Business

The Brash Genius Who Built a Railway Empire

Hunter Harrison reshaped an industry by literally making the trains run on time

BY


iStock / Dougall_Photography
iStock / Dougall_Photography

Hunter Harrison lived for telling stories. Not only did he love to entertain and charm, which he could do for hours, but as a CEO, he was purposely sending a message with his tales. He seemed to have an endless supply of fables, and few people could string one out better than he could. With a Tennessee drawl that oozed from his very pores and the timing of a cranky comedian, Harrison knew how to play for maximum effect, often finding a way to weave in one of his trademark expressions, like “I’m gonna ring his head like a church bell.”

One story that he liked to retell was about Robert Crandall, the former CEO of American Airlines. Crandall was traveling around the airline’s network, checking station expenses. Four times he went back to the same station, cutting costs each time. On one visit, he noticed a dog.

“What’s that for?” Crandall asked. “Security,” an employee said. “He barks.” “Get a recording,” the CEO said.

It’s easy to see why that one made Harrison chuckle. He was an unsentimental efficiency wizard who’d risen to the top by lopping expenses, maximizing the use of assets, and creating enormous value for shareholders. He reshaped an industry by literally making the trains run on time. While Sir Richard Branson advised executives to focus on employees first, customers second, and investors third, Harrison reversed the priorities: investors came first. For him, the game was capitalism, pure and simple. You either played it or you didn’t.

Individuals like Hunter Harrison are rare. They are singular in their talents, possessing laser-like focus and an atomic-level understanding of their businesses. By dint of starting at the bottom, questioning the status quo, and enduring back-breaking effort, they can slide into a niche that few others occupy. As a result, they represent extraordinary value to their companies and are compensated handsomely, while making tens of billions for shareholders. But they’re never satisfied. Even though Harrison had won the game for decades, contentment was elusive for him, as it often is for elite performers. Competitive to the core, they live by scorecards, such as higher stock prices or one more championship ring. They also love it. It’s who they are and what they know. Try telling Mick Jagger not to perform.

The word legend is tossed around freely these days, but in Hunter Harrison’s case, it fits. Starting out as a labourer in a Memphis rail yard when he was nineteen, in the early 1960s, Harrison rocketed upward to CEO. He held that position four times over an almost twenty-five-year span, turning around three major railroads: Illinois Central, Canadian National, and Canadian Pacific. In the last year of his life, while his shelves groaned with awards and his bank account bulged, he was hell-bent on fixing a fourth railroad, CSX Corp. Only nine months into that last assignment as CEO, he died, but he had already increased the value of the American railroad by billions of dollars. In the view of many, the fourth turnaround was well underway, in record time.

It’s hard to overemphasize the impact railroads have had in the United States and Canada. In the US, they opened up the west and connected the huge population centres of the east, providing a transportation network to service the world’s largest economy. The Canadian Pacific Railway helped forge a nation, not only tying it together but encouraging settlement in the western provinces, the burgeoning population creating a protective barrier against invaders from the south. Without the railroad, British Columbia would not be part of Canada, since the construction of the CPR to the Pacific was a condition of the province joining Confederation. Its completion meant people could travel coast to coast in a matter of days. Goods, particularly grain, could be shipped along the CPR and what became CN. Telegraph lines would span the nation, running alongside tracks and ultimately leading to the creation of the Canadian Broadcasting Corporation. CN would also spawn a national airline, Air Canada. The construction of the CPR led to the discovery of base metals—copper and nickel—in northern Ontario. The original surveyor of the Canadian Pacific route, Sir Sandford Fleming, invented standard time. Prior to Fleming’s invention, there was no regulation of time zones. The US had about 100 of them, with twenty-seven time zones in Michigan alone. The impact of the railroad boom of the late 1800s was akin to the internet blossoming in the 2000s.

