Indian Railways: Building a Permanent Legacy Tarun

Transcript:Indian Railways: Building a Permanent Legacy Tarun:
Indian Railways: Building a Permanent Legacy Tarun Khanna – Aldo Musacchio – Rachna Tahulyani Harvard Business School 9—710-008 Rev : October 1, 2009 Prasad had led Indian Railways through one of the most impressive business turnarounds in recent history In 2004, Prasad had given the railway board and Kumar the operational task of turning around the railways. They had focused on getting everyone to improve the performance of Indian Railways organizations. Implemented reforms with a “consensus-based approach” and made sure the “reforms had developed deep roots within the institutions” By 2009 Prasad and his team felt that “policy reforms have been embedded in the institutionalized DNA by instating systemic and procedural reforms. These have become part of the organizational routine, manuals and to some extend norms.” A Nation’s Lifeline Indian Railways was one of the largest and busiest rail networks in the world, carrying over 17 million passengers and 2 million tons of freight every day Colonial Inheritance (1858 – 1947) 1853 – the first train ran on India soil from Mumbai (the commercial capital of the country) to Thane (suburb) 1870 – The governor general of India had initiated the construction of minor state lines on narrow-gauge tracks in order to develop traffic to the hinterland 1875 – British companies had invested about £95 million in Indian guaranteed railways 1880 – The route mileage of IR entire network was about 14500 kilometers 1905 – A railway board was formed under the Department of Commerce and Industry 1924 – the government took over the management of the railways and separated its financing and budget from that of other government departments 1947 – 40% of the railways became part of the newly created nation of Pakistan ORGANIZATIONAL HIERARCHY The government of India’s ministry of railways operated IR who was assisted by two ministers of state for railways. Each of ministers has railway board (such as chairman railway board, a financial commissioner, and six functional members) with direct influence on the future Members of the railway board were highly specialized in the functions they represented and had vast experience in each of their field. THE PUBLIC-SECTOR GIANT At the end of twentieth century, IR had become “inward looking” organizations. Over a span of 50 years after independence, IR's share of passenger traffic declined, lost most of its business to bus transportation and airlines); and its share of good increased because of trucking