SMRT CEO Desmond Kuek Speaks on Getting SMRT Back to Health

SMRT-CEO-Desmond-Kuek-Speech-Singapore-Healthcare-Management-Congress-2015

Singapore Healthcare Management Congress 2015
18 August 2015, Sands EXPO & Convention Centre
SMRT President and Group CEODesmond Kuek

Ladies and gentlemen,

1. Good morning. Thank you for inviting me to your Congress. I wondered at first what I might be able to meaningfully share with you; what transport and health might have in common. Then, on 7/7, when a problem in one part of our arterial NSEW Lines brought down the entire transport network, it became immediately evident how very much our public transport network is like the human circulation system.

2. Keeping that system well requires regular health checks throughout its life-cycle, with accurate predictive diagnosis, timely preventive maintenance, surgical corrective interventions, renewal of parts when necessary, all while ensuring uninterrupted service. Like with the health-care industry, our transport challenges are also about sustainable financing frameworks, safety and reliability of the network, availability and frequency of trains to ease congestion, maintainability over whole asset life and the timeliness of renewal, cost-benefit of services and quality, affordability of fares across transport modes, subsidies for needy commuter groups, management of customer experience and commuter expectations… It’s a very long list of challenges and I suspect they sound uncannily familiar to many of you.

3. I would like to share with you how in SMRT, we are transforming ourselves and getting back to health again.

THE BACKDROP OF CHALLENGES

4. But first it would be instructive to jog through a quick history of SMRT’s development as part of the Singapore transport landscape so that we can understand the context and backdrop of challenges faced. The idea of a rail system was proposed as early as 1967, two years after independence. Detailed studies and reviews were carried out, but after more than a decade, the public transport plan remained inconclusive. Should we invest so much in a rail system, or stay with a lower-cost public bus system? In a significant leap of faith for a small country, the Government declared in 1982 that it would build the MRT at a whopping $5B, Singapore’s largest infrastructure project then. More than just a transport investment, the MRT was viewed in its wider economic perspective as a boost to long term investor confidence and enhancement of the intrinsic value of Singapore’s real estate.

5. The Mass Rapid Transit Corporation (MRTC) was established in 1983 to oversee all roles and responsibilities of the train network, the precursor to the now separate entities of the Land Transport Authority and SMRT, with the latter subsequently incorporated in 1987 to operate the NS and EW lines. A 5-station section on the NS Line between Yio Chu Kang and Toa Payoh was officially opened on 7th November 1987, and work continued through the years to expand the network.

6. In 2000, SMRT was listed on the Singapore Exchange, and in early 2001, it merged with bus and taxi operator, Trans-Island Bus Services (TIBS) Holdings, to become Singapore’s first multi-modal transport operator. The other is SBST who operates the NEL and DTL. Today, SMRT is the dominant rail operator in Singapore with business lines also in buses, taxis, commercial property management, media and advertising. The rail network has become an integral part and a symbol of the modern metropolis that is Singapore. By its very nature, SMRT is incredibly public facing, with passenger journeys crossing the 1 billion mark as of last year.

7. In a move to integrate the various modes of transport, a distance-based fare structure was introduced in 2010 so that commuters who travel the same distance would pay the same fare regardless whether they travel from point to point directly or make transfers across modes. Concession schemes for special interest groups were introduced, many of them funded from SMRT’s profits which grew through successful commercial enterprise in the transit network. These commercial non-fare earnings have helped to keep transport fares low. The question of maintaining fares in Singapore at an affordable level while ensuring the viability of the public transport operators continues to be a politically thorny issue. When compared to major cities around the world, Singapore’s public transport fares are actually amongst the lowest. In fact, fare adjustments have not matched the exponential increase in operating costs over the years, and significantly lags the theoretical cap allowable under the fare formula used by the Public Transport Council to set fares.

