july 2017 supply chain sustainability and rail ......supply chain sustainability and rail...

InsightInsight

July 2017

Supply Chain Sustainability and Rail Infrastructure: Leadership

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2 RICS Insight Paper © 2017


Supply Chain Sustainability and Rail Infrastructure: LeadershipPulling together or falling apart?

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3RICS Insight Paper © 2017

Supply Chain Sustainability and Rail Infrastructure: LeadershipSupply Chain Sustainability and Rail Infrastructure: Leadership

Author and panel chair:Richard Graham FRICS Director, Oval Konsult

Expert panel:Client representativeStephen ArmstrongTransformation Director, Network Rail, RDS

Tier 1 representativeDouglas McCormickNon–Executive Director, Institute for Collaborative Working

SME representativePhil MounterSales Manager, Westermo Data Communications Ltd

Subject matter expertsStephen AshcroftDPSA Head of Technical Assistance, AECOM

Peter ColleyHead of Supplier Assurance, RSSB

Nick ShannonFounder Director, Management Psychology (Organisational Design)

Published by the Royal Institution of Chartered Surveyors (RICS)RICS, Parliament Square, London SW1P 3AD

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The views expressed by the authors are not necessarily those of RICS nor any body connected with RICS. Neither the authors, nor RICS accept any liability arising from the use of this publication.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher.

Copyright RICS 2017

Project leadership team:Richard Graham FRICS Director, Oval Konsult

Dr Robert MallettInfrastructure Content Manager, RICS

Chris William–LilleyDirector, Rail Champions


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ContentsGlossary of terms .................................................................................................... 5

1.0 Executive summary ................................................................................... 6

1.1 Introduction ..............................................................................7

1.2 Research methodology ............................................................8

2.0 Defining industry leadership ............................................................... 9

3.0 Insights into general leadership .......................................................10

3.1 The rail industry context ..................................................... 13

3.2 Types of leadership ................................................................14

4.0 Demand-side findings ............................................................................15

4.1 The importance of long-term industry policy and setting priorities ................................................................... 15

4.2 The client as leader ............................................................... 16

5.0 Supply-side findings: the importance of engaging the supply chain .................................................................................................18

5.1 Procurement as a strategic enabler of business outcomes ................................................................................. 18

5.2 An insight into ‘Action sustainability’ ................................ 19

5.3 Adequate commercial arrangements that build trust and engagement ................................................................... 21

5.4 Supply chain communication .............................................. 22

5.5 Learning organisations: the influence of major programmes on future leadership and diversity ............ 22

5.6 Understanding the barriers ................................................ 23

6.0 Conclusions and further developments .............................24

7.0 Recommendations ...............................................................26

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Glossary of terms

ATOC Association of Train Operating Companies (now part of RDG)BIS Business Innovation and Skills, a previous department of governmentCEO Chief Executive Officer (of a company)CP5 Control Period 5, the current five–year regulatory period for railDfT Department for Transport, the government department responsible for

railFOC Freight Operating CompanyHS2 High Speed 2, the new programme of high speed development within

the UKICE Institution of Civil EngineersIPA Infrastructure and Projects AuthorityLUL London Underground LimitedNR Network RailNSAR National Skills Academy for RailORBIS Offering the Railway Better Information ServicesORR Office of Rail and Road responsible for the regulation of monopoly

companies acting in these sectorsPSE Purchase and Supplier Engineering (model)RDG Rail Delivery Group, comprising TOCs, Network Rail, Client groups, and

GovernmentRIA Railway Industry AssociationRICS Royal Institution of Chartered SurveyorsRSG Rail Supply Group, representing rail suppliers RSSB Railway Safety and Standards BoardSME Small and Medium EnterprisesTfL Transport for LondonTOC Train Operating Company

A note about our expert panel: these undertakings never happen without the commitment, expertise and support of our contributors. This paper is no different. Each panelist provided unique insights and evidence that has shaped the content of this paper. The author acknowledges and thanks each panelist for their time and important contributions that has led to this paper.

Sustainable Supply Chain is an initiative that encourages participation in finding modern solutions to enhance vertically–integrated supply chains in infrastructure. Without the support of our panelists and experts leading each paper within this series, this ongoing discussion would not be possible.




1.0 Executive summary

1.1 IntroductionThis paper stems from an RICS/rail industry research and engagement initiative, whose objective is to examine ways to improve supply chain practices across the rail infrastructure industry. The project, spearheaded by the author Richard Graham, Dr Robert Mallett of RICS and Chris Williams–Lilly of Rail Champions, has sought to engage directly with each tier of the rail infrastructure supply chain (Clients, Contractors, SMEs). The project’s objective is to reach a broad consensus on positive ways to create a more integrated and sustainable market model wherein project risk is managed by those best placed to do so.

The paper focuses on industry leadership as a key success factor in shaping positive industry change toward clear industrial policy objectives. It is aimed principally at government agencies and major rail infrastructure clients. In other words, it appeals directly to those bodies responsible for creating and shaping longer–term industrial policy within this sector.

The paper highlights the plethora of industry bodies publishing industry strategy. We will also argue that there are two main bodies that address policy: the UK’s Department for Transport (DfT) (setting train franchise specifications) and Network Rail (as infrastructure controller of the timetable).

There are other bodies responsible for integrating systems and defining specific outcomes that drive the UK rail industry toward its longer–term policy objectives. They are the Rail Delivery Group (RDG), the rail unions and supporting or regulatory groups. These include Rail Supply Group (RSG), the National Skills Academy for Rail (NSAR), the Railway Safety and Standards Board (RSSB) and the Railway Industry Association (RIA). These bodies collectively shape different aspects of the long–term industrial policy agenda, but the number of bodies involved in setting leadership strategy is itself a key issue.© James Reid (2016)

This paper outlines the leadership challenge facing the UK rail industry in the current decade, drawing on an expert panel’s thoughts on the demand and supply side issues with recommendations for industry practitioners.

The central issue is a critical requirement for clarity on who leads the industry in defining its strategic aims, and how government and unions should come together with a single clear strategy. This would enable the rail industry to deliver the outcomes required by customers and ensure continued growth required in a post–Brexit landscape.

While these leadership insights are focused upon the rail sector, we anticipate more general applicability across other infrastructure sectors. This paper could serve as a focus for research by others within those sectors.

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Of equal importance, this paper is directed at the unions, rail operators, contractors and suppliers who operate within, and integrate into, operating systems to deliver innovation in the way the system is operated, maintained and altered. We believe that even with the advent of the Digital Railway, the national industry plan for targeting digital systems to increase rail capacity and improve network performance, the rail industry will continue to be a major employer. Industry bodies need to come together in a more aligned fashion than exists now. This applies particularly to the relationship between government and unions, a relationship that must extend to a better collective agreement regarding future railway operations and a common plan to achieve them.

An intelligent, informed client leadership can only be effective if it and the supply chain act within a clear, consistent long–term policy framework as discussed above.

However, a good understanding of the context in which leadership is applied also matters. The IPA Project Initiation Routemap, as reproduced in figure 1, highlights the significant early development work in assessing the contextual factors and shaping the leadership messages and early decision–making activities to address critical factors.

Figure 1: IPA Project Initiation Routemap

Crown copyright material is reproduced under the Open Government Licence v3.0 for public sector information: http:// www.nationalarchives.gov.uk/doc/open–government–licence/version/3/

As well as addressing industry leadership issues, the paper also makes some observations on general leadership, individual leaders and team leadership. It looks at some of the processes that shape policy formation and comparative thinking from other industrial sectors.

Our discussion covers the importance of long–term policy setting by government and its institutions and the fragmentation of the leadership institutions themselves within rail. We discuss ‘the client as leader’, including emerging thinking of intelligent and informed clients. The paper looks at client leadership in managing demand, influencing industry supply and how clients engage effectively with a supply chain through its procurement methods. The paper focuses upon mainline rail, recognising that TfL and other metropolitan operators are driven by different integration and governance structure. Equally, it notes the importance of major programmes, such as Crossrail and HS2, in promoting leadership learning in the business context to drive the wider leadership debate and thinking. The paper subsequently draws conclusions and recommendations for future development in leadership thinking.

