Deliverable Strategies Change that looks beyond the letterbox

The Railway (GTR) franchise was created to support the completion of the : ’s ‘north-south ’. Berkeley partner Jonathan Kennedy, who worked as full-time Integration Director within the new executive team, explains why building ownership was critical for putting this mega-franchise on track.

It’s said that taking on a rail franchise is like buying a new house by peering through the letterbox. Only when you get the keys and look around, do you find out what you actually bought. The (GTR) franchise would become the UK’s largest, servicing 26% of national passenger journeys. As Berkeley began unpeeling the layers, the depth of the challenge came into clear focus.

For a start, the commercials that underpinned the merger of the two existing rail companies were a first for the industry, as the government had created GTR’s management contract with a view to removing competition, rather than on the traditional revenue-generating model. Additionally, the new executive team was up against a hard deadline and complex trade union backdrop.

Within that aggressive timeline, we needed to change the job descriptions and reporting lines for 1,200 people, including a 20% fall out and 10% arrival of fresh legs. Removing duplications is central to any merger, so we set about managing the vast contractual upheaval needed to bring both organisations under the same business.

Likewise, we had to align two totally different data systems and infrastructures, which underpinned the same day-to-day processes. This required building consensus, delivering They worked multiple IT projects and up-skilling operators. ‘‘ seamlessly alongside us The new office move also brought its own challenges. These included the need to find, providing leadership, commission, fit out, reconfigure and migrate two HQs into new office space, as well as introduce modern flexible working standards. For old-school railway, which had no experience drive and integration of drop down space, clear desk policies or hot desking, this proved a massive cultural shift. expertise while Perhaps most crucially, we needed to create a brand-new culture that reflected the franchise’s ensuring that we still own vision and values and we needed to do this at pace – on the front line as much as in HQ. felt in overall control. A winning formula From the start, there was a strong emphasis to bringing the chalk and cheese together was strong leadership and clear on embedding engagement. We identified and assembled a senior management team that blended the right mix of existing talent – and there was absolutely talent in both organisations – with fresh ownership for the new experience from the outside world to make the business more innovative. operating model within

Together, we created a Target Operating Model that outlined GTR’s target state for the GTR team. It didn’t organisation, systems, process, facilities and governance. In effect, this would turn the strategy feel like working with on paper into an integrated rail franchise that makes life and business easier for millions of Londoners and tourists every day. consultants. ‘‘ Charles Horton CEO, GTR That was the top-down approach. From the bottom up, we laid on open engagement exercises to articulate the new vision and values. Berkeley has enjoyed success with the rich picture technique in the past, as it helps people get their head round an idea far quicker. So we brought in some excellent business artists to sit with and capture the thoughts of small working groups. These were consolidated into a vision picture that illustrated the journey we would go on together.

If someone tells you to think something, you rarely do. By ensuring people were genuinely involved in both the top down and the bottom up work to shape what the franchise looked like, we fostered a real sense of ownership and pride in the new company right from the start. Major undertaking The businesses were integrated successfully and on schedule during the summer of 2015, without any significant operational issues. We achieved headcount efficiencies within every function of the integrated business, without any major employee or industrial relations incident. The process was seamless and invisible to the passenger.

It’s true to say that the more recent industrial relations crisis has clouded much of our progress. Still, I can decouple those negative headlines from the fact we helped to create the biggest rail franchise in UK history in an impressively short time period. I’m very proud of what we achieved, not least as GTR is hugely relevant for people who rely on London transport every day. Myself included.

The wrong way to tackle a massive integration like this would be to enter the boardroom with a ready-made answer. We had a new exec team, including some of the best people in the industry, who hadn’t been involved in the bid. We had two successful businesses, each with some exciting talent within. Had Berkeley arrived with a fanfare and said, “Here’s what we’re going to do, now get on with it” - that would have gone down extremely badly.

Instead, we said “Here’s what’s been bid - let’s work together to find something that works within these parameters. Let’s build something you can own, rather than something that you inherit.” While we referenced the terms of the bid, we didn’t just blindly implement them.

This was a Berkeley-shaped problem, because we are really good at bringing people on the journey. While I like to think our views count, what’s more important is that the client has lasting ownership after we’ve gone. This new franchise needed to be GTR’s organisation.

We could have been heavily directional and saved money in the short term, but that would have proved a false economy. The franchise would have gone through another big round of restructuring soon afterwards. As it was, we constructed something that still works. We helped to solve the questions, but we didn’t own the answer. The exec team are in control moving forward.

Personally, I get a real buzz out of this sort of challenge. I love the complexity - coming into an environment that’s chaotic or poorly shaped, and then bringing structure to others and helping them see the way through the fog. This situation had loads of that. The ‘how’ side was intellectually taxing.

The Berkeley consultant team loved working on the GTR programme for the same reasons, and we built some great relationships with clients and other suppliers along the way. Rail was a new industry for me, and it’s one that I’ve now developed a real affinity for. Fast Facts:

GTR in numbers:

• Largest operating company in the country

• 7000 number of employees, including 1200 managers and administrative staff

• 26% share of passenger journeys in the UK

6 steps to integration:

The new franchise required organisational and people change on a scale not previously seen in a UK train operator. What needed to happen?

1. Design of a new operating model capable of delivering large-scale industry change throughout the franchise term

2. Establishment of a corporate vision that embedded values and culture

3. Reorganisation involving TUPE of all 7000 employees from the heritage franchises

4. Reconfiguration of office accommodation across the region, including identification, selection and commissioning of a new corporate HQ

5. Contractual and financial transfer of Southern and into GTR, including safety certification for the new franchise and the new organisation

6. Delivery of multiple technology and process improvement projects to enable the business to operate in an integrated manner

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For clients, I believe the greatest attribute of this data-driven approach is its credibility. To get buy-in for a strategy, you need endorsement from a very senior set of stakeholders from a whole range of organisations. You’re asking them to collaborate despite a wide variety of benefits, dis-benefits, responsibilities and accountabilities that will impact their individual organisation to a greater or lesser extent. They may be willing to work together, but you simply can’t expect consensus unless the projections are credible.

Turning the juggernaut won’t be easy. We shouldn’t underplay the severity of the situation. The NHS is not going to be able to continue delivering what it does today in 10 years time, even if politicians throw more money and more nurses at it. We need to do much better with what we already have. As a nation, we have a duty to do the right thing for our frail and elderly population. Any transformation strategy must be sent with strong conviction. Robust evidence and targeted insight is the key to unlocking a door that everybody wants to enter.