Beyond the rails: Our key takeaways from ‘Future of railway innovation and entrepreneurialism’

As the UK moves to a more public sector model for its railways, and the challenges of affordability, decarbonisation and reliable delivery loom ever larger, what lessons can we learn from the innovators of the past? 

At ‘Future of railway innovation and entrepreneurialism,’ the first in-person event in Steer’s Beyond the Rails series celebrating the bicentenary year of the Stockton to Darlington railway, a panel of distinguished guests set out to answer this very question. 

Sir Andrew Haines OBE (CEO, Network Rail), Shamit Weinberger Gaiger OBE (Managing Director, West Coast Partnership Development), Tim Shoveller (CEO, Freightliner Group), James Bain (CEO, Worldline UK & Ireland) and Julia Prescot CBE (Co-founder, Meridiam and Deputy Chair National Infrastructure Commission) all brought their expertise and experience to bear on a vital topic as the industry faces a generational paradigm shift. 

The conversation was robust and rich in insights, with some of our key takeaways below.  The panel quickly confirmed that the railway cannot spend its way out of its current challenges.  The pandemic had caused a shock to revenue streams and driven the sector and its funders to short-term operating decisions in a fiscally constrained environment. Entrepreneurship and wise investment approaches are now more critical than ever, was the conclusion.

“Managing a combined profit & loss account should help to unlock the risk of creating a potential public sector monolith”

Great British Railways (GBR) could provide the backdrop for a boom in investment if done right: The Government's arms-length body, which will oversee the gradual renationalisation of the sector, featured prominently in our discussion. Rather than acting as a stopper to innovation, GBR could in fact encourage entrepreneurial investment by creating a long-term vision and framework for rail. However, it was noted that nationalisation will increase the impetus to deliver a good service as it will place rail in direct competition with health, education and other key areas for spending. 

“Act fast, make decisions, apologise when you get it wrong”

We need to stop thinking of rail in a silo: Sometimes our industry can get tunnel vision, pun intended. In the future, we will need to be flexible, and innovation can come through partnerships with other sectors like retail and tech, as well as through integration with other modes, as the UK moves to an integrated national transport strategy. GBR and artificial intelligence have great potential to declutter our decision-making.  Similarly, learning lessons from other industries will also help rail to build a service fit for the future, particularly in the realm of data and customer experience. Even within rail passenger and freight, there is a lot to learn from each other when it comes to things like flexibility and understanding client needs. 

“We need innovation in financial technology as well as data and physical technology” 

Take an open-minded approach to finance: How to fund and budget the railways overall, not to mention new infrastructure, is always a challenge and has been even more so in a post-pandemic landscape. Our speakers highlighted many innovative funding models, including the Mutual Investment Model in Wales and the half-century contract period that underpins the Paris to Bordeaux line, through which we gained an understanding of the different pathways to financial sustainability for rail. The opportunities of new technology were widely discussed, but one speaker highlighted the need for new financial technologies to develop robust revenue models and financial instruments to underpin investments. Likewise, we heard how adopting fresh approaches can bring stakeholders together to tackle the challenge of decarbonisation in an affordable way, with less cost for the taxpayer. Critical was providing sufficient investment certainty for an appropriate amount of time for the reward it might reap and the risks it would face.

“Network Rail’s approach and performance is a function of the incentives, obligations and controls placed upon it – if you don’t change these for GBR, you shouldn’t expect things to be radically different”

We need to understand the paradigms of risk in our sector: The rewards of entrepreneurialism come with a certain amount of risk, but in an industry with so much at stake, can failure be tolerated? We need to allow people to fail if we want good innovation, whilst balancing the need to provide a secure service and environment for investment. A key point of discussion was how to balance the need for investors to feel secure, whilst also allowing them enough risk that the Treasury will sign off on it. The panel discussed that extending ‘governance’ and increasing decision-making hurdles does not in itself lead to risk reduction or better decision-making.

“Focus relentlessly on the customer and the outputs promised – for the railway, delivering the time promise is critical”

We need to understand a new generation of customers: How can we reach Gen Z and Gen Alpha passengers if we don’t understand them? These consumers have grown up in a world where personalised, customer-centric products and services are not only available but expected and rail will need to do the same in order to compete with other modes. The comparison of agile road and maritime fleet decision making, measured in days and weeks, to the rail sectors marked by years and control periods was starkly laid out.  Our industry must become the ‘second movers’, a new iteration of our service that is fit for users who can get everything they want within seconds via their handheld device and seamless connections. The AI era beckons, and rail can capitalise on it to make this happen.

“Successful entrepreneurs and leaders first need insight, then need courage to act and the ability to have endurance through the challenge to implement”

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Photos from the event