Episode 24: The Railroad…Where Innovation Produces Profit

Sometimes the best way to get ahead in business is to think small. Compared to the multi-billion-dollar titans in their industry, Rio Grande Pacific is more nimble, reactive, and able to communicate more closely with the niche market they serve. On this episode, Rio Grande Pacific CIO Jason Brown shares how his IT department mixes traditional IT, marketing and customer service to drive innovation. Because IT can become a profit center for any business… if you have the right mindset.
Listen More
All Luminaries Podcasts

Listen in to Learn

  • Why Rio Grande’s company culture was critical in driving technological innovation
  • How Rio Grande was able to easily transition their employees to new technology to increase their efficiency
  • Understanding their customers’ needs and pain points helped to identify new revenue streams and areas of opportunity
  • How Rio Grande is exploring the next disruption in railway… The Railway Internet of Things (RIOT)

How Innovation in IT Leads to New Revenue Streams

IT is generally considered a cost center in organizations. At best, we see the IT department as providing vital infrastructure to support the business; it’s part of the operating cost, not really an investment that pays dividends.

Jason Brown, the CIO of Rio Grande Pacific, is out to change that perception. He believes the IT department can be a source of innovation, finding new ways to meet customer needs – and, yes, generating revenue.

In this interview, Jason shares how Rio Grande Pacific stays nimble and aggressive, moving faster than their larger competitors. He also discusses how to overcome resistance to change and get organization-wide buy-in to adopt new technology.

Listen to the episode to learn how Jason’s IT department unites marketing, R&D, and customer service to create solutions that fit the company’s niche market.

Featured Luminary: Jason Brown, Chief Information Officer at Rio Grande Pacific Corporation

Jason Brown joined Rio Grande Pacific Corporation (RGPC) in 2010. As chief information officer, Jason oversees technology use and deployment for RGPC and its subsidiaries, sets department objectives and strategies, implements suitable technology to streamline internal operations, and spearheads infrastructure upgrades. In addition to virtualizing RGPC’s data center and server farms, he has also modernized the phone system with hosted VoIP system, installed wayside IP cameras for enhanced railroad operations visibility, and developed custom dashboard interface for third party dispatching services.

Prior to RGPC, Jason spent 11 years a consultant for Dallas-based IT Partners. During his tenure, he advised multiple clients, including Fortune 500 companies, on a variety of technology and network challenges, such as modernizing data centers, enhancing telecommunication systems, and improving help desk services.

For more information on how Rio Grande Pacific streamlined their IT operations…Watch Tales of Transformation: Episode 2

“We’re going to be a profit center. We’re going to make the company money. I think if a lot of companies looked at IT in that manner, they would do better.”

— Jason Brown, CIO, Rio Grande Pacific

Luminaries Hosts

  • Mark Schaefer Author, Consultant, College Educator. Mark is a leading authority on marketing strategy, consultant, blogger, podcaster, and the author of six best-selling books, including "KNOWN." He has two advanced degrees and studied under Peter Drucker in graduate school. Some of his clients include Microsoft, GE, Johnson & Johnson and the US Air Force
  • Douglas Karr Technologist, Author, Speaker. Pre-Internet, Douglas started his career as a Naval electrician before going to work for the newspaper industry. His ability to translate business needs into technology during the advent of the Internet paved the way for his digital career. Douglas owns an Indianapolis agency, runs a MarTech publication, is a book author, and speaks internationally on digital marketing, technology, and media.

