Railways, Digitalization and HR – Crossing the chasm

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Berlin, Railway Forum 2017. Here we met with Jochim Meyn to discuss digitalization and its effect on the railways. With more than twenty years in the railways, Jochim draws from a wealth of experiences that enable him to comment holistically on the transformation of the industry – so let’s get straight to it. 

Introduction – Where are we today?

We are currently at the beginning of a breathtaking change within the working world. Driven by digitalization, new business models and forms of work emerge and replace old ones. The younger generation seems to be less and less committed to familiar operating structures. What does this mean for a comparatively traditional industry such as the rail transport sector? How do we prepare employees for the use of new technologies? What will the workforce of the future look like? Which cooperation models will we need in the future? Which competencies and skills will be required in the future? How can we make sure that rail is still “sexy” tomorrow?

The existing infrastructure will certainly continue to exist and be operated. But we shouldn’t rest on our laurels. A comparatively traditional industry such as the rail transport industry is well advised to deal with the changes that digitalization brings. Therefore, the following questions arise: Do we want to run with the crowd or lead the pack? What are our answers to the demand for cross-linking of transport modes? Which new business models are conceivable? What additional benefits can we offer the end-customer, such as the passenger or a logistics company? How will sub-suppliers and OEMs (Original Equipment Manufacturers) work together in the future – technically and non-technically?

The new technologies will create a broad range of opportunities and modules and thus open up new business areas. We should prepare employees for this and encourage them to participate in developments. This article promotes a change of perspective, providing food for thought regarding the working world in the rail industry of tomorrow and what this means for our staff. Everyone is talking about digitalization, but what do we know about it? This article addresses both passenger and freight transport in equal measure.

What do we mean by digitalization?

Before we examine the unique features of the railway industry, it is worth taking a quick look at the status of the discussions on digitalization. Do we already have a common understanding here? Are we talking about the same things when we use the buzzword digitalization? At a glance, we note plenty of buzzwords: IoT/IIoT, scrum, agile thinking, disruption, VUCA principle, big data, artificial intelligence, smart factory, virtual prototyping, smart maintenance, to name but a few. We also note that the term “4.0” is now used to describe almost everything: Industry 4.0, the working world 4.0, consulting 4.0, personnel 4.0, freight railways 4.0, etc. The abbreviation “4.0” stands for the so-called “4th industrial revolution” that is expected to come from digitalization.

The Essential Eight technologies: how to prepare for their impact; Courtesy PWC

According to Prof. Dr. Thorsten Petry from the RheinMain University of Applied Sciences, the term “digitalization” distinguishes between a purely technical and an overall understanding:

Purely technical: Digitization (less commonly also called digitalization) in the narrower sense means the processing of information for processing or storage in a digital technical system
Overall: digitalization is a transformation process driven or facilitated by technological developments in companies or entire industries, which entails far-reaching strategic, organizational and sociocultural changes

For the technical dimension, various fields of activities can already be identified today:

Value of data and information: “Whoever has the data has the power” & “Data is the gold of the future ”
Open-X Paradigm: Exchange and disclosure of information
Digital competences and skills: training of these competencies, skills and work culture adaptation
Model-driven developments made possible through digitalization
Revolution of the technical systems by IoT / IIoT
Virtual experience

What digitalization will ultimately mean for society and industry, no one can say with certainty today. There is, however, a broad consensus on one thing: digitalization will considerably disrupt the existing product landscape, create new business models and bring new forms of work with it. Digitalisation can, therefore, be equated with a substantial transformation process in the coming years and decades. Whoever wants to play should be prepared.

Developments in mobility and what else is happening around us

Digitalisation cannot be considered in isolation. A plethora of events is taking place simultaneously. Stuttgart’s central train station, for example, is currently presenting its envisaged future in the transport sector:”Next Generation Train,” “Moving Platforms,” “Hyperloop,” “OneCar” etc., to name just a few technically-oriented examples. Everyone is talking about electromobility and autonomous driving (AD). Studies indicate that the track length of automated subway systems will increase from the current 800 km worldwide to 2,300 km by 2025 (UITP, McKinsey).

