So it’s no surprise that the rail industry jumped headlong on the hackathon bandwagon, keen to get a piece of this exciting way of bringing digital innovation to their own staid sector. One organiser of multiple rail industry hackathons suggests that the coding events can find technological solutions to “the major challenges of rail within a few hours.” Is that possible given the complex issues that our rail network is currently facing? Of course not.
The reality is that the rail industry knows little of innovation, and ironically it is the hackathons themselves which are holding the industry back by hampering the development of any real cutting-edge technology.
Hackathons are a dated model and cause a fundamental market distortion in which it is believed that skills and products should be delivered for free in the name of so-called innovation. How many hacks thrown together by sleep-deprived, caffeine-fuelled coders at hackathons actually make it? How many competition entries fully serve the needs of the complex organisations they are put together for without detailed input or stakeholder guidance? Very few see the light of day, let alone develop into long-term commercial projects - they are an exploitation of free labour, and certainly not the hotbed of innovation they are made out to be.
One big issue is that the duplication of products and services results in a vast amount of publicly-funded trials which never go any further than just a pilot. In 2015, a group of British railway companies held a 48-hour hackathon session on board a train. One of the teams came up with an idea for a piece of tech which would scan train carriages and alert passengers to empty seats. A useful idea, but one which never materialised in any commercial form until this summer, when British franchisee London North Eastern (LNER) unveiled a McLaren-designed seat sensor to do the very same thing which, safe to say, had nothing to do with the original hackathon idea.
Pilot schemes and product trials are, as a rule, worthless to start-ups and SMEs, wasting precious resources for no financial reward. They need commercial contracts to remain viable and attract investment, and these don’t come from hackathons or competitions - they come from well-run procurement processes, with commercial products properly commissioned through research and genuine collaboration. This what you find in sectors outside of rail. However, transport, and in particular rail, seems obsessed with disconnecting commercial viability from critical services and solutions.
Take one European rail operator for example which recently contacted Zipabout recommending that we submit our Connect product to their new ‘Innovation Challenge’, designed to uncover ground-breaking technology for identifying travel disruption and providing information to passengers. The competition winner, whose product would be judged on “wow factor” alongside the more conventional feasibility criteria, would land an unpaid pilot in 2019.
The operator was already familiar with us, thought we were a “very interesting party” and considered Connect to be “highly relevant” to the challenge. Unfortunately, despite having identified their business challenge and recognising that we already possessed a relevant solution, the option of commercially procuring the product was clearly outweighed by the attraction of potentially obtaining it for free as a so-called “pilot.” If our innovation process is going to boil down to “Work for free to win the chance to work for free a bit longer,” do we really think the greatest solutions are going to be forthcoming?
It isn’t solely hackathons and the rail industry, however, which are guilty of this flawed business model. British government agency Innovate UK was set up with the objective of boosting innovation in small businesses, and to hand out grants in order to do so - more than 11,000 since its launch in 2007 - usually through funding competitions. With an average grant of £95,000 for new projects in 2016-17, this seems like a promising way of getting new businesses off the ground.
In reality, however, the vast majority of these publicly-funded ideas struggle to move beyond the trial stage, and certainly don’t lead to full commercialisation as intended. Many are held up by government red tape, end up costing the SME time and money they can ill afford, and many are duplications of the same concept. There is no doubt that providing support to small businesses is indeed crucial, but R&D funding competitions leading to worthless pilot schemes is not the way to do it.
This is where accelerator schemes should position themselves as the answer, but most unfortunately fare no better. Heralded as essential support programmes which aim to grow early-stage businesses into the next Google, the better ones such as Brent Hoberman’s Founders Factory provide excellent access to a cross-industry panel of knowledgeable experts, as well as connecting start-ups to a valuable network of investors. The bad accelerators mirror the hackathon model by taking up SME resources and skills for little reward, and often go one step further by taking a sizeable chunk of equity for good measure.
So what is the answer?
It is vital that we recognise the proper value - and the uniquely brilliant opportunities - that SMEs and external input can make to a corporation. From the discussions we have had with clients across Europe, it is obvious that we are not alone in realising that, exploitation aside, the current innovation as a novelty approach is failing to deliver results. But that’s beginning to change.
Recently we were asked to join the Beyond 1435 programme in Berlin. Beyond 1435 is a collaboration between German Rail (DB), Swiss Federal Railways (SBB), Siemens and Bombardier that looks to create commercial relationships with technical and innovative firms that have proven their offering, and now want to develop their business.
Each session is hosted by senior decision owners - with budgets - from the operational business, so any idea is aligned from the outset with a product owner who can take it forward. It is then possible, over several weeks, to discuss and explore the potential to build a commercial solution with input from both sides - nobody wins a prize, and nobody has offered us a hoody.
Beyond 1435 also demonstrates the enormous value in large companies coming together to drive innovation through collaboration. In the transport sector, where a passenger journey rarely takes place over a single mode, true innovation that benefits the customer can only be realised when operators come together to share expertise, data and good practice.
We also need to encourage corporations to invest internally in the skills and people required to develop innovation. We need to remove the fear of failure in a commercial context and offer these competitions and POC ‘pilots’ long-term contracts if they deliver the agreed outcome. Corporations need to invest both knowledge and money - not through a gimmicky event but as a mutually beneficial process for developing real solutions.