NARRATOR: Luminaries– talking to the brightest minds in tech.
MICHAEL DELL And my hope is that we come together to share more than technology, and expertise, and products, but that we share a vision of a future that is better than today, a vision of technology as the driver of human progress.
NARRATOR: Your hosts are Mark Schaefer and Douglas Karr.
MARK SCHAEFER: Hello everyone. Welcome to another episode of Luminaries, where we talk to the brightest minds in tech. This is Mark Schaefer with my co-host Douglas Karr.
DOUGLAS KARR: Hello, sir.
MARK SCHAEFER: How are you, Doug?
DOUGLAS KARR: Fantastic.
MARK SCHAEFER: We’re going to have a really interesting conversation today. It’s kind of energizing for me because when I started in business, IT was like a pain in the– what kind of– what am I allowed to say on this podcast?
MARK SCHAEFER: Butt. It was a pain in the butt. It was a cost to be managed. You really didn’t even like the people working in IT. But we’ve had a little conversation here with our guest today Jason Brown.
And Jason is awesome because he is creating new business models from IT, which is how we should have been thinking about IT from the beginning. Jason is the CIO of Rio Grande Pacific. Welcome, Jason.
JASON BROWN: Thank you guys for having me.
MARK SCHAEFER: Well, I think we’re going to have some fun together. And I have to admit we’ve been interviewing companies from all over the world– cutting edge technologies, cutting edge ideas, startup accelerators, human genome research, cybersecurity. I have to admit, I’m a little surprised to have a railroad on the show with us today.
JASON BROWN: Wow. I don’t know how to take that exactly, but I’m guessing that’s OK. I mean–
MARK SCHAEFER: Buck up, Jason.
MARK SCHAEFER: Tell us about Rio Grande. Come on, we’re kidding you. Tell us about what’s going on.
JASON BROWN: So Rio Grande Pacific Corporation was founded in the ’80s. And originally, it was set up as a short line railroad holding company. Our owner– very aggressive, one of the greatest business minds ever in the railroad business.
So we owned and operated four railroads for 20 something years. As the opportunity to buy shortline railroads dried up, there was bigger billion dollar holding companies that are buying them. It’s hard to compete with that.
So in 2007, we started other business units that are railroad related– signal technology, maintenance away, track surfacing– just services for other shortlines that don’t necessarily have the resources to bring those types of talents in-house, or those services because it’s not cheap to do, in some cases, especially on the technology side.
DOUGLAS KARR: Your company is making headlines today because of its innovative use of technology. I’m curious with a company that is more than 30 years old, and maybe, you know, obviously a traditional business– that had to be a big hurdle to overcome to get that innovation mindset there. What happened as part of your company culture to make that happen?
JASON BROWN: Well, I think our company culture– we’re very aggressive, since we’re not a multibillion dollar company. So when a decision needs to be made to make a change of direction– whether it’s an IT, operations, or the future of the company, we turn really fast. We’re not an aircraft carrier. We are a cigarette boat, for lack of a better term.
We’re very nimble and aggressive. Our owner has been that way with us when we first started talking about, hey, let’s sell technology to other railroads. I think there’s something here to this. And he said, go. It was a five minute conversation.
And we’ve done fairly well for ourselves, frankly. We’re not we’re not General Motors just yet, but, you know. We can try, right?
DOUGLAS KARR: The great thing about your story is really– I mean, the cultural transformation has to come from the top. It has to be owned by the leader at the top– the person that sets the strategy, the one that ultimately owns the budget. So you had the green light. I mean, that’s something that’s so important in companies. And that seemed like it was pretty effortless for you.
Now, as the CIO, what do you do with that? Because we’ve talked to a lot of companies big and small, and they’re struggling with– what’s that first step as a CIO? How do you even get your mind around this challenge?
JASON BROWN: Well, I think it’s being able to sell the technology. And I’ll use an example is– there’s a software program out there that– back in the old days, our locomotive engineers and conductors would literally handwrite out the train orders. OK, well, I moved five cars from this track to that track.
And then it’s snowing outside, it’s rainy and cold, and their handwriting’s bad. And they fax it back to a customer service clerk, who pulls off the fax machines, like, I think he meant this or that. So we started putting tablets in the field.
