VitalRail/Rail Business Culture Transformation IntelliConference

Background Statement

Since 2006, the Class I rail industry has experienced a sharp decline in market share and volume, primarily due to a decrease in coal production. This was worsened by a risk-averse culture focused on "cutting to profitability," exemplified by Precision Scheduled Railroading (PSR)'s pursuit of lower operating ratios for shareholder value. This relentless pursuit of short-term profits and aggressive cost-cutting, within an outdated culture, has hurt customer satisfaction, employee morale, expertise retention, and innovation. There's a compelling alternative: Transform rail culture, creating a revitalized industry that prioritizes growth over austerity, and models supply chain efficiency, satisfaction, success, and safety for all.

Core Question

How can the rail industry transform its business culture to balance the interests of investors with the professional and personal interests of key stakeholders?

Dialogue Questions

Round One
Existing Railroad Culture

Here are some questions to consider when evaluating and evolving railroad culture:

1. What existing dynamics between railroad management and investors contribute to a risk-averse decision-making culture that hinders growth and modernization?
2. What cultural drivers influence railroad boards and investors to prioritize share repurchases and shorter-term returns over long-term investments aimed at growing market share?
3. How has the prevailing rail business culture influenced:
   1. The recognition and implementation of staff ideas?
   2. Employee satisfaction and retention?
4. What has been the impact of a hierarchical decision-making culture on:
   1. The reliability of first-mile and last-mile services?
   2. The industry's capacity to advance customer-centric market opportunities?
   3. The safety of freight train operations?
   4. The quality of professional and personal life for train, yard, and engine staff?
   5. The autonomy of train, yard, and engine crews to make real-time operational decisions based on their experience and local conditions?
5. What skill sets are currently lacking within railroad organizations that could be cultivated to better serve the needs of customers, communities, and employees?

Round Two
A New Future for Railroad Culture

1. What outcomes and organizational characteristics should the evolving rail business culture aim to achieve?
2. What cultural shifts are necessary to foster a dynamic where employees, particularly frontline operating personnel, are genuinely seen and engaged as collaborative partners with management in shaping an organization that addresses the diverse needs of all stakeholders?
3. What kind of work and lifestyle experience for rail management should the business culture actively support and promote?
4. How can senior management enhance their collaboration with company staff to effectively establish a culture of meaningful growth and continuous improvement that is both satisfying and sustainable?
5. What specific cultural transformations are required to:
   1. Optimize the retention of critical railroad subject matter expertise?
   2. Build trust among customers and trucking partners that rail operating decisions, services, and rates genuinely reflect their needs and investments?
   3. Ensure that communities and public entities perceive railroads as consistently providing a safer, less congested, and environmentally sustainable option for freight transportation?