20/06/2021 – By Frédéric de Kemmeter – Railway signalling and freelance copywriter – Suscribe my blog
(Version en français)
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I have just finished the french book « Gafanomics » *. Invigorating. The book makes us think about the evolution of the dominant economic model. Whereas industrial society is still based on the product, Gafam (Google, Apple, Facebook, Amazon and Microsoft) has the customer as its sole objective. A definition that must be taken in the sense of use of things. For Gafam, technicality is of little importance. It is the time spent and the appreciation of the product that counts above all. In short, it is the opposite of the railway. An unfair comparison?
Of course, the first thing that comes to mind is that the flexibility of digital – an immaterial object – makes it much easier to offer an optimal experience, often formally free of charge, that can be customised on a large scale. Gafam have almost no assets, apart from expensive servers. Impossible in a railway environment? Not sure. The German company Flixmobility – through Flixtrain – is one of those start-ups that wants to disrupt the railway business model with the help of powerful servers and an army of developers rather than an army of railway workers. But beware of quick comparisons. Guillaume Gombert, one of the authors of the book, explains above all that a large number of companies could be inspired by some of the elements that make Gafam live: « we can draw inspiration from them to improve the quality of execution of our business, to improve the lives of our employees and our relationships with partners. »
Of course, the Gafams fascinate, amaze and worry established structures, such as taxis (Uber), retail (Amazon), hotels (Trip Advisor) and… railways (left out of the travel comparators). Sitting on mountains of data, they are gradually building what all the greatest leaders once dreamed of: a global access, spanning the entire planet and extending to regardless of where you live. This instant and immediate access provides phenomenal power. Each new, product or innovation allows Gafam to further consolidate their power and extend their influence.
But despite simple perception of them all as “tech” companies, their core revenue sources are clearly different. In fact, these companies aren’t in the same businesses: they’re not competing with each other, or really anyone else. Apple is considered a global benchmark for high-end electronic hardware and entertainment. Apple has achieved a lot of external growth. She has acquired many companies in the field of software automation, virtual assistants or health sensors. Google and Facebook earn most of their revenue from advertising thanks to search engine and social media. Microsoft and Amazon are in the field of mixed retail, computing and media. In other words, these 5 giants occupy different spaces, but which encompass almost all of our social and professional activities. The railroads therefore have no chance of escaping this hold. But why are these actors perceived as a threat rather than an opportunity for the railways?
Firstly, because of their clearly American nationality, which, as always in Europe, provokes waves of suspicion when it comes to the Anglo-Saxon world. This suspicion is further accentuated by the European culture which still largely associates the railways with a social service, where digital business has no place. The social history of the railways also plays a role: the railway culture is the exact opposite of the world of start-ups (job description, career development based on the law, official wages, strong hierarchical and administrative supervision, etc.). Secondly, the disruption caused by Gafam concerns mobility in the broadest sense. When thousands of requests for carpooling or long-distance bus routes are aggregated on a large scale in one app, it is clearly to avoid the train. Finally, there is access to sources of financing. The railways have always been – and still are – adjustment variables for public finances. Liberalization attempts to breathe new life into the operation of trains, with mixed success. The ticket for new operators is still too high and the priorities are rarely in digital. All this explains why it is difficult for rail to take anything positive from Gafam. There are, however, some reasons for hope.
The political world has changed, it is younger and more attentive (the Finnish Prime Minister is currently 36 years old). They no longer want to bail out railways at any price or encourage costly rent-seeking situations. The new recruits to the railways have also changed: they are « digital natives » who understand better why there are automatic machines in the stations. But which also ask significantly more places to store the bike …
Railways can make serious progress and learn some lessons from Gafam in the mobility practices of its own customers. The digitisation of tickets is the ideal option for finally knowing with more finesse the occupancy rates of trains and the days and times of greatest use. Today, rail applications are limited to the railway perimeter. A situation dictated by the contracts with the Authority and the lack of incentives to go beyond the station. « Why would go through the trouble, we are paid anyway, » justifies an anonymous executive. However, the challenge for the future is also to know what people do outside the station. A complete analysis of their journeys would allow the best conclusions to be drawn.
To get to this point, rail must offer an application that goes beyond rail needs. These are the famous peripheral options, which appear to be unrelated to the core business, but which in fact allow it to scrutinise the use of things by its own customers. Apple uses this technique extensively to ‘retain’ its customers in its ecosystem, with iTunes, its App Stores, iBooks Store, Apple Music and other even more ancillary sales which add up to just 11 percent of the company’s revenue. Digital companies take all these low-value “raw” data and turn it into high-value competitive advantage: a better product or a more efficient process. In the rail sector, this would mean creating an app… where you don’t see too many trains, but which is attractive and used for many other purposes, to provide enough data to feed large customer databases. This avoids unreliable counting on board or in stations, which are always very approximate.
This makes it possible to see which stations are busier than others and how passengers are distributed (often badly) along a platform. This would also allow us to know the realities of train use on certain evenings (Fridays and weekends). Perhaps in the middle of the week these late trains are less necessary. This would also make it possible to know how many customers are travelling alone, as the sale of tickets does not tell us anything since each member of a group can buy a ticket separately. The use of restaurants in the city could give an idea of what to put in the big stations, with what choice and quality. The same applies when local residents use station shops. They don’t take the train, but they keep the station running.
Moving from a « product » policy to a « customer » policy is a real challenge for rail. The weight of assets (trains-infrastructure) and cultural habits still largely shape rail policy, while the automobile and aviation industries are progressing in an environment that is more open to new technologies. Isn’t Tesla said to be an « iPhone on wheels »?
* « Gafanomics, comprendre les superpouvoirs des Gafa pour jouer à armes égales », Fabernovel, with François Druel and Guillaume Gombert, éd. Eyrolles, 242 pages.
20/06/2021 – By Frédéric de Kemmeter – Railway signalling and freelance copywriter
Suscribe my blog
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