And our Chief Operating Officer, who’s really a brilliant guy– we were talking about some of the challenges because he had some experience with it. And he says, you know, the good thing is the younger guys in the field– which there are a few– they’re a little more tech savvy and easier to adapt. And you get the older guys, and said, well, I’ve never had a piece of technology in my life. And said, hey, that’s great. You have no preconceived notions. Let me show you how this works.
So the buy-in wasn’t that hard. Leadership was pushing down. So there was– not to say there wasn’t an option, but it was very easy transition to get them in there.
So once you get the first one in there, now it’s easy to keep building up on that. OK, well, we’ve added this new thing. What do you think of this?
And that’s what we’ve been doing is developing new applications and services and just stacking them on our current platform.
MARK SCHAEFER: Talk about the infrastructure a little bit. I mean, did you have a good base to build on, or did you have to say, you know, we’ve got some housekeeping to do?
JASON BROWN: We’re a legacy MC shop. So we got to the point to where our storage array had grown from a few dozen servers to what it is today. And we kept just adding to our old EMC array– non-flash, very mechanical. Good quality stuff, never had any problems, but it got to the point where it’s probably time to just invest and buy an All-Flash Array.
And our IT director talked me into it. There were some waterboarding involved–
So we made the jump, and we did it. And frankly, the spread– the delta between when we started with EMC to where we are now with the Unity platform– it’s night and day. And I’m talking about as far as the tools available and whether that’s part of Dell or EMC that’s brought along. But it’s amazing.
I mean, it’s not something we ever worry about. It’s one of those devices that’s back in the data center that doesn’t require constant care and feeding. It’s like, you just forget about it. It’s there, it’s working. Everything is great.
That’s what we like best about it. And the performance and scalability is off the chart. I mean, it’s–
MARK SCHAEFER: And on that, I’m interested stability, obviously, efficiency is there. What are some of the areas that you had goals from an early standpoint? You know, obviously, there wasn’t profitability day one. But was it productivity, safety?
JASON BROWN: Well, we originally– we hit a wall on storage, and we said, OK. We’ve got to make a decision. So we made the decision.
But we wanted the decision to be based on a multitude of factors, not just, oh, we need more space. Let’s go buy the Flash. So we started looking at things, like, OK, well, our accounting system can run twice as fast as it used to. And you sell that to a CFO. That’s not a hard sell.
We start developing software, right? And our software development tools are on the All-Flash. That makes spitting out VMs a lot faster than it used to be. And the other piece is safety signal systems on the railroad. It’s important that those systems are running on a redundant hardened platform. And they are now.
MARK SCHAEFER: One of the interesting things that I’d like to learn from you because it really does kind of give us a glimpse at the future– we keep hearing how so many traditional businesses are going to become software-centered businesses. You’re a CIO, but you’ve also kind of got to have a hand in marketing this stuff. You’ve got to be connected to customers to direct your efforts.
So that is just fascinating to me. I mean, I’ve never really met someone that’s kind of been in that position before. And I’m imagining many of your traditional customers probably had a deer in the headlight kind of look– it’s like, you’re what? Tell me a little bit about this business metamorphosis for you personally, and really kind of becoming almost marketing.
JASON BROWN: Yeah. I think it’s kind of twofold because the Rio Grande Pacific Technology Group that we’ve created– we’ve got basically two customer bases. One is the shortline industry, which is near and dear to our hearts because that’s what we do. We recently started operating a commuter line in North Texas, which was a completely new business for us. And frankly, that’s the driver for a lot of the tablets and the Android apps that we’ve been developing for conductors there.
Very similar to what I told you about with the shortline– the guys used to handwrite everything. Now it’s all on a tablet, I got this many passengers on. But it’s presenting the data.
We’re in a hybrid cloud environment. Obviously, we’re between Microsoft, Azure, Oracle. We leverage a lot of different systems. But locally, everything on the flash that replicates up– I think that kind of puts us in the norm of most companies. I don’t know many companies that keep everything in-house or keep everything in the cloud.