The enduring effects of economic austerity and, now, the uncertainty that prevails in the aftermath of the Brexit referendum outcome means that the UK government’s call for ‘strong, integrated supply chains and productive long term relationships’ (Industry Strategy: government and industry in partnership) has greater resonance than ever.

In short, the construction and infrastructure sectors must develop less fragmented supply chain practices, in order to achieve better integration and high value outcomes at optimum cost. The insights on leadership to drive quality improvement highlight initiatives from other sectors that appear more advanced, but at the same time recognise that a debate exists now in rail to improve benchmarking, leading to quality improvements.

A critical factor underpinning leadership remains the setting of clear integrated industry policy to inform the direction of industry leaders. Improved levels of integration across the above interested groups is vital if the infrastructure sector is to establish the wider industry policies, objectives and leadership required to deliver value and distribute project risk more fairly across the supply chain and meet the needs of rail users. The industrial disputes that affected Southern Railway during 2016 centred on operational changes highlight the importance for DfT and rail unions to come together with a leadership agenda that addresses and balances the longer–term needs of the industry. Such an agenda should recognise there will be changes in how labour is deployed across the rail sector.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/529311/handbook_2016.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/529311/handbook_2016.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210099/bis-13-955-construction-2025-industrial-strategy.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210099/bis-13-955-construction-2025-industrial-strategy.pdf



1.2 Research methodologyOur expert panel represents a strong cross–section of client and supply chain. These experts hold diverse expertise in this topic and bring with them different perspectives and experience. This small group enables us to go into detail and explore some of the issues in a way that is not possible with a large group. The resulting discussions led to sub–discussions on aspects of leadership across policy, clients, procurement and the rail supply chain.

This paper has a UK focus and draws primarily upon rail transportation, but the themes it raises are likely to be relevant for other sectors and globally, notwithstanding wide cultural differences.

In the discussion below, this paper looks at two questions:

1. How leadership drives government policy and the importance of clear industry requirements to drive key changes such as integration, quality and productivity.

2. The best way to establish a supply chain leadership that is more formally embedded within and across the industry, and an understanding of the issues that have so far prevented this.

Additionally, it explores:

1. The importance of long–term industry policies: setting priorities.

2. Clients as leaders: the ability to exert influence and power.

3. Procurement as a strategic enabler of business.

4. Commercial engagement: how leadership drives this engagement across the supply chain.

5. Communication of policy messages.

6. Learning within major programmes on leadership and team diversity.

7. Understanding the barriers to effective leadership.

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The defining issue in need of urgent resolution within the current UK rail industry is determining who is the single leader that sets industry policy direction and who, subsequently, provides the underlying key policy messages for those within the industry to follow.

It is of critical importance that the rail industry leadership sets this direction for the wider supply chain leadership in order to deliver the required outcomes. An industrial strategy should exist to explain key industry issues, requirements and targets. Rail is relatively immature in this regard by comparison with other sector industrial strategies. For example, Nuclear Industrial Strategy published by BIS in 2013, offers a unified and comprehensive vision, clear accountability, a delivery plan and targets. At the same time, it defines the considerable challenges that it faces regarding waste management, decommissioning and new build. It is positive in that it highlights the real benefits to be gained in making advocated changes. The NIS forward cites its strategy:

“as evidence of the fruitful partnership between Government and industry in setting the direction of travel for the UK to achieve its ambitions to be a leading nuclear nation. Having that clarity of vision and determination to succeed will help bring substantial rewards and benefits to the country’s energy, industrial and economic future, and provide the platform from which to showcase the industry’s qualities and capabilities to the rest of the world.” Leadership needs to understand those benefits and embrace these complexities to deliver effective industry change.

2.0 Defining industry leadership

Complexity is caused by the number of bodies involved, the scale of investment and the challenges in managing existing operational assets and meeting rapid capacity demand growth at the same time. Complexity also exists through our social interaction as individuals and teams, in our collective performance and attempts to establish leadership patterns across industry and within organisations. The challenge arises in finding effective leadership interventions that consistently produce desirable outcomes.

There is considerable academic and business research on different aspects of leadership, leadership culture and models. However, this research is often not evidence–based, having been conducted away from business and thus ‘out–of–context’. Consequently, industry application of such leadership models does not deliver the expected results (Why Leadership Development Isn’t Developing Leaders, HBR, Oct 14, 2016). It is important therefore to conduct industry benchmarking and comparative research in a way that can be understood and applied by leaders to help their strategy formulation and effect industry change. This highlights the need for leadership training within the business setting, where there is a lack of clarity within industry regarding what is good leadership and what makes effective leaders. However, if the emphasis is solely on leaders, one misses the importance of having the right followers prepared to follow the right leader. Network Rail’s emphasis upon collaboration engagement begins to address this issue.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/168048/bis-13-627-nuclear-industrial-strategy-the-uks-nuclear-future.pdf






General leadership thinking is multi–facetted, and requires a consideration of softer issues as well as technical experience. Issues include:

• decision making, ambiguity and human judgment;

• collaboration and trust;

• the willingness of an organisation to follow a leader and work together with each other for some common purpose;

• long–term vision and short–term alignment of aims;

• the importance of context and situation on effective leadership styles; and

• the macro– versus micro–levels of leadership from pan–industry to within individual teams.

When considering the leadership attributes that we should promote, we need to assess how we train our leaders.

The rail industry is asset based and capital intensive, requiring technical and systems expertise to understand and manage its operational complexities. The panel agreed there needs to be a link between technical excellence and stronger leadership. It is valid to distinguish between technical systems and social systems when assessing leadership capability. Technical systems have identifiable cause and effect mechanics. Social systems frequently have undetectable cause and effect mechanics – known unknowns and unknown unknowns. Therefore, a different kind of thinking is required for social systems problem–solving to that for technical problem–solving.

Growing individual self–awarenessDeveloping our ability to collaborate effectively requires us to transcend ‘self’ and to see others’ perspectives. This includes the ability to accept differences in style and approach, which in turn leads to insight and inspiration, but requires effort and training to support an individual’s growth and a natural tendency to conflict among opposites. Investment made within collaboration techniques should be extended. There is the belief that general leadership training is frequently undertaken ‘outside of industry context’ in the classroom, and therefore not undertaken within the business itself. UKCES research highlights that middle–management are the least trained group across the UK in any sector, therefore least well–equipped to manage the complex issues they face.

The importance of concentrating on aspects of leadership that set clear long–term policy and goals, and enable a social culture that is supportive of productivity and innovation across the supply chain should be stressed.

The ISO 9000 family of quality management systems standards helps organisations meet customer and stakeholder expectations within statutory and regulatory

requirements. Concepts such as PDCA (plan – do – check – act) provide structure in technical systems. In a linear technical system everything and everyone follows that statement. In a social setting there is no equivalent standard and therefore no explicit guidance exists to inform culture. The leader informs and influences culture but cannot enforce a standard, only demand/request alignment. General research highlights that while technical systems can be linear, repetitive and relatively predictable in terms of intervention and interaction, social systems involving people and social groups tend to be chaotic and much less predictable in their response.

Defining what consitutes good leadershipWe know more about what makes a bad leader than what makes a good one, given that leaders come in all shapes and sizes. It is the impact of the business environment and other influencer factors that are often ignored. Whether these be a business’ regulatory framework, its location, interfaces or the number of its customers, its asset–base and condition, its operational characteristics, HR culture, or external factors such as political changes, weather, etc.

Good leaders do not necessarily need technical training if they are effective at managing technical teams, especially in the context of an engineering and asset–based business.

Hierarchical or devolved leadership?Historically one key organisation in the rail infrastructure sector, Network Rail, had a hierarchical command structure that was necessary for the organisation to deal with the issues that it faced at its inception. However, it is not adequate to talk about the individual leaders or hierarchical leadership being focused upon the actions of the CEO.