8. In a way, the run-up in commercial profitability in the last decade masked the issues which were to later surface about rail financial sustainability in the face of aging assets that needed to be replaced or renewed. With rising profitability, questions were raised too about the reasonable level of returns for shareholders, many of whom are retirees simply looking for a steady dividend, and the appropriate amount that should be sunk back as re-investment to upkeep the system. The transformation of the transport industry is now underway with a new fee-based bus contracting model where government takes on all fare-revenue risk. The intention is also to migrate the rail business to an asset-light model to facilitate future expansion and renewal of the rapid transit system by the authorities in a more timely and sustainable manner. These are however not easy industry changes to implement and there are many consequential effects to take care of.

9. Meanwhile, those oldest NSEW lines are now nearly 30 years old and in urgent need of mid-life upgrade or end-of-life extensions or complete replacement and renewal. These are currently being dealt with through an ongoing multi-year, multi-project effort while still keeping the system live. Passenger services continue to run for nearly 20 hours each day, even more intensively and with higher loading than ever before. A doctor friend recently commented to me that what we are doing is like heart surgery while the patient is still awake and complaining about the pain.

10. Recent troubles in SMRT however are what has captured public attention most vividly. Two vandalism incidents in 2010 and 2011, the Dec 2011 train disruptions and more recently, the 7/7 disruption, have shaken public confidence and affected the institution and reputation of a Singapore-grown company that had been painstakingly built up over 28 years.

SMRT Staff all hands in

11. Against such a formidable backdrop of challenges, where do you start? How do we define the problem? What is the roadmap going forward? We decided to focus squarely on people – getting our many diverse stakeholders on board and on track, to be on top again. This key focus on people is seen in our efforts to (1) go back to basics with our shared vision, mission and values and a comprehensive strategy for action; (2) centre on the commuter in our approach to service and recovery; and (3) inspire a service excellence mind-set in all 8,500 of our staff. Let me talk briefly about each of these.

GETTING ON BOARD – BACK TO BASICS

12. We started by going back to the basics. No change effort can be sustained without conviction, and our people must first believe that there is a need for change and agree on the direction forward. So we brought all our staff together by forging alignment towards a common vision, mission and core value system.

13. We reviewed our Vision statement and kept it because it remained apt. “Moving People, Enhancing Lives” spoke not just to our physical transport goals, but also emotively about winning the hearts and minds of our commuters.

mother and baby on SMRT train

14. We refreshed our Mission statement to be more relevant to the times, placing special emphasis on key ideas such as people’s choice, world-class, safe, reliable and customer-centric. Our aspiration was that people would take public transport as their preferred choice – because they want to and not just because they have to.

15. And we identified a set of shared core values to define ourselves and shape collective and individual attitude. Not coincidentally, they spell SMRT n I, signifying the mutual relationship and commitment between the company and each member of the organisation.

16. Having a vision and aspiration clearly aren’t enough. They have to be meaningfully translated into strategy and action. So we decided on 5 strategic thrusts to guide our priority of effort in bringing about a robust recovery across all fronts in the company:

• Improving Operational Performance;
• Enhancing Customer Service;
• Strengthening Workforce Health;
• Entrenching Organisational Excellence; and
• Ensuring Sustainable Growth.

17. These five strategic thrusts were developed into a weighted scorecard that tied everyone’s incentives to their attainment, from CEO to the worker on the ground, obliging everyone to build trust and seek stronger collaboration across functional lines and responsibilities. At the heart of this 5-prong strategy however is people. People underpin operational reliability, customer-focus, strong workforce relations and productivity, process excellence and business growth.

GETTING ON TRACK – FOCUSING ON CUSTOMER/COMMUTER

Commuter References

18. To get everyone on the right track, we placed our focus squarely on the commuter. While system efficiency continues to be important and has been the dominant consideration in early design and implementation, the quality of our public transportation network is no longer defined only by technical and operational KPIs. Numbers and statistics mean little to the commuter. Their reference is not the international benchmarks from which we know we have one of the best public transport systems in the world, but on the substantive quality of their travel experience – measured specifically at the time and place that they use the system. Their perspective, not unexpectedly, is shaped more by how far it is to walk to the nearest station, how long the wait time for the next bus or train is, how crowded the buses and trains are, and whether arrivals are as scheduled.