But to answer your question, from a marketing standpoint, it’s a challenge because on the commuter side, people know exactly what they want. It’s not pure cookie cutter, but it’s pretty dang close. The shortline industry is pretty diverse. Every railroad is different. You’ve got railroads that move 5,000 carloads a year, and you have some that move 100,000 carloads a year.
So you’re dealing with different budgets. There’s shortline railroads that don’t even have IT staff. They outsource everything, which is kind of like where we raise our hand a little bit and go, hey. We can help a brother out over here, you know.
MARK SCHAEFER: Well, I’m curious about that. So how many shortline– is it hundreds of– so hundreds of companies. What is their reaction to you guys, you know, as far as technology advancement?
JASON BROWN: Yeah. The issue with the shortline is most of the railroads are owned [INAUDIBLE] the top three holding companies that own hundreds each, let’s say just for round numbers. And then you get another segment of midsize that own 10 or 12 different ones.
But the one thing they all have in common is they all struggle with technology. And they’re all driven by what the big companies– the big railroad software manufacturing companies give them, right? So this is your solution. You should fit in this box.
And it’s not. It’s square peg, round hole a lot of times. So we’re trying to smooth some edges out with our software platform and help those guys, hey, you know, let us customize this for you. We know there’s data points out there that we present in our dashboard that are not– IT, for example. I’ve got seven different dashboards– from backups, to Cisco, to EMC– all of my tools.
And while they’re really nice, but open up seven tabs every day in the morning, that’s not real– you know, for a railroad operator, that’s just, like, no. They won’t do it. They’re very ADD. They want it all on one screen, quick look, what’s going on my railroad, how’s the performance, you know, how much fuel are we using– all those data sets that are important to a railroad operation guy or a finance guy. They need to be able look at it quick, get it down, and move on. And that’s what we’re trying to do.
And we have a lot of smart people in our company. So it makes it easy for us because I can walk down the hall and talk to our VP of finance, and go, hey, what would you like to see if you’re looking at this? He’s like, I’d like this, this, and this. OK, good.
You know, our chief operating officer is the next office over from me. I can walk over there, what do you want to see? So we get to develop that. And these guys have years and years of experience.
So by the time I’m trying to present it to a potential customer, they’re like, hey. That looks pretty good. We like that. Or they say it’s total garbage, and we move on.
MARK SCHAEFER: We won’t go there.
JASON BROWN: That’s fine.
MARK SCHAEFER: This is a gentle podcast for gentle.
MARK SCHAEFER: That’s how we think of ourselves.
JASON BROWN: I like the gentle podcast.
MARK SCHAEFER: Now, the thing that’s really interesting about this whole thing, Jason, is now you’re putting these apps and these software systems out there. You’re collecting a lot of data. That could create some very interesting new models.
Talk about that. Is that the next disruption? Is that the next evolution of this for you?
JASON BROWN: Absolutely. I think one of the things– and we’ve kind of taken over the railway internet of things and called it the RIOT domain. So literally–
MARK SCHAEFER: That is just the best name ever.
JASON BROWN: I can’t take credit for it.
JASON BROWN: You know, but anyway. It’s a really smart name. And that’s what we are running all of our analytics on. So yeah. To your point, if I can start collecting data from a hundred railroads–
MARK SCHAEFER: Lots of railroads.
MARK SCHAEFER: Fuel consumption.
JASON BROWN: Right. You can do a lot of predictive analytics when you get that kind of data. And that’s kind of what we’re shooting for. And not just on the freight side– commuter side as well.
MARK SCHAEFER: I mean, that’s kind of an obvious idea. But the thing that’s so interesting about what you’re doing is that I love that you’ve disrupted yourself. I mean, we see that so many businesses are being disrupted. And then they look around and go, huh?
But you’ve already taken the first step. You’re being a software-centered company. So how do you keep that momentum going? What’s your process to look for?
It sounds like your CEO is very forward thinking and innovative anyway. So what’s your process to look for the next thing so that you are the disruptor?
