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Carl Ice, CEO of BNSF, welcome to Stanford and systems leadership.
>> Thank you, I'm thrilled to be here.
>> So tell us a little bit about BNSF, for
our viewers who don't know anything about the company.
>> We're a railroad, we do handle some passengers and,
of course, it's very important we do that safely and on time.
But the vast, vast, vast majority of our business is freight.
We are part of Berkshire Hathaway.
A few years ago when Warren Buffett was writing his annual letter,
he asked us to come up with some of the stats, of the amount of tonnage we move
between cities in our country and we still use it today.
15% of all tonnage between cities, regardless of weather the cities are in
our geographic coverage, and regardless of the military transportation move on BNSF.
We do something important.
I think that's why people really like being railroaders,
is they know they're doing something that's important.
Another reason they like being railroaders, is we do that one thing,
we move goods and commodities from where they are,
to where they need to be to be useful.
But then we have many, many functions that support those.
What we run with, what we run on, our dispatching center,
which is much like an air traffic control center.
And all the things around those, in addition to traditional functions, so
people have a chance to do many things and many roles,
if that's what they want to do.
>> Now in this country while railroads are very important,
for making sure that we can move people and goods across the broad landscape.
Companies been around the long time, how are technologies changing the business
today, versus what it have been for the last 100, 150 years?
>> Well, we are almost 160 years old, >> Wow, if we moved what we moved
then the way we moved it then, you and I probably wouldn't be talking today.
So the technology has changed a lot and it's across our business.
It's really hard to pick a couple things,
that could be our locomotives that are tremendous machines that move.
We can move one ton of freight over 500 miles on a gallon of diesel fuel.
They're like rolling data centers, so that by itself is technology.
The way we plan uses more technology,
the maintenance we do on our railroad is deeply based on technology.
Now where we use predictive methods to know where we need,
to work on the railroad, and
I'd tell you our railroad's in the best shape it's ever been in.
It also changes, of course, because it changes what happens with our customers.
And as they change and they develop, or even as their markets change,
then that means that we need to adjust and change.
So on the one hand, you have coal,
that not that long ago was 25% of all railroad's business.
It's not the business horse it was for electricity,
it used to be over 50% of electricity in our country was generated by coal.
It's much less than that now, and we're down from that 25% to more like 15%,
so that's changed and
how their whole business has changed, that's had a big impact on us.
On the other side of the things is in our consumer business,
how consumers buy has an impact on us.
As they moved away from bricks and mortar and buy it online.
I won't tell you that's necessarily great for
us, because moving things really fast isn't what we do, but we can do it.
We can move things quickly enough, with also the transparency people now expect to
have, to be able to serve that market.
And we think we can continue to grow there.
That consumer products area is about half of our market these days.
>> So as you look at changes in technology and other industries,
it might be shipping for overseas.
It might be electrification and autonomous trucking,
how does that impact your business?
And how do you make changes to your organization,
depending upon changes that have happened outside of your company?
>> Well it all effects us I think, and
I mentioned the great opportunity moving consumer goods.
And almost any trucking company you would name UPS, FedEx, Snider,
Swift, Hunt, all those people have big relationships with us.
So on the one hand, they're a way we go to market together and move a lot of freight.
As they gain efficiency though, that could have a big impact on us.
So if they're, if they're working on autonomous or
they're working on batteries, then that could have an impact on us.
Honestly we work on the same things, but
I think it's always important that a company works
to drive forward adding technology, not for technology's sake, but for a purpose.
And those purposes could be productivity,
they could be capacity with something like movement plan or advances in the signal
system that controls how our trains run around the systems.
Or they could be the way we give information to customers,
which also then helps us grow.
And lastly, again, those same thing that help some other groups could help us,
that maybe a market's open to us that was never open before.
>> How do you think about developing those new technologies internally,
versus partnering with other people outside?
>> Well, we would do both, I think you have to do both.
I think you have to have a certain capability on your own as a company.
I think every time when there's a partnership,
whether it's around technology or whether it's one of our key buyers,
then you come together for a reason.
You each have something you bring.
If you're using somebody external it's because
they've got a capability you don't have, or one you potentially need to grow.
And then you work together towards a common goal.
I think maybe the difference with an established older company, and
a smaller tech company, might be the range of risk reward that one could do.
If you're dealing with a great big company,
maybe they can have a greater reward with a greater risk,
because they've got the capability to sustain that.
Whereas a smaller company that it's, doing a tech startup with is, might not.
But beyond that I think it's a lot the same.
You figure out what each of you are bringing,
what you're trying to accomplish together, and then work towards doing that.
>> So, now you've been in the railroad business a long time.
>> A really long time.
>> As you think as a systems leader.
You know, understanding how everything interconnects together.
What are the two or three things you've had to change and adjust,
in your leadership style in the last few years?
Well, I really want to start the answer to that a little differently.
because I think there's a lot about leadership that's enduring, and
we've worked on leadership for a really long time.
Leaders matter, leaders count, and it makes a difference to an organization.
And so I think the greatest leaders always have,
a set of skills that they can bring to place for the circumstances they're in.
And so some of the things one might use more now,
that may not necessarily be something that you didn't do before.
