In the last two years the industry has seemingly invested a huge amount of time and effort in creating a clear vision for how it intends to address the dichotomy in being recognised as both a key enabler for economic, social and environmental welfare and a significant drain on the public purse.

The government commissioned ‘Rail Value for Money’ informed both long-term thinking and immediate priorities as outlined in its paper ‘Reforming our Railways: Putting the Customer First’. Subsequently, government, Network Rail and the industry have developed more detailed plans for the period 2014 – 2019. In parallel the Rail Delivery Group (RDG) has gained significant momentum and profile as it seeks to bring industry leaders together to collaboratively address strategic challenges.

But has all of this hard work given the rail industry the necessary clarity to confidently align its business strategy and invest in internal change programmes that will transform its organisations and make them fit for purpose? Or has it been completely undermined by last year’s West Coast franchising debacle?

To help better understand how successful the UK transport industry has been at navigating complexity and uncertainty, transformation consultancy Moorhouse surveyed more than 130 board members and their direct reports from a cross-section of UK transport operators and infrastructure providers, overseeing a total transformation budget of £2.1billion.

The research revealed that:

• Less than a fifth of senior leaders in the rail industry (compared to a third across the transport industry as a whole) believed that the government’s vision for the future of the UK’s transport network was clear
• All rail respondents (compared to nine out of ten of the transport industry as a whole) indicated that government policy impacts their strategy and investment decisions. Only one felt lack of a clear vision had not negatively affected their organisation
• Just a quarter of those working in the rail industry (compared to a third across transportation) believed their organisation was effective at working with government and influencing future transport strategy.

Let us hope that the Transport Secretary’s newly unveiled plans, including a revamped franchise programme, went some way to restoring confidence and providing the intended long-term certainty to the market. Either way, our survey results suggest that organisations can achieve strategic advantage by persisting with their collaboration with government. Those able to create effective working relationships had greater clarity on the transport vision for the UK, felt better able to select the right mix of projects to deliver their strategy and were more confident that change agendas would deliver intended benefits.

Moorhouse’s Navigating Uncertainty research report outlines two further recommendations that should help organisations in the rail industry to achieve greater success in delivering strategic change.

Take a benefits-led approach to investment in change

Unfortunately our research identified a lack of discipline in how organisations are managing their major investments in change, with about £1.65 billion being invested without a comprehensive business case, and around £1.5 billion without proper evaluation of return on investment (ROI).

While a number of factors should be considered when selecting and prioritising strategic programmes, a benefits-led approach is key. The most successful organisations set a clear link between the outcomes of each change initiative and corporately set strategic priorities, such as reducing cancellations and significant lateness. This helps organisations make the initial decision to invest, adjust the mix and relative priority of initiatives over time, and stop programmes where business cases are no longer valid.

ROI cannot be quantified without measuring benefits accrued over time.

The challenge is that benefits are not typically fully realised until after transition to business as usual, particularly for large-scale transformations. Teams brought together to deliver change initiatives are usually temporary and thus, on completion, key people move on to other challenges. It is therefore imperative that organisations consider ownership for on-going benefits tracking and reporting. This will help to ensure change is properly embedded, benefits are delivered and sustained, and lessons are learnt to inform future investment decisions.

Build your organisation’s change delivery capability

Creating shareholder value requires a combination of strong business performance and effective delivery of strategic initiatives. So change remains a constant and organisations require robust, flexible change delivery capability.

Our research found that less than two thirds of respondents were confident they will have the right change delivery capability to achieve longer-term strategic objectives; just over a quarter believe this change capability will come from within their organisation. To remain competitive it is crucial that rail organisations understand the change management skills and experience they need to succeed. They should assess their current capability and succession plans, then define a deliberate approach to recruitment, training and supplier sourcing to fill the gap.

The first decision is whether to build a full or partial internal change function. It is our experience that as industry matures in its delivery of large-scale transformation, some are choosing to retain only a light layer of senior change leaders in-house in conjunction with a central portfolio management function. This is typically supplemented by temporary delivery teams sourced both from within the business and externally.

Secondly, organisations should consider where resources will come from. What investment should be made in developing internal talent given the risk this could make staff more attractive to others? How much emphasis should be placed on external recruitment given you will be competing externally for a limited pool of talent, and this option tends to have a higher financial and business cost? When should you use other sources of external support?

Historically, organisations have typically been reactive, operating on a short-term basis by engaging specialist consultancy support to bridge gaps in capability, and individual contractors to fill gaps in capacity. However, strategic delivery partnerships that enable the creation of integrated in-house, consultant and supplier teams as a planned ‘norm’ are becoming more commonplace. In so doing, organisations can balance the need to develop internal capability with the specialist expertise, skills transfer, and in some cases lower cost, achieved by the effective and targeted use of external resources.

Our research highlights that the UK transport industry must chart a path through an increasingly complex landscape. At a time when ambiguity and competition are increasing, organisations in the rail sector have an opportunity to reassess their approach to delivery of strategic change. Those that manage change most effectively will be in the best position to successfully transcend the current pressures and shape the industry to their own strategic advantage.

Liz Newson is a principal at Moorhouse, a consultancy that helps organisations design and deliver successful transformation. For more information or to request the full Navigating Uncertainty report for free visit www.moorhouseconsulting.com