JASON BROWN: You know, I think a lot of it is– there’s a lot of black holes. There’s a lot of low-hanging fruit, I think, that’s still out there for the railroad industry. And I don’t just mean shortlines or computers. Even the large class 1 railroads that you see running up and down the highway.
There are areas where we can help. And I think what we’ve been trying to do is survey and find out what those are. We talked to our partners. We talked to the shortlines. What are your pain points? What do you need help with? What can we help you with?
We do a lot of conventions. We do a lot of shows. We talk to a lot of people. So we’ve kind of got this dope chart that we’re trying to cluster together and figure out, OK, well, this is a pain point for everyone. Let’s tackle that and see what happens with it.
But yeah. I mean, it’s a never-ending cycle. It’s just like everything else in development, as I’m learning because I have no development background.
MARK SCHAEFER: You’re talking like a CMO I mean, listen to the customer. Identify pain points. Developing new products. What is your background? Do you have a background that’s–
MARK SCHAEFER: –helped facilitate that?
JASON BROWN: No. I actually did IT consulting for a number of years, which is kind of, I think, the genesis of when we started Rio Grande Technology, which was– I’m always used to IT a profit center. As a consultant, that’s what you do.
So we had some opportunities presented to us that allowed us to do capital projects for some of the railroads. And we sat around the whiteboard one day and said, hey, let’s give it a go. And it’s not bad. I mean, we’re not necessarily General Motors yet, but we’re trying.
But when you talk about being a CMO, a company our size– we don’t have unlimited resources. So everyone wears five hats. You just you just have to.
MARK SCHAEFER: To me, it seems like that works to your advantage because you’ve merged two critical functions, and that’s what’s really driving your business. Being small is to your advantage, in this respect.
JASON BROWN: Yeah, I think so because I think development dollars and things that– we don’t have a $5 million R&D budget to just, let’s get a bunch of developers, and let’s pretend, you know, we’re fixing some sort of unseen scenario. We don’t have that.
So our solutions and our fixes have to be basically on the whiteboard, like I talked about, looking at the pain points– what can we do to help make the industry better?
MARK SCHAEFER: It’s kind of bootstrap mentality.
JASON BROWN: It’s very bootstrap.
MARK SCHAEFER: Yeah. Good for you. That’s awesome.
DOUGLAS KARR: It seems agile as well. You know, you’re taking a clearly agile approach to it. So where does this take us? In five years, where is your company? Is it a software company?
JASON BROWN: No. No, I don’t think we ever will be. I think we stick to our core what we do, which is we own and operate railroads. We have the best operators of any– obviously, I’m very biased. But our leadership team, our railroad operators are the best in the business. That’s the core of our business.
What we’re trying to do is just augment a little bit. We’re going to be a profit center. We’re going to make the company money.
I think if a lot of companies looked at IT, or accounting, or operations in that manner, companies our size would do a lot better. I mean, I think the finances show that.
MARK SCHAEFER: Jason Brown, CIO, Rio Grande Pacific Railroad Holding Companies, who is holding–
JASON BROWN: Can I mention that I’m holding a very special coffee cup in my hand right now?
MARK SCHAEFER: Yeah. No, don’t mention that because then everyone will want one, and we don’t have enough.
JASON BROWN: I got to be honest with you. There’s an Ikea stamp on the bottom, which I thought was a nice tough.
JASON BROWN: Dell was written on with a crayon.
MARK SCHAEFER: Hush now. Hush now.
JASON BROWN: Really nice.
MARK SCHAEFER: Jason, we’ve had no fun on this podcast whatsoever. And we’ll never have you back.
JASON BROWN: Tell me. It’s been awful.
MARK SCHAEFER: So for our guests that want to catch your routine on the web–
MARK SCHAEFER: Where can they find you if they want to learn more about your company and what you’re doing?
JASON BROWN: Rgpc.com.
MARK SCHAEFER: There you go.
Thank you so much for being with us today.
JASON BROWN: Thank you guys for having me.
MARK SCHAEFER: It’s been a ball. And it’s also been really inspiring. I love what you’re doing. I don’t know if we’ve ever–
NARRATOR: Luminaries– talking to the brightest minds in tech. A podcast series from Dell technologies.
MARK SCHAEFER: Thank you so much. Everyone, thank you for listening. We never take you for granted. Thank you for your great comments, for your support.
This is Mark Schaefer on behalf of Doug Karr, my co-host. Thank you so much for listening to Luminaries, and we will see you next time.