But I would say communication, always been important, even more so now.
Transparency's really important, we have over 40,000 people at BNSF.
Getting all 40,000 people in the same way,
you can only do it if you're transparent about what you're trying to accomplish.
Why how you're doing against that.
And I think in today's world, people expect that they have a dialogue and
a conversation, so it's not just a one way communication.
So we spent a lot of time trying to be out with with all the folks at the BNSF,
and again, have a conversation with them.
Not to have to tell them what is going, on but have a conversation.
I think it's not a different thing but
certainly important where you do it, it's always been true where you spend time.
Is what people think are important, and so
certainly as we have technologies we need to understand.
It's important I spend time there, or
if we have something we may roll out that could make a difference.
So we have a thing called positive train control, that's now a government mandate,
that actually BNSF started before it was a mandate.
We've had a monthly meeting for five years for, how are we doing against that,
what are we learning, how do we need to make adjustments.
because I think it's important that I do that.
And then I think the other thing I would say is that, also
companies with long histories, we've had things we've done that we're successful.
We've already talked about coal once already.
That's an example of that, that it's hard to let go of that, and
so, three or four years ago, maybe five.
It was starting to become clear that coal was going to be lower, but
that really wasn't easy for our whole organization.
To recognize and react to the ways that we always do things, and
how we maintain that part of the track, and would it really be low and so forth.
And so that was the case where it was I think, for almost senior leaders to say
this is going to be different now, we have to have a different plan.
So I think the things I would talk about would be communication where one
spends their time.
And then again sometimes at BNSF we say leadership situational,
normally empowering, sometimes directive.
And I think sometimes, if there's something that'd going to change, and
we know we have to react to it, that's the time to be directive.
>> So BNSF moves a lot of very important material, energy, foods,
things that are important to our society, but also can be dangerous to move.
How do you make sure that safety is embedded into what you're doing, and how
do you deal with government regulation, oversight, involvement in your business?
>> So, course we start with safety,
[INAUDIBLE] doesn't require government regulation.
And we do move things that are very crucial at, talked about that earlier.
We do something that's important,
some of those things are very important to handle right, they can be handled safely.
When we think about a given commodity, we think in terms of a mitigation.
Nothing happens, we think then, well, first prevention, then nothing happens.
Then mitigation, that if something does happen, how it's contained, and
then response.
But all that really goes back to, as a start,
that prevention goes back to our raw safety program.
It's the most important thing we do.
We start every discussion with that,
we expect everybody to take responsibility on that.
For that we've worked hard to have a recognition, that safety's about taking
accountability for your own safety but also for that of your coworker.
We've had things we've done, to try to arm people with the tools to do that.
I think the real magic is you arm them with the tools, then they start to have
the expectation, somebody's going to say something to me, and it's not bad they do.
It's good they engage, and so I think that's changed and
driven our safety culture and, again, that's very important.
In terms of regulation, railroads are,
some people think railroads are a government organization.
It's amazing how many people would say, you actually own the track you run on?
So regulation has a big effect on us, and we always have some
additional things where I, we're sometimes say we're special.
So we don't just have OSHA, we have the Federal Railroad Administration for
safety, for instance.
And there are a lot of regulations that we have, we don't, and
we recognize those people have a job they have to do to protect public safety, so
I will never suggest they shouldn't.
But over time there's also things that come along,
that regulations come about that.
That have unintended consequences,
and as technology changes, those regulations don't change.
So one of things we're spending a lot, in terms of things we spend time on.
One of the things we're spending time on is just that, how we can use technology,
to move from a command of control sort of regulatory scheme,
to aperformance sort of scheme.
And so we can have an autonomous detection car, they can go out and
run across the railroad, and find where are defects and respond to those.
And if we can demonstrate that we drive defects down, and incidents down, and
all of that.
We can do that,
as opposed to making sure somebody goes out and runs over the track everyday.
And those people do an important job, I don't want to minimize that one bit.
What they can do that way, versus what we can do with technology,
sometimes can completely change how the approach should be.
>> One of the themes that we're looking at in the course,
is how the mix of physical and digital is changing businesses.
If you look forward the next five to ten years, what do you think will be
the biggest impact of technology and digitization on the BNSF?
>> Well that's hard to pick one.
We've talked a lot about technology already, and
I think railroads have long been users of technology.
I think once PTC's in place as a safety system,
I think that we can bring some things to bear with that,
where we tie together something we call Movement Planner.
Which helps the dispatchers with how you plan out, how all the trains would run.
With other of our systems that we could have more
advanced train operations, and control those in different ways.
So I think as all those things come together,
those could be the biggest changes.
Some of those could be how the authorities for how the trains work,
instead of having a fixed distance between speak.
That could be dynamic moving along, and you get more capacity that way,
I think those things that could be the biggest change but we'd find out.
>> Carl we are very appreciative of your coming to Stanford, BNSF is very important
to our country, it's very important to all of us as society.
And we're grateful that you'll come to Stanford,
and help us learn more about your business, and explain it to the students.
>> Well, I'm thrilled to be here, and
I expect I'll get more out of it than the students do.
>> Carl, thanks for your time.
>> Thank you.
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