19. So although we have 180 km of rail network and 140 stations in Singapore, this is an irrelevant statistic for that resident who has to walk 2 km to find the nearest node. Despite running a tight schedule with a cumulative train distance travelled of nearly twice around the equator each day, this apparent trivia is of no significance to that passenger who was late for a job interview because he was on that particular train service that happened to be delayed for a few minutes. And although our average train service availability is more than 99.8%, this is of little comfort when the passenger has to put up with the rush hour crunch on congested trains.

20. Improving rail network performance therefore goes beyond the rationality of operational and maintenance data. Managing public expectations and satisfaction levels is an emotive issue, entwined in the socio-economic well-being of the country. It explains why the national conversation about public transport revolves around that desire for a reliable essential service, an affordable public good and a vital ingredient in our quest for liveability and sustainability.

SMRT Care Zones

21. So we are rethinking the older station architecture and commuter flow because demographics and travel patterns have changed since they were first constructed 30 years ago. Much has been done to improve accessibility for a more inclusive society especially as our population ages. Recognising that commuter safety and security are essential to quality rail service, we demarcated “care zones” on station platforms for passengers with special needs so that they can be monitored through CCTV, with emergency telephones nearby. We are even revamping in-train displays so that commuters can see the location of exits in the destination stations as even this can be aggravating. To give commuters more real-time information on services and delays, so that they can make informed decisions early, we reworked our apps on mobile devices, in addition to Twitter and Facebook to disseminate real-time network information. And for those who remain un-connected to any forms of media, we rolled out a traffic light system at the station entrance – with green, amber and red – to denote the extent of crowdedness in the stations so that passengers can choose an alternative mode, set aside more time, or have a coffee outside if the network is disrupted or overly crowded at that time.

GETTING ON TOP – DRIVING A SERVICE EXCELLENCE CULTURE

22. The third key area that we embarked on aggressively was to lead a culture change. No change in structure, technology or process can have lasting value if there is no accompanying change in culture. Building on the existing culture of compliance and commitment in the company, we wanted to bring about a higher degree of team collaboration, open communication, continual learning, critical thinking, and customer-focus.

23. Shaping and nurturing that desired culture takes time, and is a journey more than a destination. Despite more pressing operational reliability and financial sustainability concerns that needed to be urgently addressed, we felt that it was as vital to find and define that desired culture right from the onset. Just because one can never quite finish it doesn’t mean we shouldn’t ever start.

Communicate the why behind what we are doing - Desmond Kuek

24. In leading that culture change, communication was key, in straight-talk and straight from the top. We opened up every possible channel and opportunity to engage staff directly, through town-halls, informal and unannounced visits to our business units, dialogues, union cascade meetings and small group discussions with junior staff. Even now, I continue to meet some cross section of staff every single week – to communicate not just the what, but also the why behind everything we’re doing. My senior management team do the same to translate key priorities in terms and language that the ground can relate to. There is no better way to build trust and confidence than to communicate directly, personally and honestly.

25. Fostering an open climate was next. On my first day at work, I sent out an email to all staff titled “What are you thinking?” It was an instigation to them to challenge the status quo, as well as an invitation for them to tell me candidly what they thought was good that we should keep doing well, what was worth doing that could be done better, and what should really be junked because it was unproductive or irrelevant except that nobody dared or cared in the past to say so. It was about building shared ownership, breaking through hierarchy in the company, and forging top to bottom alignment amongst all our staff of the company vision, shared values and desired ground actions.

26. These efforts form part of a continuing effort by leaders at every level to set cultural norms that engage, energise and empower the entire workforce. Ironically, soft fuzzy subjects like culture need firm frameworks and clear processes to make them work. To lead and drive new behaviour, we needed a unifying platform that all 8,500 staff in SMRT who come from all walks could easily identify with. We chose Service Excellence because it applied to everyone, from front line staff to back office admin and technical crew, and because it was tangible, implementable and measurable.

