Rajesh Chakrabarti, Assistant Professor of Finance at the Indian School of Business (ISB), talks to V Nilakant, Associate Professor of Management at the University of Canterbury, and S Ramnarayan, Clinical Professor of Business at the ISB, about the transformation of Indian Railways. Nilakant and Ramnarayan recently co-authored a book, ‘Changing Tracks: Reinventing the Spirit of Indian Railways’, about the process.
Rajesh Chakrabarti: Let’s start at the very beginning. What got you interested in the Railways story? Why was it special? Was it the size? Was it the hopelessness of the initial situation? Was it the government department? Or was it India?
S Ramnarayan: Interestingly, it was none of these things. The truth is that, in the beginning, we were not interested in the Railways story. We had read newspaper reports on the transformation of the Railways but we dismissed those as mere hype. As students of change, we believed that it was simply not possible to transform the Railways and enhance performance to the extent that was claimed. The organisation was too big, too old and too bureaucratic. It was Sudhir Kumar, the officer on special duty to the Minister of Railways, who got us interested. He had visited the ISB to make a presentation at one of our conferences, and I got an opportunity to spend a couple of hours with him. During that meeting, I gave him a copy of the earlier book that Nilakant and I had written on change management (Change Management: Altering Mindsets in a Global Context). Kumar read the book and called me within a few days. He was highly appreciative. He then suggested that we should write a joint book, with him, on the railways story. He felt that our model captured the way the Indian Railways had gone about its change process. I thought it was an interesting idea and got in touch with Nilakant.
V Nilakant: At that stage, I was still somewhat skeptical. We decided that we would collect our own data to validate the story. Initially Ram (S Ramnarayan) met a number of people at different levels and functions. We went through voluminous internal documents of decision-making in key areas. Kumar also spent an enormous amount of time. We have to admit that it took us quite a while to really appreciate the nature of changes in the Railways. Thanks to the ISB, I got a chance to come here for three months from New Zealand as a visiting scholar. Ram and I met a large number of people. We started as skeptics but were transformed into “true believers” as we uncovered the complex details of the change process. Therefore, the credit for getting us interested should go to Kumar. The initial plan was to have him as a co-author. However, as we began writing the book it seemed inappropriate to do that since he was a key player in the transformation story. Kumar was generous enough to see our point of view and graciously agreed to be excluded as an author.
A key feature of the Railways story is the relationship between the technocrats and the politicians at the helm, And you have brought out this sweet-sour relationship extremely well in the book. I guess also important is the morale of the rank and file of Railways employees. How important do you think is the people element in the transformation of the Railways?
The people element was, perhaps, the most important aspect of the transformation of the Railways. [The distinct role] played by the important actors – bureaucrats, technocrats and politicians - was crucial to the success of the change effort.
Nilakant: You are right. The people element was, perhaps, the most important aspect of the transformation of the Railways. What impressed us during our study was the distinct role played by each of the important actors – bureaucrats like Kumar, technocrats in the Railway Board and politicians like (the then Indian Minister of Railways) Lalu Prasad Yadav. By and large, they stuck to their role and contribution. They did not interfere in others’ roles. We believe this was crucial to the success of the change effort. These relationships were not always smooth. However, they worked because people learnt from their mistakes and were willing to correct themselves.
Yadav was particularly sensitive to the rank and file of Railways employees. He made sure that they were well looked after and shared the gains from performance improvements quite generously. The senior officers were not entitled to bonuses, but Yadav made sure that they received certain benefits that they did not get earlier. Apart from these benefits, we were told that a proposal had been made to increase the training budget substantially so that all senior officers would be able to make an overseas visit within a reasonable time frame and gain from this exposure. Our respondents strongly felt that the minister would certainly have approved this proposal, but it was shot down by the Railway Board which saw no reason to increase the budget beyond the current figure.
Moving on to the related issue of leadership and Lalu Prasad Yadav, how much of the credit for the turnaround do you think goes to the top leadership? How important were the changes that (the previous Minister of Railways) Nitish Kumar had brought about?
Nilakant: You have raised an important issue. The top leadership in any organisation cannot claim sole credit for the success of a change effort. Of course, success or failure is often attributed to the top leader – most cases of change present the story as if only the top leader did the complete diagnosis, took all the right initiatives and made all the right decisions. In large organisations, successful changes can only be brought about by the co-operation of everyone in the organisation. One can’t deny the contribution of Yadav. He provided the leadership and played an important role in the change process. By letting competent and committed professionals act freely and accepting occasional errors of judgment as an inevitable part of the change journey, he created an environment where people could perform and achieve their stretch goals. A number of other individuals who held top or senior positions at that time like Ghosh Dastidar, Member, Traffic; Rajiv Jaruhar, Member, Engineering; R Sivadasan, Member, Finance; R R Bhandari, Member, Mechanical and L R Thapar, Additional Member, Traffic working along with several individuals at the middle and operating levels made significant contributions. In our book, we detail out how each individual framed the change message, mobilised support for change and successfully executed it.
One of the most important lessons from the Railways story is that successful transformation requires a change in mindsets. Organisational change is not just about restructuring, downsizing or cost cutting. It is about changing people’s mindsets.
Ramnarayan: Yadav was able to claim success because he built on the solid foundation laid by his predecessor, Nitish Kumar. As we have mentioned in our book, Nitish Kumar was instrumental in overhauling the crumbling infrastructure of the Railways. Nitish Kumar commanded a lot of respect among the technocrats in the Railways. He was seen as a committed, honest and knowledgeable person.
For any change to succeed, you need three things – infrastructure, investment and initiatives. Nitish Kumar acquired the investment and created the infrastructure. Yadav provided the initiatives. The initiatives during Lalu Prasad’s tenure yielded results because the infrastructure was already in place, for which the credit should go to Nitish Kumar.
You mention how a few critical technical changes as well as a host of new ways of management thinking – the “business savvy” as you put it – were behind the changes. Did one lead to the other? Was it a mindset change that led to dynamic and differential pricing or heavier trains?
Ramnarayan: Yes, the fresh approach to pricing decisions, axle load and the strategy in general reflected an altered mindset. One of the most important lessons from the Railways story is that successful transformation requires a change in mindsets. Organisational change is not just about restructuring, downsizing or cost cutting. It is about changing people’s mindsets. Why are mindsets important? If you have a set mind, you will become resistant to change. It is as if your mind has been set in concrete. It cannot be altered, moulded or changed. It can only be broken. On the other hand, if you have a mind that is flexible, curious and willing to learn, then any change is easy. In our experience, most people have set minds. They are not willing to change. Worse, they won’t let others change. There were a number of such individuals in the Railways. However, there were also a few individuals who did not have set minds. They were willing to experiment, take risks and learn. The transformation in the Indian Railways was successful because these individuals were given recognition and support. They were the ones who brought about the paradigm change.