What is necessary to understand leadership at a micro–level? How do those devolved leaders feel able to take decisions that, alongside all the other devolved decisions taken at the same time, allow the organisation to achieve its wider objectives? In this context, a top–down directive decision–making model will not permit devolved leaders to act effectively.

Hierarchical leadership tends to slow decision making but creates stability and control, whereas devolved leadership promotes agility but can lead to confused accountability. The current requirement is for agile leadership close to the local customer. Empowerment is a macro issue of senior leaders in addressing strategic change and the issues that industry structural alignment creates.

3.0 Insights into general leadership

https://www.gov.uk/government/organisations/uk-commission-for-employment-and-skills

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People: leadership and followershipLeadership addresses people, social interactions of groups, their accepted norms and values. Leaders need to prioritise and set out their value and behavioural expectations clearly. This should align across industry. One notable example where leadership has driven a unified policy message across industry is safety. Strong industry leadership is expressed through clear statements such as ‘everyone home every day’, and lifesaving rules that the industry understands and adheres to.

Much time is spent analysing leadership with relatively little research time dedicated to those that follow leaders and how they respond. A person can only lead if a majority will follow them. It does not define the style of leadership, but simply that the leader has followers. Followers are attracted by the leader’s promise of a better future (vision), or by the need to be protected from some perceived threat.

A leader doesn’t need to inspire the world, only the people they need and want as followers. The leader’s skill should be to understand how to inspire the targeted followers.

Stephen Covey’s 7 Habits of Highly Effective People includes ‘seek first to understand, then to be understood’ So, what would inspire followers? Examples of leadership traits include a leader who:

• Loves doing something dearly; they won’t care how successful they are at inspiring others and will continue to persevere (on many levels) no matter how many times they fail.

• Thinks big and noble, not only about inspiring more people, but also about the impact the leader has on each follower. For example, inspire followers by supporting an established noble cause or practice, such as sustainability. It’s much easier to gain attention, followers, and support for noble causes than it is for individual gain or what some might think are more selfish reasons.

• Is expressive – passion is something leaders must have and be willing to express it in order to really inspire others. Expressive passion is contagious because of the curiosity it stirs in (potential) followers. The process of inspiring followers comes with no shortage of challenges and negative naysayers. To get past this, the leader must stay positive, work past failures, and present optimism openly to followers no matter what the circumstances are. Doubt – like expressive passion – is contagious and, if made visible, can impact any positive influence the leader might have instilled in a follower.

• Practices what they preach – consistent and high standards, really committed in time and attitude to the cause. Consistency in actions, information, and moral standards is critical. Welcome others, and listen to their needs and ideas – recognising followers is an opportunity to support them grow and change as well. Share personal stories, teach them things learned along the way, talk about failures and achievements, and ask followers questions about their own progress. Help them avoid the mistakes the leader has made in the past, and always maintain a positive outlook on their forward progress.




Leaders should aim to understand their followers and visa–versa for the leadership to move in step with the business. A lot of the critique of leadership development is that learning activities take place outside of the business context and ignore the important influence that the business context exerts on leadership decision-making. Leadership is not just personality. People are different and there are many ways to show leadership. Different leadership styles work effectively in different environments and organisations.

It is vital to recognise the importance of establishing environments within which there are opportunities to collaborate, for visionary thinking, and that adapt to different leadership styles where people can be inspired to perform. At the same time, it is difficult to find hard evidence that proves specific leadership interventions can achieve successful performance outcomes, as business is not a controlled environment. It is an assumption that greater employee engagement increases organisational performance, given that the direction of causality remains unproven. However, there is evidence that engagement has a link to higher performance. SMEs cite the importance of communication (of mission, of requirements, etc.) and the ability of a client leader to ask for their advice in solving a problem as part of a necessary process of engagement with suppliers.

This requires a leader to accept an element of ambiguity and doubt, coupled with a leader’s ability to be ready to ask the question of their supplier, and listen, assimilate and adopt. Effective leaders in complex, non–hierarchical contexts admit partial knowledge and demonstrate

flexible thinking in order to adapt to the ambiguities of their context. There has not been enough focus on ‘thought’ itself as a key skill. Some suppliers now actively select for an ‘ability to think’ rather than specific knowledge and competencies.

Risk managementAttitudes to risk vary. People and organisations have different risk profiles, where these attitudes affect leadership. SMEs often express the view that action-oriented leadership is necessary to cope with the high level of ambiguity that often exists in the supply chain. A leader needs to exercise judgment and take decisions in a situation of ambiguity, even if that decision is later shown to be wrong, otherwise the SME is paralysed.

It is also necessary for clients to understand SME, manufacturing and supply chain risk dynamics, and take consideration of the hygiene factors – such as fair payment – necessary to build confidence, trust, understanding and cooperation. This suggests that more inclusive leadership styles are likely to work better across the supply chain.

Historic association with hierarchical organisation, figurehead leaders and autocratic styles mean that leaders often associate their position and power as demanding authority. This creates an adversarial outcome at the interfaces across the supply chain. This adversarial versus collaborative leadership style is cited in literature as ‘Theory X and Theory Y manager’ (A review of Leadership Theory and Competency Frameworks, McGregor, 1960).

https://ore.exeter.ac.uk/repository/bitstream/handle/10036/17494/mgmt_standards.pdf?sequence=1&isAllowed=y

https://ore.exeter.ac.uk/repository/bitstream/handle/10036/17494/mgmt_standards.pdf?sequence=1&isAllowed=y

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3.1 The rail industry contextWithout a singular and clear long–term industrial policy, leaders and their teams are forced to act within a highly ambiguous context. This makes leadership decisions harder and, in our opinion, less likely to succeed in the long run.

© Matthew Jospeh (2016)

Thus, the drivers of leadership decisions will vary; driven on the one hand by the periodic review settlement by ORR, and on the other by the Mayor’s transport strategy and its management priorities (such as the fare freeze to 2020). TfL faces leadership challenges that to some extent mirror those of mainline rail, including how to adapt to rapid industry change due to high ridership growth.

3.2 Types of leadershipCultural issues affect our view of what constitutes effective leadership. A lot of leadership theory is decontextualized analysis that too often ignores business culture, along with the important part that it plays in the development of a leadership style that fits a business’ operational needs.

How do we select our leaders so they have the diverse experience necessary to address the issues they face within the business as defined by the context of business itself? Given that industry environments change with time, and arguably more rapidly due to the advent of new technologies that disrupt established ways of working, what lessons can we learn from these experiences?

Leadership selection itself can act as a barrier to changing leadership requirements. For example, over the last decade Network Rail has moved from a centralised command control to a requirement for devolved decision-making closer to their regional customers. However, there is a time lag before emerging leaders with the appropriate leadership style reach positions of authority, such that the prevailing leadership style falls out-of-step with the new requirements of a devolved business.

Our expert panel explored the need for leaders to act in any situation if change is to occur, but where the outcome

As highlighted above, there is a fragmentation of the leadership institutions themselves within rail. There is an imperative for joined–up policy setting, which is, rightly, the one industry recommendation made by Shaw (The Shaw Report, The Future Shaping and Financing of Network Rail, 2016, DfT, recommendation 4).

Consider the paradigm of ‘the client as leader’, an idea that dates back at least as far as the Latham report. This paradigm considers the emerging thinking of intelligent and informed clients, how they act within industry and what they need to provide effective leadership. Leadership cannot easily be separated from the business context in which teams operate and some of the reasons why context matters greatly are considered in section 3.2 Types of Leadership.

Clients are viewed frequently as leaders of industry supply and demand. Leadership involves understanding the importance of engaging with the supply chain in delivery and the focus placed by clients’ leaders on how they vertically integrate supply chains. This is not simply for individual works, but to define and validate the client’s business objectives, and also to ensure alignment with, and sustainability of, a wider supply chain and all of the SME organisations that ultimately contribute to industry policy outcomes.

