Some top business schools across the globe have shown great interest in the successful turnaround of Indian Railways. Some people have attributed a great deal of this to railway minister Lalu Prasad’s common sense, consequently, his image has transformed into that of a management guru, at least in some quarters. Indeed, good management education, after all, is common sense codified.
But, it was more than just common sense of the minister and his cohorts that saw the dramatic change of fortune for the railways. The under-reported part of the turnaround is that it is also a good example of industry-institute interface.
The bureaucrat(s) who actually had a big role to play in the railways’ success story did greatly benefit from this interface. Acknowledging its value, the ministry has also taken steps to further strengthen this relationship.
In 2001, when the Rakesh Mohan committee forecast that the railways would be in red to the tune of Rs61,000 crore by 2015, its doom seemed inevitable. But, the new team at the railway ministry in 2004 had different ideas.
What they did is what B-schools teach. They analysed various operations of the railways and also the competition. Ideas for improvement were taken from officers at various levels and also from best practices abroad. They then came up with the success mantra: running heavier, longer and faster trains. For this, they took many initiatives such as increasing axle load for goods train, adding more coaches to passenger trains, market-oriented tariffs, reducing wagon turnaround time, extending platforms to match length of trains, key freight incentive schemes and passenger-profile management. They were to a great extent successful in bringing back the business they had lost to road and air.
Some critics have pointed safety concerns, which is about the damage an overloaded train can cause to the tracks. Already there have been cases of track failure. But, with a proactive management this can be overcome. What is more important is that Indian Railways is now the second most profitable public sector venture of the country.
Few people know that the railways was not the first preference of Prasad, who wanted the home portfolio. But, once he got the new responsibility, he made up his mind to turn it around. He brought in Sudhir Kumar as his officer on special duty (OSD). This choice was critical. Unlike many Indian Administrative Service officers who don’t care to learn and grow after clearing the civil services exam, Sudhir Kumar constantly updated himself by attending various management programmes at the Indian Institute of Management, Ahmedabad (IIM-A) and the Administrative Staff College of India in Hyderabad. There he honed his management skills.
After becoming Prasad’s OSD, he maintained his linkage with IIM-A. The railways funded IIMA to do research and develop a case about its turnaround and also get suggestions for improvement.
I was amazed by media reports that raised aspersions about this sponsored research. Wasn’t lack of this kind of industry-institute interface bemoaned by academicians? How many Indian companies have taken this kind of initiative to develop cases by sharing their data with B-schools, let alone providing funding? Indian Railways has also set an example by setting a chair in IIM-A, which will enable researchers to study its infrastructure developmental plans and future prospects. They have also given consultancy projects to other top IIMs.
The rail ministry is convinced of the impact of good management education on the efficiency and growth of the railways. To give a global perspective and adequate training, the ministry has mandated that senior members of the staff get the best of learning from top global B-schools such as New York University’s Stern School of Business, Insead campuses in France and Singapore, and HEC Paris. They also are talking to Wharton, the Harvard Business School and the Massachusetts Institute of Technology’s Sloan School of Business, for advanced management programmes, which will be tailor-made for the railways.
Though most of the ideas for transforming the railways did not originate from him, Prasad deserves his share of credit. Besides selecting right officials, he also empowered them to try out new ideas and made sure that there are no impediments in their functioning.
No doubt, the railway turnaround is a big image and morale booster for Prasad. But, it is also a lesson for our politicians that if they can’t be completely incorruptible, they can at least provide leadership simply by leveraging India’s intellectual capital.
Premchand Palety is director of Centre for Forecasting & Research (C-fore) in New Delhi, from where he keeps a close eye on India’s business schools. Comments are welcome at email@example.com