Besides, it is not only on the boards and committees of the rail transport industry that have identified relevant megatrends such as environmental requirements/sustainability, urbanization, globalization of the world economy, liberalization of rail transport, the creation of a single EU railway area – and, of course, digitalization. According to Prof. Dr. Stefan Rammler (mobility and futurology researcher), we are at the beginning of the end of mobility and automobility as we know it. Thought leaders, such as Elon Musk (Tesla), call for a universal basic income to be considered in the context of digitalization.

But that’s not all: these developments coincide with demographic change. We want to prevent the migration of existing specialized knowledge away from the railway sector and, at the same time be attractive for the next generation. This new generation of employees has other requirements and expectations and, it knows what impact it has. The employer-driven market can also quickly turn into a labor-driven market. The war for talent is unlikely to ease over the next few years.

The first delicate links between digitalization and the mobility sector can already be observed. “Vehicles on demand” (www.door2door.io),”Airbnb” for private vehicles (www.get-a-way.com),”predictive maintenance” – not only in the railway sector, “platooning” in the transport sector, AGV – automated guided vehicles for BASF, etc. As well as concepts already introduced such as www.car2go.com and www.emmy-sharing.de.

Number of transport tech companies founded from 2010-2016; Courtesy http://www.tracxn.com 

Why is all this worth mentioning? Society has always been concerned about the future and has tried to take a look into the crystal ball. Only in rare cases, has the prediction proved to be accurate. Thus, for example, in the anthology “The World in 100 Years” published in 1910, there was no contribution on the subject of automobiles. When ATMs were introduced, many predicted that the banks would be discontinued. Independent of predictions, in the end, the future has always happened. It seems more promising to participate in shaping the change surrounding digitalization rather than to sit passively and reactively in the audience, watching the action on the stage.

What do we need to do? Are we active enough?

Few people today have the perfect and custom-fit master plan. We will certainly also have to revise some of the current ideas. It is not a big deal if we are aware that the process is iterative. We should be able to have a substantial impact. Society expects this from us, as do our employees. And, in the end, the further existence of every company will depend on this.

Let’s look at the current market position of the rail transport industry in the discussions on future mobility. It is noticeable that, although the activities of OEMs, operators, and suppliers are recognizable (minimum box DB, 5L demonstrator SBB Cargo, freight transport 4.0, AD DB & SBB, etc.), they lag far behind the activities of the automotive industry. The rail sector does not currently have a capable platform at European level. In the public discussion about the two drivers digitalization and future mobility, the platform seems to cling too much to the well-known system of rails. Where and how will future standards be defined in these two areas? How can the transportation industry become a game changer? How do we design the intelligent interconnection of current and future transport modes to close service gaps? I believe that the railway industry has so far failed to address these questions sufficiently.

What form of collaboration do we need in the future? Today’s cooperation between OEMs and Deutsche Bahn is partly influenced by a culture of mistrust and not by a mindset of trusting cooperation. Instead, a significant amount of energy is put into claim management. In such a manner, collaboration and future-oriented cooperation, which all require a big picture approach, can only succeed with great difficulty.

Do we already act flexible enough to face the VUCA world? Here too, we are well advised to prepare the ground so that useful innovations – both technical and non-technical – can be created.

What does this mean for our workforce?

Our staff makes business happen, our employees. Both today and in the future. Particularly in times of change, the principle of “right people, right time, right place” has strategic importance. This is generally agreed upon. But what does this mean in the light of digitalization and future mobility?