There are differences across the rail industry. Notably, Network Rail is a monopoly company where price control is set by the Office of Rail and Road in conformance with statute. TfL, by contrast, was established in 2000 as the integrated body responsible for London’s transport system. Its role is to implement the Mayor’s transport strategy and manage transport services across the capital, for which the Mayor has responsibility. It is directed by a management board whose members are chosen for their understanding of transport matters and appointed by the Mayor of London. TfL’s Commissioner and the chief officers are responsible and accountable for the day–to–day operations of the organisation.

The panel agreed that leadership needs clear direction. Rail industry strategy sets that direction. But strategy needs to be driven from a single point: DfT (for industry & TOC) and NR (as Infrastructure Manager).


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/510179/shaw-report-the-future-shape-and-financing-of-network-rail.pdf

https://www.designingbuildings.co.uk/wiki/Latham_Report



of actions can be unpredictable depending upon the levels of ambiguity and change in the underlying business.

Better links between demand and supply offers deeper interaction and collaboration between leaders and teams. This in turn strengthens the bonds between companies and aligns leadership issues across supply chain organisations. It highlights the issues that lie across interfaces rather than within any one company. Cross-industry experience is perceived as an important area for improvement.

Traditional hierarchies in large companies are no longer viewed as the only approach. Chris Grayling’s announcement of devolved and locally integrated services requires devolved structures of federated units, different leadership and alternative styles to address effective decision–making at the operational ‘coalface’.

Different leadership and management styles will suit different contexts depending on the organisation’s culture, the size of the team or organisation, the nature of the work or industry and the particular personalities involved. Aspects include:

1. Selecting the right people for the right jobs, building a complementary team, and aligning people with organisational goals and culture. Subsequently, the development of key people is a crucial determinant of an organisation’s ability to deal with uncertainty and succeed.

2. Exhibiting empathy enables the building of rapport with and between people, leading to greater trust and transparency in the team and throughout the supply chain. Understanding people and connecting with them leads to the opportunity to influence, setting objectives that motivate, and rewarding in such a way they actually find motivating.

3. Communicating clearly, frequently and consistently is essential. Communication needs to flow in all directions, from leaders, managers to their staff, from staff to managers, between team members, and up and down the supply chain.

4. Being positive and constructive by providing timely and meaningful feedback and determine how best to give feedback is vital. Show appreciation when a job has been done well (inside and outside the organisation).

Technology is also a prime drive for organisational redesign. Traditional hierarchical organisations suffer through lack of innovation and speed of decision making. Where technology creates closer interaction with customers (Uber, AirBnB, Netflix, etc.) organisations become more flexible and less hierarchical. We have yet to see this in the construction industry as hierarchical customer interfaces still prevail. However, the Digital Railway is likely to change how users interact with our service, and will require different organisational approaches in response.

Context and position within the industry tends toward requiring different leadership styles. Government and policy setting requires that the leadership establish an industry vision. Clients in asset and engineering, planning and procurement require a pragmatic and more detailed model of leadership. Wider industry and the supply chain itself require a more responsive, task–oriented leadership that focuses on teams and individuals operating close to the customer.

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4.0 Demand-side findings

4.1 The importance of long-term industry policy and setting prioritiesThe main issues that have emerged are:

1. the need to define the singular leadership authority that determines the aims and direction the industry takes; and

2. the need for a long-term transport industrial policy and a singular industry plan that unites the whole industry around common aims.

Any consideration of leadership and intelligent clients should only be addressed if one is clear regarding the policy goals and long–term priorities. Historically, the rail industry has been bedevilled by short–term policy–setting, poorly aligned control periods and changing franchise specifications that neither created the leadership nor any of the incentives required to identify and address long–term industry requirements. Collaboration is needed at these industry interfaces. The number of federated groups across a business or between businesses requires a greater collective leadership and incentives to achieve interface alignment.

industry direction where rapid changes in policy and organisational industry occur.

One example of this was the need for Network Rail, at its inception in 2001, to have a strong top–down centralised organisation to turn its fortunes around. This set clear requirements that were easy to understand, even if they did not address the wider issues. Today, the government recognises the need for a more federated industry structure, with appropriate engagement skills to connect with its customer base. However, this creates challenges through the resulting inevitable loss of clarity of mission and leadership. For example, historically, British Rail (the UK’s former state run rail service) had strong training schemes, but periodically a lack of funding caused their suspension, resulting in cohorts of managers lacking in certain skills and knowledge. The regional integration issues create a leadership challenge that cannot be underestimated.

We believe that it is difficult for leaders to respond at all levels of the client and supply chain if there is no clear industry strategy, accompanied by consistent long–term goals that industry leaders can cite and understand.

Sir Roy McNulty’s 2011 review of the rail industry Realising the Potential of GB Rail stated that ‘value for money’ should be the major goal. But is this still true six years on? We are driven in 2017 by a new context and differing goals; for instance, toward skills and training, export growth (post–Brexit), industry devolution and the Digital Railway to name but a few. Business leaders might be forgiven for being confused as to how all these goals align within a rail industrial sector strategy.

One of the challenges lies in measuring the objective ‘value for money’ itself. The benchmarks within the report became the subject of scrutiny and a debate began around their validity. The leadership messages need to easily understood and communicated. There needs to be a consistent message over time; client leadership, supply chain and institutions become confused as to long-term

Industry leadership needs to come together to address the strategic policy issues, such as those that exist within skills and the leadership, to create a single skills delivery plan.

Organisations such as RDG and RSG exist as intra–rail organisations and play an important part in improving industry organisational capability, as well as in aligning priorities between constituent companies. RDG, in consultation with DfT, has been set up to develop the Industry Strategy, where DfT remains the ultimate client. This led to the RDG publication in 2015 of Britain’s future, Britain’s railway that sets out broad aims for a more productive and efficient future railway. But this leadership’s direction exists within the TfL policy constraints (legal, regulatory and mandated), hence RDG needs to work closely with DfT, and DfT needs to focus upon expanding this blueprint into a full Industrial Strategy – one that not only covers national but also metropolitan railways.

The current lack of an integrated strategy is seen in the disagreement between the Mayor of London and DfT over rail devolution and who should operate suburban railways, including the mix of suburban and long-distance services run over these networks. The then Secretary of State for Transport Chris Grayling instead announced in December 2016 a different proposal based upon a new integrated franchise for south-eastern. Such changes create uncertainty for business leaders and impede consistent long term planning.


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4203/realising-the-potential-of-gb-rail-summary.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/4203/realising-the-potential-of-gb-rail-summary.pdf

https://www.raildeliverygroup.com/files/Publications/2015-02_britains_future_britains_railway_brochure.pdf

https://www.raildeliverygroup.com/files/Publications/2015-02_britains_future_britains_railway_brochure.pdf

https://www.theguardian.com/uk-news/2016/dec/06/transport-for-london-plans-ditched-chris-grayling-sadiq-khan




The Shaw Report suggests the number of governing institutions may itself be a problem, and consolidation between these bodies would help. The Association of Train Operating Companies (ATOC) was absorbed into the Rail Delivery Group (RDG), and the Rail Industry Association (RIA) may become a delivery agent for the RSG. Certainly, more alignment is required until leaders are clear that there is a singular industry policy.

Training and experience is needed to link closely with the new skillsets required to meet longer–term policy objectives. These include the skills required for the digital railway, assets (ORBIS), whole life valuation and management, BIM and integrated engineering design. RICS’ new infrastructure strategy will consider the consequences for this in terms of the Institution’s future member training programmes. Recommendation 7 of the Shaw Report recognises this challenge, and recommends that industry comes together with an aligned strategy, but has this happened?

4.2 The client as leaderThe ‘intelligent client’ approach is important in driving strong leadership and the industry in a common direction. An intelligent and informed client is one that understands its asset base, its operational systems and its current customer requirements, but also has the capability and capacity to act in an efficient manner to effect change and operate its assets to meet future customer needs.

