team - "the recruiters". You need different thinking to drive different actions that will deliver different results.

Only then perhaps, at last, you may start to achieve the real transformation of performance that we all need to see.

Some of your suppliers learned to do this, once upon a time - so it is not impossible in the Rail Industry.

Here is a starter question - Do you think you might first need to become a sufficiently attractive Leadership Team to attract and then retain the quality of management you seek?

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching Internationalwhere we help businesses to learn different thinking to enabledifferent actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".

Merrill Lynch - Wrong Thinking Wrong Conclusions

Last week, Merrill Lynch admitted it had been wrong to hold an “underperform” rating on ARM the Cambridge based technology company since November 2009. Over that period the value of ARM’s shares tripled and they have broken into the FTSE 100!

In a note published last week (entitled “ARM Wrestling”) Merrill admit that they “… had underestimated the potential for royalty rates to increase … and the sheer pace of end market growth addressable by ARM’s customers … and failed to appreciate the impact of Microsoft selecting ARM’s designs as the basis for the next generation if its Windows software …”.

How did they get it so wrong and for so long? This is the inevitable outcome of using conventional financial and business analysis to attempt to pick the next winner in an increasingly unconventional world. This way of thinking also assumes that all businesses perform in a conventional way and will therefore perform broadly in line with market conditions rather than outperform or underperform.

However ARM is not a conventional business in the way it thinks and behaves. If we apply the Competitive Strength perspective we can see that ARM have achieved a Competitive Strength condition of Excellent and may even have progressed to Free. Quite simply this means they are able to do things that other businesses with weaker conditions of competitive strength cannot. In this case the outcomes are higher royalty levels, customers who have exceptional rates of end market growth, major breakthrough deals with the likes of Microsoft and so on.

Merrill’s conventional approach is trying to spot the golden eggs, which goose is likely to lay them, as well as where and when. The Competitive Strength perspective identifies which geese have the capability to lay golden eggs because, as the Competitive Strength research base shows, that is invariably what they do. Can you also spot which is likely to to be the short term and which the long term investment perspective?

In spite of Merrill’s wrong call the market as a whole appears to recognise what ARM were capable of, though how many of the investment decision makers involved really know why is still a question in our view.

Can ARM do now wrong? Well watch out for any conventional sounding statements from the company, any sense of complacency and that they feel they have cracked it (no pun on the egg theme intended) and have become unassailable. This can be a sign that the Competitive Strength condition, how they think and behave, is slipping towards the Comfortable condition, where they will become vulnerable to external forces.

What about Merrill? They have now upgraded their stance on ARM to “neutral”. This indicates they are still using conventional thinking and analysis and/or maybe “neutral” is about exciting as it gets at Merrill Lynch these days.

Exceeding Expectations is brought to you by Steve Goodman and Tony Ericson partners in Achievement Coaching International where we help businesses to learn different thinking to enable different actions that deliver the different results that Make a Big Difference.. It is one of our "Excellence Quartet" of blogs promoting the cause of Excellence as the key to prosperity. We publish regular articles using a recent business/financial topic to highlight different perspectives and conclusions to those obtained by conventional thinking and techniques. You can read the other three blogs at "Business Bloop Award", "You're having a laugh ... seriously?" and "Capitalism or ... Common Sense".