Cooperation: In the coming years, the ability to innovate will depend crucially on the capacity to build up networks and enter into collaborations and partnerships – both internally and externally. These will not necessarily be the ones we already know today. We should be prepared for surprises and be willing to question old ways of thinking (may I, as a railway expert, speak to the automotive industry or perhaps to the food industry?). Hierarchies will play an increasingly smaller role in this context. We should encourage our employees to embark on the search, and we should train and hire them to do so. And we should turn managers into executives who enable our staff to do just that. Silo thinking has no place here. Mutual esteem is the key to fruitful cooperation in turbulent times.

Industry attractiveness: Only attractive companies and industries will continue to win competent people. Attractiveness is created not only by a smart product or a sophisticated business model. The “Y + Z” generation understands its significance and makes more demands than previous generations. It raises the question of the meaningfulness of an activity and is less and less bound to a company or organization. It will be important to find the right balance here: on the one hand, to enable a healthy exchange of information and, on the contrary, to create attraction and stability.

New professional fields: Digitalisation will create many new business models and thus new professional fields. A small indicator of this is the fact that many companies have meanwhile hired a CDO (Chief Data Officer). A few years ago, who would have thought that there would be job descriptions such as the “Social Media Monitoring Account Manager” or the “IoT Solution Architect” or the “UX Developer”? More – still unknown today – will follow.

Teamwork and diversity: More than ever before, the ability to tackle and solve problems in a team will be crucial to managing the increased complexity and speed of change. New structures, for example, Hackathons, should be open-minded. The ability to work in a team must be accompanied by the willingness of each team member to assume responsibility. Naturally, not everyone has the same abilities and characteristics; the team structures must be selected in such a way that a healthy and productive mixture is created. There are already models available. Here, too, managers have a decisive role to play. They decide who will work on which task.

Digital competences and skills: In the context of digitalization, various fields of competencies are emerging that need to be developed and expanded: design thinking (Which problem do we solve? How do we address the problem? How can we offer our solution?); LeanUX (The customer decides on success. Validation is more important than implementation. Desired failure, fast and often); agile software development (changes are welcome); big data (ability to handle big data & analytics). We will also have to deal with the fact that our employees are increasingly expected to have an overarching understanding of the subject matter and the business, combined with social skills. Moreover, specifically in engineering, the systematic and complete implementation of digital technologies will be increasingly required. IoT technology places particular demands on the structure of future systems and subsystems. Our employees will have to deal with these new requirements.

Experimentation, experimental fields: Particularly in the area of mobility, spaces and possibilities for experimentation are repeatedly required. This demand should be met. But here too, the right degree of maturity and the right employees are needed. The “fail fast, fail often” culture is not necessarily inherent in the DNA of our industry. However, this will be an essential building block for achieving results more quickly in complex tasks.

Conclusion and outlook – a glance into the crystal ball

Digitalisation and the associated technological change will affect all sectors of industry – albeit not simultaneously. Although we will probably retain the means of mass transport by rail, the more traditional companies and sectors such as the rail industry will also have to deal with digitalization. At the same time, technological change offers enormous opportunities and development potential. Current processes can be further automated, new working methods and business models developed.

If the industry, wants to play a role and not just stand by, it is worthwhile to deal with this development. The rail transport industry is well advised to take a greater part in the public debate. The transport industry, in particular, will benefit massively from the desire anchored in society to implement environmentally friendly and sustainable forms of transport. If this development is accompanied by modernity, innovation and the service concept at the same time, many positive knock-on effects result.

The new technologies will create a broad range of opportunities for interaction and thus open up new business areas. We should prepare our employees for this and encourage them to participate in the developments of our companies and industry.

Jochim is an independent consultant working in HR-Consulting and Recruitment Consulting. With more than twenty years in the rail industry, Jochim draws from a wealth of experience in building, recruiting and leading national and international teams. He holds an MSC Engineering and is a certified personnel manager and certified HR business partner.

VUCA: Volatility, Uncertainty, Complexity, Ambiguity

IoT: Internet of Things

IIoT: Industrial Internet of Things