ICE’s Intelligent Client Capability Framework outlines the capabilities required of a leadership organisation. It offers a long list of capability indicators that are themselves facets of effective leadership. It cites the IPA’s Project Initiation Routemap as a procurement framework through which clients can engage the supply chain on an on–going basis in the delivery of long–term outcomes, as well as each project.

Critical to industry leadership is the client’s ability to exert its influence across the supply chain, to create demand and appetite within the market through its procurement strategy and to shape the way the supply chain will respond.

dwarfed by those in its supply chain. These individuals and teams have a wide range of views, risk appetites and approaches within these organisations. This dilutes an otherwise clear leadership message within the day–to–day business delivery. Therefore, it is crucial that the informed client both sets and manages internally its leadership agenda to avoid distortion of key messages within middle management operations. Alignment of attitude to risk, including a common approach to safety, is a key leadership requirement.

One key finding is that effective leaders should view the supply chain as integral to their business, rather than as a ‘bolt–on’ that is out of sight and out of mind once procured (that is until something goes wrong).

Also consider the scope of supply chain leadership and whether this should be restricted to client leadership within procurement, or within the client, or across the whole industry. We believe that leadership needs to encompass the full asset and its whole operations. Network Rail has around 38,000 staff for example, but this number is

Network Rail’s decision to move toward a more federated management model as a response to industry change requires devolved leadership closer to customers. This has been done to enable more customer–orientated decision making and this, in turn, may require a much broader base of leadership capability. We need supply chain leaders embedded within Network Rail’s routes that can develop suppliers to meet local needs and think strategically about the commercial arrangements and relationships that the routes need. Network Rail is now devolving route–based commercial and procurement teams into its routes to help facilitate this change.

On 6 December 2016 Chris Grayling, the then Secretary of State for Transport, stated that future rail franchises must create integrated operating teams between TOCs and Network Rail, and reunite the trains with the track. This integration policy presents significant challenges in leadership direction, organisational and cultural change.

ORR recognises the issues in the way that prices were set for Control Period 5 (PR13). On the one hand, there was a need to agree a plan for Network Rail to catch up the backlog at the end of CP4 that covered the first two

Case studyNetwork Rail established its Commercial Director’s Forum (CDF) in 2011 to promote, support and influence working practices in the rail industry and facilitate collaborative working throughout the supply chain in pursuit of doing more for less, and safer.

The forum provides a strategic overview of commercial, procurement and wider developments in the rail industry. This leadership forum combines client, Network Rail (Stephen Blakey, Commercial Projects Director) with senior commercial directors across its supply chain. It won the Constructing Excellence (London and South East) 2016 Award for Integration and Collaborative Working. The judges stated:

“The Commercial Directors’ Forum brings together some of the most innovative minds in the industry and creates space for the collaborative development of solutions and opportunities to positively change the dynamics of the industry.”

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/510179/shaw-report-the-future-shape-and-financing-of-network-rail.pdf

https://www.ice.org.uk/getattachment/disciplines-and-resources/best-practice/intelligent-client-capability-framework/intelligent-client-capability-framework.pdf.aspx

https://www.gov.uk/government/publications/improving-infrastructure-delivery-project-initiation-routemap

https://www.gov.uk/government/publications/improving-infrastructure-delivery-project-initiation-routemap


http://orr.gov.uk/__data/assets/pdf_file/0007/16378/network-rails-cp5-delivery-and-issue-issues-for-cp6.pdf

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generally from the experience of different approaches to cooperative working between Network Rail and TOCs in the operation or enhancement of the railway.”

(ORR Published letter Network Rail’s CP5 delivery and issues for CP6, p4, 16 Oct 2014.)

There is also a wider leadership discussion regarding incentivisation with TOCs/FOCs to reduce network costs, to use the network more efficiently, deliver customer requirements (e.g. journey time improvements) faster and how Network Rail maximises and allocates future capacity efficiently.

Egan, in Rethinking Construction, talked about the importance of benchmarks, citing the impact of LEAN and other productivity tools in driving increasing efficiency in automotive and other manufacturing industries. Critical factors were the ability of leadership to benchmark its own performance against other industries; and to identify and then take the steps necessary to reduce gaps in productivity. This led in 2000 to Constructing Excellence publishing the Building Down Barriers’ toolkit to offer clients a method to implement these quality improvements; the tools themselves having been developed as part of the MOD’s Defence Estates’ Building Down Barriers project in the 1990s. Finally, there is some academic evidence that points to the limitations of benchmarking in finding quantitative solutions. It is likely the case that leaders will need to work with imperfect evidence and tools in a complex environment when defining the plans against which the industry should deliver positive results.

years of CP5. But, on the other hand, Network Rail has failed to meet that agreed plan, with leadership needing to determine what improvements should be made within PR18, the next planning period, to create robust plans and pricing for CP6. ORR recognises ‘that there are elements of the five core strategies where Network Rail needs the co–operation and joint ownership of the train operators to deliver [its targets].’

However, the ORR equally recognises that Network Rail has failed to address three of its core strategies: increased asset reliability, the elimination of temporary speed restrictions and better weather resilience. There is a leadership requirement to restate and address clear aims, and to work across organisational interfaces to achieve its strategies.

Network Rail now focuses its key messages on the Digital Railway (including the ORBIS scheme for the management of asset information, and ETCS, traffic management that enables digital control of network operations) and sustainability (the environmental and operational cost advantage of network electrification, as well as keeping the rest of the network going).

Beyond Network Rail, setting clear direction has implications for major projects such as Crossrail 1 and 2 and HS2. The IPA Routemap module on procurement considers models by which clients may actively enable their supply chain to achieve their defined objectives.

The supply chain is willing to follow a client’s lead, especially where there is a high–level of mutual trust. However, trust and co–operation are eroded through supply chain volume volatility, badly aligned behaviours and loss of mission visibility. This comes back to needing leadership with clear and consistent messages that supply chain leaders can deliver.

While Network Rail is dependent upon TOCs and FOCs to deliver an integrated railway, LUL operates as a vertically integrated system with each line having its own operational management. Hence, the metropolitan railway is inherently better integrated and less prone to the delivery issues that Network Rail faces. Both ORR and Network Rail recognise there is room to improve the Periodic Review planning process to address the regulatory 2013 Perodic Review (PR13) short-comings and the issues noted above. Improvements include price setting and control as a monopoly company to:

“ • understand better what role comparison within Network Rail (e.g. by route or activity) could play at the next price control period. Comparisons are widely used in water, energy and healthcare regulation; and

• to understand whether there are lessons which can be learnt more

In summary, leadership needs to agree on its priorities and long–term issues, and be supported by better evidence (including comparators across Routes and benchmarks across rail and between industries). It also needs to agree on required implementation planning and delivery dates.


http://constructingexcellence.org.uk/wp-content/uploads/2014/10/rethinking_construction_report.pdf

http://constructingexcellence.org.uk/resources/building-down-barriers-toolkit/

http://constructingexcellence.org.uk/resources/building-down-barriers-toolkit/

http://ascpro0.ascweb.org/archives/cd/2009/paper/CERT136002009.pdf



5.1 Procurement as a strategic enabler of business outcomesWe established previously that leadership needs to extend across the supply chain. Clients as the creators of supplier demand are clearly thinking about how to engage with the suppliers within their market. The client creates both the supplier appetite for demand and the way that the market responds, but relies upon its supply chain to deliver its requirements. The leadership challenge for clients is how best to define their procurement strategy and where to focus their effort across a large supply chain to drive cultural change.

Client leadership should establish a sustainable bidding environment. By setting appropriate tender periods that smooth supply and demand, clients create a stable, long–term volume of work where peoples’ skills can be deployed and grown in the longer term. This contrasts with volatility, short–termism, ‘boom–bust’ and large swings in requirements for skills. If skills are lost at the trough of a peak, there is little chance to recover enough of the right people at the peak, as the industry has discovered. As an industry leadership priority, long–term demand is considered in parallel to skills and training. The management of stable funding and skills during CP6 will be fundamental to leadership success.

