Digital transformation is all about making a difference, so how do you do it in an industry traditionally associated with large-scale infrastructure and integrated business processes?
Danny Gonzalez, Director of Digital & Innovation (CDIO) at London North Eastern Railway (LNER), believes technology should be at the heart of everything the company does.
“We strongly believe that digital technology is absolutely essential,” he says. “We need to deliver experiences that meet or exceed customer expectations. »
Optimization and integration of various modes of transport
Compliance with this program is not an easy task. According to Danny Gonzalez, a train ride is “absolutely full” of elements that can go wrong for a passenger, from buying a ticket to arriving at a station, to train delays and the difficulty of leaving the station as soon as you arrive at your destination.
LNER aims to remove roadblocks for customers, but it must bring these changes to an industry where legacy systems and processes are still prevalent. According to Danny Gonzalez, many of the technologies used are over 30 years old.
“There is still an incredible amount of paper and spreadsheets being used in a large part of the rail industry,” he says. “Our challenge is to see how things like machine learning, automation and embedded systems can really change what we do and what customers get. »
Team of 38 specialists
Danny Gonzalez says the job involves focusing on how technology can be used to improve how a company operates and delivers a service to its customers.
This is evident in the detailed digital transformation plan, which Danny Gonzalez calls the LNER North Star: “It keeps everyone focused on the things that matter. »
As CDIO, he has created a 38-person digital leadership team of skilled professionals who go beyond traditional railroad processes and management to focus on innovation and finding creative solutions to intractable problems. “It’s pretty unusual for a railroad company to let people try things more and fail,” he says.
15 PoC for two years
Since 2020, Digital — combined with its ecosystem of partner companies and startups — has launched over 60 tools and tested 15 proofs of concept (PoC).
One such concept is the station avatar, which was developed jointly with the German national railway company Deutsche Bahn AG.
LNER also conducted a trial in Newcastle that allowed customers to have open conversations with an avatar in a special booth at the station. The avatar is connected to the LNER booking system so that customers can receive up-to-date information on the availability of services. Following this successful test, LNER is now looking for a final solution for a wider deployment.
The company is also working on what Danny Gonzalez calls the mobile app as a door-to-door service. This will keep customers up to date on the status of their trip and provide them with links to other providers such as taxi companies or car or bike rentals.
“It’s about making sure the whole journey is seamlessly integrated,” he explains. “As a customer, you feel in control and know that we guarantee that if something goes wrong in the process, we will fix it. »
Machine learning concepts in manufacturing
When it comes to operations behind the scenes, LNER is investing heavily in machine learning technologies. Danny Gonzalez’s team has implemented several important concepts that are now moving into production.
One of them is a technology called Quantum, which processes huge amounts of historical data and helps LNER employees redirect train traffic in the event of disruptions and minimize the impact on customers.
“Quantum uses machine learning to learn from the past. It looks at decisions that have been made in the past and their impact on rail traffic,” he explains. “He calculates hundreds of thousands of potential contingencies of what could happen when certain decisions are made. This completely changes how our service teams manage trains in the event of service outages. »
To identify and exploit new technologies, Danny Gonzalez’s team adopted consultant McKinsey’s three horizons model, enabling transformation in three key areas, allowing LNER to assess potential growth opportunities without neglecting performance here.
Find long-term profitability
Horizon 1 focuses on the “large products” needed for day-to-day operations, such as booking systems. Horizon 2 covers new features the company is exploring.
Most of his team’s activity is now focused on Horizon 3, which McKinsey says includes creative ideas for long-term profitable growth, Danny Gonzalez said.
He explains that this process involves giving teams a lot of freedom to jump in and try things out, test out concepts, and really understand where the technology is at work.
A critical part of this work is an accelerator called FutureLabs, where LNER works with the startup community to see if they can help propel digital transformation in new and exciting directions. “We formulate key business problems and ask innovators to come and help us solve our problems – and that has led to some of the most important things we’ve done as a business,” says Danny Gonzalez.
Set goals and priorities
FutureLabs has already achieved groundbreaking results. Quantum’s machine learning tool and door-to-door mobility service were co-developed with startup partners, JNCTION and IOMOB, respectively.
LNER continues to look for new sources of inspiration and has just launched the third group of its accelerator. Selected startups receive mentorship and funding opportunities to develop and scale technology solutions.
According to Danny Gonzalez, this targeted approach helps structure LNER engagement and investment in the startup community, giving it a competitive edge.
“It’s not like what I’ve seen elsewhere where innovation initiatives tend to boil down to spraying and praying,” he notes. “The startups we work with have a clear understanding of the problems they are trying to solve, which leads to a much higher success rate. »
Specify the problems to be solved
Danny Gonzalez advises other professionals to be clear about the problems they are trying to solve through digital transformation. “Know what your priorities are and take the business with you. It’s really important for a company to understand the opportunities digital can bring in terms of how the organization operates,” he defends.
“We are lucky to have a board that understands that railroads are not keeping up in terms of the digital offering. But we have put in a lot of effort to understand the challenges and find the solutions needed to be competitive in the future. »