27. We engaged Disney Institute and NTUC to work with us to tailor programmes for different groups, in English and Chinese. The customer was defined as both the commuter and our own internal staff. Every single employee from myself to bus drivers, station staff and maintenance crew attended a localised module that set out to build a mind-set and common purpose of building trust and bringing on smiles, every day and in everyone who journeys with us. Why Disney, some have asked me? We chose Disney as we needed to fire up a new level of imagination about customer experience and what it takes to go the extra mile in service excellence. That’s what’s iconic about Disney. What’s less obvious though is that the entertainment world of Disney is really also about engineering, transportation and massive crowd movement and control.

28. Our staff left the schoolhouse empowered to do more and better. It helped that their supervisors back in the workplace had similarly undergone their training too, and were aligned and supportive of ground up changes to improve service quality in the daily routine. Slowly but surely, we are fostering a climate where service excellence can be practised into habit, and both attitude and action can develop into second nature.

29. The results have been most encouraging and we have won numerous Service Excellence accolades in the past year. Even more heart-warming are the stories from commuters about staff who had gone beyond the call of duty to make a difference in someone else’s day.

THE CONTINUING JOURNEY

30. It is a continuing journey. And there are road bumps along the way even as we gain critical momentum on the pathway to excellence. As I told the Straits Times recently, whatever has happened in the past doesn’t faze us, it only makes us stronger as we learn from the lessons, even if there are bitter pills to swallow.

31. There is much more to be done to improve rail reliability and renew the aging network, but while we strive on with a zero defect attitude, we are encouraged that efforts have been positive. The train withdrawal rate for every 100,000 km, a key measure of rail reliability, has improved more than threefold from 3.3 in 2012 to 1.03 as of end-June 2015 on the ageing NSEW Lines. It is the lowest rate in seven years. And although that recent major network disruption on 7/7 is seared in our minds, the rate of incidents lasting longer than 5 minutes has improved significantly from 1.54 to 0.73 last year.

32. We have also recovered on all other fronts. We were certified this year with ISO 55001 for rail asset management which is a significant international quality standard, and are only the second company in Asia to attain this. Bus operations have turned around from the loss-making spell suffered over the past four years to a small operating profit in the last financial quarter, and customer satisfaction over bus service quality and punctuality have improved. Despite these successes, more still needs to be done.

33. We engaged Towers Watson to do our organizational climate survey early this year and they found that 9 in 10 of our employees are proud to belong to SMRT. That surprised me, considering how difficult the work environment is. Our sustainable engagement score of 86% – which measures how engaged, energized and empowered are people are – is considered best in class in the world. We were awarded by NTUC this year with the May Day Plaque of Commendation (Gold) for our efforts in strengthening the partnership with the Union and introducing progressive wages and careers for our workers. It’s an especially meaningful award for us coming two years after that illegal bus strike in Nov 2012.

34. In our organisational excellence efforts, we have also gained ground. SMRT won a global risk management award in 2015 by the renowned London-based Institute of Risk Management, against an international field, for our efforts in delivering value through enterprise risk management. We are the first Singapore company to win this.

CONCLUSION

35. Let me conclude. I’d said earlier that, accolades and statistics, they tell us we are on the right track, but they don’t matter unless we can get people on board with us. We aim to keep winning back the hearts and minds of commuters and staff alike, through our sheer commitment to getting our basics and fundamentals right, and because we believe in putting people first.

36. Getting us back to health is not something that can be done overnight. It doesn’t come by chance, and past or present prognosis is not a matter of hope or despair. What is needed is to navigate forward with a calmness of mind, consistency of effort and constancy of purpose. We will need to continually evolve and innovate into the future, as we have done in the past that has brought us this far. We’re celebrating SG50. It’s as good a milestone as any to be… thinking again, planning ahead and implementing afresh the ideas that will shape the pathway of public transportation for the next 50 years and beyond. That journey needs to be taken with all stakeholders on board, regulator and operator, and most importantly with our public and commuters, to co-own, co-share and co-create the solutions that we want. We’re on track to getting there and getting SMRT on top again.

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