5.0 Supply-side findings: the importance of engaging the supply chain

The panel concluded that we need an open and more collaborative way of engaging with our supply chain. If we do 80% of our work with 20% of our supply chain, let’s start with this 20% and build strategic relationships with them first. We should aim for longer term and more sustainable competitive relationships.

The panel agreed that frequently there is too much change in direction. Leaders should stick to their guns and not change from an agreed direction. If change is required, this should be addressed in a subsequent period.

There is often insufficient planning and design. Requirements and scopes are taken to market too early before they have been adequately tested and developed. This leads to build and design volatility, waste and disruption.

Procurement professionals have a key business function to broker relationships between demand and supply. There is a lot of focus on supplier enablement, where procurement professionals act as leaders, sitting between the client’s technical leaders and those within the supply chain. They play an important role in understanding SMEs, their manufacturing and supplier services dynamic, as well as providing effective procurement frameworks that the parties together may then adopt.

Supply chain leadership does not come from procurement professionals alone. Suppliers interact with many people in client organisations on a day–to–day basis, and the way they are treated and the signals they receive will make a huge difference to levels of supplier engagement and value. Leaders from the top down need to set the right example in treating the supply base as an integral part of the business that should be challenged, nurtured, informed, and respected.

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RSG published its Sector Strategy for the UK’s mainline railway in February 2016. The Executive Summary sets out a strong vision for the UK and continental supply chain sector. This vision can only work with the support of the unions and of major clients (Network Rail, TfL, and Transport Scotland). It requires close working between the RSG and RDG, and collective leadership to exploit opportunities, mitigate tensions, align the gaps and secure mid–term outcomes. Leadership is required to ensure that clients sign–up and deliver the context to enable the supply chain to implement this plan. There is more work to do, both in defining supply chain requirements and in defining clear outputs. Achilles’ Supply Chain Risk, A Study of Procurement in the UK (2012) report on supply chain risk highlights ‘failure to deliver service in terms of quality, timeliness or cost’ as the largest source of client concern across many sectors, though notably of lower concern in sectors such as manufacturing, with their supply chain clusters and vertically integrated supply chains.

Comparative issues were highlighted within Managing the Project Management process in aerospace and construction, a comparative approach, (1999), IJPM Vol. 17. No.1 pp39–45, investigating project management practice between aerospace and construction. The panellists consulted for this paper concurred with this view, citing productivity and addressing quality issues as ongoing areas requiring leadership. Supply chain enablement will only work if there are clear requirements. Without clear technical systems and operational requirements with defined outcomes, enablement alone will not deliver results.

These leaders communicate requirements, understand constraints and are well–placed to address barriers that exist naturally between the client and supply chain. This is a cultural issue that affects everyone.

One priority area is the importance of leadership in driving quality improvements and lead the supply chain toward output gains. Within the construction sector there is the example of Action for Sustainability, a triple bottom–line growth model that is bringing the construction sector into greater alignment.

5.2 An insight into ‘Action sustainability’ Whether it’s sustainable purchasing, responsible purchasing or sustainable procurement, who does not want their supply chain practices to be sustainable?

But there’s a hitch. There is growing concern over greenwashing and uncertainty about which environmental claims relating to standards and labels can be trusted, independently benchmarked and verified. But how can the rail sector community be sure it’s using a credible benchmark? Is there a one–in–all standard that all organisations can use?

a) What is sustainable procurement in rail sector?

A process whereby rail sector organisations meet their requirements for supplies (of goods) works and services in a way that achieves value for money in terms of generating benefits not only to the organisation, but also to society and the economy, while minimising damage to the environment.

b) Why an ISO standard?

The ISO 20400 standard will bring value beyond the rail sector community by helping to disseminate CSR practices contained in ISO 26000:2010, guidance on social responsibility, throughout supply chains, and ultimately the entire economies.

c) How will an ISO standard contribute?

The ISO 20400 will standardise guidelines and principles for all stakeholders working with internal and external purchasing processes – including contractors, suppliers and, buyers – as part of an effort to demonstrate good practices for a sustainable supply chain.

d) Who will benefit?

All rail sector organisations, independent of their size and sector, will benefit by integrating the principles and issues of social responsibility within the purchasing process. In summary, it will:

• increase the value of these essential emerging leadership and management practices;

• help differentiate between the programmes that are genuine efforts to tackle environmental, human rights or corruption issues within the supply chain, and the programmes that are just scratching the surface and could be considered mere window dressing; and

• encourage other organisations to launch similar programmes by benefitting right away from the experience of early adopters and subject matter experts.

BackgroundBS 8903:2010 was the world’s first standard for sustainable procurement. It was driven by Action Sustainability. It provides guidance to organisations on adopting and embedding sustainable procurement principles and practices, and covers all stages of the procurement process including supplier audits, carbon measurement and life cycle assessment.

The Managing Director of Action Sustainability, who is a lead UK player on the ISO committee, has committed to launching ISO 20400 in 2017. ISO has a membership of 163 national standards bodies and hence is patently international.

Forty–five of the UK’s top construction contractors, FM service providers, clients and suppliers are now partners in a school as the go to sustainability resource for their supply chains. Here is a model by which to consider


http://www.railsupplygroup.org/sector-strategy/

http://shop.bsigroup.com/ProductDetail/?pid=000000000030203003

http://www.actionsustainability.com/

http://www.actionsustainability.com/

http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1873

http://www.supplychainschool.co.uk/



how the construction sector has sought to catalyse collaboration by focusing on a ‘big idea’; in this instance sustainability through the supply chain.

a) A proposed ‘big idea’ aim for leaders in rail?

From recruitment and training through to process, supplier engagement and results measurement, there is evidence, commitment and independent accreditation of an excellent base of knowledge and skills that will continue to be applied to address challenges in the supply chain ‘differently’ in the rail sector. Sustainability embedded in the organisation’s strategic behaviour and achieving ISO 20400 accreditation is one way that leaders in rail could aim to demonstrate commitment to sustainable practices.

Several clients now demonstrate leadership thinking to drive higher quality, innovation and productivity. Crossrail for example, published in 2010 its quality policy statement, stating:

“through the implementation of an effective management system we will:

• achieve CRL’s vision and values, including delivery of a World class affordable railway;

• deliver Crossrail at minimum capital cost with due regard to optimising whole life costs;

• manage all functions in an effective and efficient manner;

• set realistic, measurable objectives and targets for all activities, to assist delivery of performance and progress;

• apply the principles of ‘right first time’ and continual improvement to our performance;

• ensure compliance with legislation, regulatory requirements, and relevant codes of practice and standards;

• identify risks early, and place ownership and responsibility for mitigation with those best placed to do so; and

• implement audit and review programmes to monitor compliance with requirements and assess the effectiveness of the system.”

This drove subsequent supplier engagement for high quality and the creation of an Innovation programme (i3p.org.uk) that is funded by major infrastructure clients. Outside of infrastructure there are other innovation programmes that aim to drive productivity and quality improvements. Of note is SC21, described as:

“a change programme designed to accelerate the competitiveness of the aerospace & defence industry by raising the performance of its supply chains. International competition, together with the challenges posed by the defence industrial strategy, necessitates rapid improvement in the effectiveness of our supply chains. At the same time, industry must ensure that it delivers competitive solutions for customers whilst maintaining profitable business growth.”The programme has measured a range of benefits across its supply chain, including quality benefits such as reduction in materials use, time to supply, quality cost and rework reductions.

Tier 1 contractors and designers engage with their supply chain on wider joint objectives, such as diversity, local community engagement, environment and societal values. However, the effect on performance is unclear because clear empirical evidence is hard to come by. There is an issue concerning the hard and anecdotal evidence upon which leaders, informed by experience and models, take decisions. Part of the work of these procurement leaders, therefore, is to obtain clarity on the mission and the ability to create an execution plan. They should question both client and supply chain leaders whenever the mission and plan appear unclear. The procurement process itself is an important, if costly and unloved, mechanism to secure engagement and alignment.

For clients, balance is about clear requirements, namely the ‘iron triangle’ of time | cost | delivery, addressing how input versus output specifications affect innovation and considering how not to micro-manage but, rather, to define and deliver requirements for the supply chain to address.

For the supply chain, engagement is about the need to listen, engage, collaborate, and ultimately create innovative solutions and ways to deliver upon the wider mission (environment, sustainability, communities, productivities, exports).

The Purchase Supplier Engineering (PSE) model (see Programme Procurement in Construction, Learning from London 2012, (2013)) from the London 2012 Olympics has evolved through the Infrastructure and Projects Authority Routemap highlighted previously, in order to enable more

http://74f85f59f39b887b696f-ab656259048fb93837ecc0ecbcf0c557.r23.cf3.rackcdn.com/assets/library/document/q/original/quality_policy_statement_apr_2010.pdf

http://www.i3p.org.uk

http://www.sc21.org.uk/about/

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objective procurement leadership. The ICE subsequently set out in its own competency model to codify the key practice, behavioural and contextual competencies, ultimately as a ‘wish list’ that the client should address to act in an informed and intelligent manner for leaders and followers. Similarly, recent supply chain research calls for an intelligent supplier model that ties in with that for intelligent clients.

The reason why procurement leadership is important is that supply chains bring innovations for clients to deliver strategic change. For innovation to flow through to the client, however, someone in the supply chain must take a risk. For instance, there is a key difference in strategic intent between a client prescribing a ‘failsafe’ solution versus one where it is ‘safe to fail’. In the former it discourages suppliers from taking sensible risk and from innovating. In the latter, the supplier can bring innovation to market.

One example discussed by our panel concluded that Highways England set constraints within their contract with one supplier on the supplier’s performance where breaches result in fines.

The paradox is that an innovative supplier is likely to breach the performance criteria in developing a novel method that might improve longer–term performance. The supplier exercised judgment as to when taking a risk is acceptable, seeking an approach where the client defines what it means by incentivisation to allow the supplier latitude to take an innovation risk without penalty.

Incentivisation influences the way that a client creates trust across its supply chain and the individuals within it. The focus upon trust building across the supply chain supports the flow of information, products and services in one direction and the flow of money in the other. Management of risk has a bearing on trust. Risk is usually an issue that gets passed between client and suppliers. Where the responsibility for risk is disputed, trust suffers. Clients can do simple things to build and maintain that trust, such as abiding by agreed payment terms, paying on time or within frameworks and also by highlighting pipeline value and volume to its participants to ensure a ‘fair’ and consistent volume of work creating certainty for the supplier. The more that clients attend to these ‘hygiene factors’ the more likely it is that individuals and organisations within the supply chain will start to openly share intellectual property, invest in innovation and bring ideas and solutions to solve clients’ dilemmas in a productive way.

One panellist described having developed a retrofit product to solve a high–volume legacy problem within the existing asset and secured product acceptance. However, the take–up of the product was much lower than promised initially by the client, who then applied retrospectively a competitive procurement process. The SME took a decision reluctantly to withdraw the product and write–off its costs, with only a few hundred units installed.

Recent examples such as the Staffordshire Alliance highlight the benefits of addressing these issues effectively. Unfortunately, where successful outcomes are achieved (as was the case with the Staffordshire Alliance), replication of such results on other projects proves elusive (such as a future Alliance). Social systems are very complex and we lack a body of knowledge for successful interventions that will improve them, which itself generates further uncertainty. Both leaders and followers should recognise such ambiguities.

Another leadership factor often cited is integration. Team integration requires more than the co–location of people for ideas to flow smoothly across interfaces in the supply chain. Different organisational cultures dominate, particularly across public/private partnerships, and require careful client leadership to be effective. In recent years, this has led to clients stressing the important of collaborative as well as technical skills, and assessing for these skills when scoring bids.

There is the feeling that good progress is being made overall in this area, but with a requirement to train professionals for the future in the emerging models and practice.

5.3 Adequate commercial arrangements that build trust and engagementTrust needs to be developed across the supply chain, but this is notoriously hard to achieve. A good starting point would be to address payment terms and other commercial aspects, such as sharing intellectual property, that regularly erode trust. There is often insufficient trust between supply chain participants to share their knowledge readily, and leadership is required to enable adequate sharing of Intellectual Property, for example.

The ability of a client to manage such hygiene factors is a prerequisite to building suppliers’ trust. In other words, clients should make use of appropriate procurement frameworks, where the commercial arrangements align commercial relations with suppliers in a way that achieves objectives. Zero-value frameworks create ambiguity, conflict and work as a disincentive for a supply chain to invest for the long term. Suppliers need to know the secure work volume, type and pipeline to enable them to respond through investment in innovation, learning and training. Thus, leadership both within client and supply chain is needed to provide short and long-term incentives that align delivery with outcomes.




with clear industry requirements. The more ambiguous and variable the inputs, the harder it becomes to take effective investment decisions in support of the mission. Poorly prescribed and overtly detailed requirements will stifle innovation and the ability of the SME to respond.

5.5 Learning organisations: the influence of major programmes on future leadership and diversityWhile not exclusively the case, major programmes have become a test–bed for developing the new thinking that wider industry adopts. Leadership should be actively promoted within the major programme leadership skills agenda, and be firmly embedded in the context of the programme itself. One cited example lies in the promotion of diverse teams capable of tackling complex problems.

Effective leadership recognises the benefit of diversity both within teams and as an approach. Diversity is useful in complicated and complex scenarios, but where the benefits of better decision–making are likely to be context dependent. (See the Cynefin framework.)

Industry leadership, as is increasingly promoted by Network Rail, recognises the importance of encouraging diversity. This is being promoted within formal leadership training. A more ‘command and control’ approach to leadership might result in leaders being brought through from the supply chain and moving through different companies (rather than staying within one single company), or an apprenticeship scheme that draws upon applicants from diverse backgrounds. Evidence from Network Rail suggests that despite their effort, the pool of applicants is insufficiently diverse and that apprentices continue to need support after their training is completed.

Leadership should consider the softer aspects of commercial management, as issues can get personal with a need to ‘foster closer and more collaborative engagement’. Guidance is needed around collaboration rather than adversarial contracting. Consider why there is no standard for adversarial contracting, but ISO 44001 (BS 11000) is deemed necessary to promote better collaboration. It is important that leaders reflect values and behaviours that actively discourage a drift toward an adversarial condition, but also to recognise that collaboration is both difficult across different organisational cultures and not always the appropriate answer.

Commercial engagement is an area where more needs to be done, despite recent progress by major clients to undertake more formal early engagement with their supply chains and the variety of methods used. Frequently, commercial issues frustrate a common intent and are cited as a barrier by the supply chain to achieving greater success.

5.4 Supply chain communicationSupply chain businesses listen to clients. Clients should speak with people across industry to get a balanced view of their needs and the ability of SMEs to respond.

SMEs spend a lot of time speaking with people across the industry and its leaders to understand what is expected of them by industry leaders. Within their own organisations this information is communicated to their leaders. SME businesses base their decisions upon imperfect knowledge centred upon how best to respond, allocating investment and resources and to apply expertise to address the requirements. This leadership needs to align

https://www.ice.org.uk/news/knowledge/june-2015/diversity-leads-to-better-decision-making

https://hbr.org/2007/11/a-leaders-framework-for-decision-making

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The leadership influence of major clients such as HS2 and Crossrail is proving a key driver for change in several ways. One example is i3p, the Infrastructure Industry Innovation Platform. The Crossrail leadership developed its innovation programme, ‘Innovate18’, as an opportunity to capture and explore pioneering ideas from all of those involved in the project.

The techniques, products and methods used on Crossrail act as a benchmark for other construction projects. It is an award–winning programme that continues to evolve and leave a legacy for future infrastructure projects, as i3p.org.uk. Its aims were to raise the bar in the construction industry, now and for future projects, to think differently about how we share ideas and implement them, and ensure Crossrail were the first organisation to develop a strategy and process for managing innovation in mega projects. Innovate18 was developed by Crossrail in conjunction with Imperial College. Critically, it placed people at the centre of its programme. The network of innovation champions and innovators were drawn from Crossrail, its supply chain and its partners, providing energy and inspiration. Ideas that passed assessment were supported with programme funding and intellectual property expertise to increase the pipeline delivery of successful ideas.

5.6 Understanding the barriersThere are several barriers that prevent positive leadership from occurring. These barriers and ways they might be overcome to support leadership decisions and achieve client outcomes are considered below.

Position–power and the power of ‘experts’Technical expertise is fundamental in an asset–based and system–wide industry, such as transportation. Technical competency and leadership is more assured when there is a good understanding of the system and underlying asset performance. However, experts can become a barrier when expert power is used to give the answer in a hierarchical fashion. A lot of the technical expertise is embedded within the supply chain. Effective client leadership requires that this supplier technical expertise can be extracted through clear objectives, communication and procurement. Often technical experts in positions of power feel unable or unwilling to engage in less of a command/control approach because they are the expert.

The asset owner needs to become an expert in systems integration and operation, but not necessarily in the constituent parts that make up that system. This approach is more likely to foster innovation within the supply chain.

Industry structure and a command mentalityMany perspectives and behaviours exist across the industry. There is a command mentality in parts of the industry, but also very different cultures exist in other parts of it; this can cause friction. Respect is hard to achieve, with need for greater understanding and tolerance of difference between these groups.

Much greater thought is needed on the part of followers and what tasks they need to perform. All the focus cannot be on the leaders. Network Rail’s collaboration programme is viewed as an important innovation through its promotion of a common industry culture for team learning and engagement across teams and organisations.

SilosQuality management is central to high asset performance. However, Network Rail has only just appointed (2016) its first Head of Quality Management. Like procurement, quality management is viewed as a bolt–on rather than something embedded within the business. Leadership is required to ensure that silos such as quality management and procurement become embedded within the core of the business, rather than viewed as separate from the frontline service to customers.

Perceptions about leadershipThere are three assumptions about what makes effective leadership. First, people can be found who naturally possess the right attributes to become effective leaders. Second, it is possible to train these people to lead effectively within the context of the business. And third, when these leaders take appropriate actions this leads to the desired outcomes. Perceptions about what makes a good leader can distract from creating the right overall environment for the achievement of positive outcomes. More visibility of leadership in the context of the business might help.


https://www.i3p.org.uk/

https://www.i3p.org.uk/

http://i3p.org.uk.

http://i3p.org.uk.



This paper discussed how leadership should be developed positively in a new sustainable supply chain world, based upon the exchanges between our expert panellists.

Action remains a key part of leadership, but one that is combined with reflection and thinking, and an ability to assess ambiguity and to respond in a way that achieves repeatable results. Misaligned risk attitude and perceptions of failure require leadership to overcome such barriers. Leaders need to address both hard and soft aspects of individual performance in their behaviours, and develop an ability to learn in response to failure. Attitudes to risk matter and can dilute clear leadership messages if not managed within mid–level management.

6.0 Conclusions and further development

The panel concluded that this world is one of federated companies working across many formal interfaces, where integration is not achieved through hierarchy and position, but through goal–setting, alignment and our collective willingness to engage in delivering a common outcome.

There were several key conclusions from this work:

1. A clear industrial strategy would help leaders across the supply chain to invest in and develop solutions that meet the requirements of industry change over the next decade. This paper has set out some areas, such as quality and productivity benchmarks, that would enable learning from other sectors to be applied better within rail.

2. Common industry policy requires industry alignment. We viewed this between two key bodies, DfT and Network Rail who between them manage both the UK’s train services and timetable. The alignment and consolidation of ‘advisory’ bodies are challenges highlighted by Shaw that need to be resolved.

3. There should be recognition that industry integration, while desirable to improve frontline delivery of service to passengers and freight users, creates significant leadership challenges that should not be underestimated. Industry change should be progressive to allow industry time to adapt toward a longer term defined vision.

4. Industrial disputes in 2016 on Southern Railway highlight the importance of a long–term collective agreement between DfT and the unions that aligns with industry policy. The rail industry will continue to be a major employer where the redeployment of skills will be key to delivering common future outcomes that benefit all rail users.

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Our findings suggest the hierarchical leadership styles that existed historically, and which have been effective within a single large business, are unlikely to be effective across a federated supply chain comprised of multiple organisations and interfaces, where knowledge, resource and capability is spread out. Collaborative styles of leadership and closer engagement will continue to be key to the delivery of any programme and wider industry objectives.

At a macro–level, there are many factors that affect leadership and outcomes. There remains limited evidence to prove that specific leadership interventions will always deliver positive outcomes. Repeatability of results is low, and the tendency for industry change and evolution is high. Learning will need to keep up with this change in context.

In due course, RICS will be developing within its strategy update for infrastructure, initiatives that aim to train and equip its professional membership to be ready for these changes over the next decade.

5. There need to be clear policy objectives for leadership to be effective.

6. There should be cultural alignment across middle management within the railway organisations that enable cross–business collaboration focused keenly on common outcomes. Leadership messages will be more effectively adopted across industry where attitudes to risk become aligned. Safety is a good example of an area where client leadership has driven a common view of safety risk management across the whole industry.

7. Industry should consider adopting the IPA Routemap that governs procurement in terms of managing complexity. Leadership should set clear priorities, requirements and outputs to achieve the delivery outcomes that they need from supply chain.

8. There is more work to do in the alignment of commercial incentives and in managing demand volatility across the control periods. This would give suppliers greater certainty, and enable supply chain leaders to invest in innovation and skills to support future industry capability requirements.

The extent of industry change and business context matters greatly.

Network Rail, in moving toward a more federated structure, requires leaders who can operate closer to the customer, with a level of autonomy and ability that enables them to cope with ambiguity due to their complex business environment. This has led some commentators to argue that

“The authoritative, command–and–control leader has been dumped on the shoulder of the information highway. He (or […] she) has been made obsolete by transformed business models, faster information flows, stiffer competition, and changing demographics.

The new leader is the collaborator–in–chief, setting context, creating networks, and facilitating decision making. If you are a leader today, be warned: what got you there may not necessarily keep you there.” (Go Where There Be Dragons: Leadership Essentials for 2020 and Beyond, (2010))




1. Careful consideration should be given by all parties to the development of a single leadership voice for the industry (DfT and Network Rail), with alignment and collaboration of wider industry bodies around a singular transport policy and industrial sector plan.

2. The move to an integrated regional railway needs to be progressive to allow leaders time to change industry toward a longer term vision.

3. As a major employer, the relationship between government and unions will be one important determinant in achieving future policy outcomes. A clear positive industrial plan supported by both government and unions is essential.

4. Leadership at government and senior–industry level should set clear long–term policy objectives. Policy setting needs to be in consultation with industry, and needs to be consistently maintained over a significant period for the industry to adapt and respond.

5. Leadership professional development should be embedded within business for it to have contextual meaning and application.

6. There is a need to gather more evidence that establishes a clear link between developing the right leaders and giving them the tools to intervene in a complex business organisation, and their interventions improving the organisations, leading to better outcomes.

7. It must be recognised that leadership requirements are not static and will continuously evolve over time.

8. There must be experimentation with new organisational forms and structures.

9. There must be a consistent effort to improve leadership at all levels of industry and organisation.

10. Relationships and tensions between commercial imperatives and management of risk and efforts to innovate and achieve closer collaboration must be acknowledged, discussed and managed.

© Finbarr Fallon (2015)

7.0 Recommendations

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july 2017 supply chain sustainability and rail ......supply chain sustainability and rail...

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