In spite of the human toll it took to build North American railroads in the nineteenth century (in Canada alone, at least 600 Chinese workers died constructing the railway, and Indigenous communities ceded control of land, an issue that still reverberates today), the continent’s economy now depends on all manner of freight shipped by rail: automobiles, lumber, agricultural products, and general merchandise. Some of what’s shipped is hazardous material and, in the case of oil, highly controversial. It was one thing to construct railroads; it is quite another to run them profitably in today’s hypercompetitive and publicly sensitive business environment. For decades, Hunter Harrison, an American from working class Memphis, would repeatedly show people how to do it better than anyone else.

From LaGuardia Airport, it’s a short drive to one of Harrison’s estates in the luxuriant rolling hills of Connecticut. A horse farm sits amidst this storybook New England tableau of clapboard churches and cemeteries dating back centuries. Multiple barns dot the manicured landscape. Between facilities in Connecticut and two in Florida, at its height, Harrison’s Double H Farm boasted somewhere between fifty and sixty horses, including retirees. They have been highly competitive on the global show-jumping circuit—winners at the Olympics, World Cup, and major Grand Prix. Hunter Harrison didn’t do anything by half measure.

On May 24, 2016, Harrison’s wife of more than fifty years answered the door. Wearing canvas sneakers, Jeannie Harrison has an easy, youthful charm and a welcoming way. Through the main entrance of the home, there’s a great room with a commanding stone fireplace and a vaulted ceiling with thick beams. When I visited that day, Hunter Harrison, then still the CEO of CP, looked gaunt and was wearing a blue cardigan, a sports shirt, black casual pants, and loafers without socks. We sat in front of the unlit fireplace, along with Mark Wallace, his chief of staff and vice-president of corporate affairs, whose connection to Harrison dated back to his days running CN and who figured prominently in the rail roader’s odyssey at multiple companies. I asked Harrison how he was doing. The implication of the question was clear—how was his health, given the scare he’d had a year before that had required a vascular procedure on both legs up to his groin and hospitalization for shortness of breath, forcing him to miss CP’s quarterly earnings call. As was often the case, though, he’d bounced back and was soon on the golf course, knocking the ball 250 yards while polishing off two cigars over eighteen holes.

But now he indicated he wasn’t so good. A couple of weeks beforehand, in New York City, Harrison had been admitted to hospital again. He’d had a bad cough and was short of breath after a meeting with investors. He’d used oxygen in his limo and asked his driver to put the heat on full blast, even though it was May. The previous year’s diagnosis, which pointed to pneumonia, had turned out to be wrong. While he said the Mayo Clinic had called him its poster boy because of his amazing recovery, health issues lingered.

For a man who’d begun his career by squirting oil into railcar axles and who ultimately amassed great wealth—his Connecticut estate was on the market for $55 million (US)—Harrison seemed profoundly dissatisfied. Perhaps it was his looming health issues, but he also talked about CEOs not leaving their jobs with a smile anymore, citing his own unhappy departure from CN in 2009. With just a year left on his contract, he was foreshadowing a similar exit from CP.

He was also frustrated and angry at his peers in the railroad industry, going so far as to say they may have helped stymie CP’s growth plans—a brief and unsuccessful merger discussion with CSX, followed by unsuccessful hostile bids for Norfolk Southern. How ironic, he said, given that their companies were all products of consolidation. Good enough for them, but not for others, he complained.

How could someone with such achievements feel so aggrieved? He had been paid enormous sums, was the recipient of countless awards, and possessed several fat scrapbooks celebrating his work. Perhaps toiling day and night and weekend after weekend building businesses and financial security only took a person so far down a path to a satisfying life. Perhaps it was the prospect of retirement again, which he’d “failed” the first time after leaving CN at sixty-five, discovering that, for him, a life without work was a void. During that interlude, he had been anxious to get back into railroading, and he had made a dramatic comeback two years later. Or perhaps it was the realization that time was not on his side. After four years at CP, Harrison was tired. He’d done it again—increased shareholder value by making the railroad more efficient—but now seemed like a spent force, soon to be eclipsed by younger, healthier leaders.

“I worked my ass off all my life so I could afford to drink a good bottle of wine, and now I can’t drink it,” he said. He could no longer play hard, unable to enjoy the rewards for his considerable efforts.

Still, Harrison believed in a key message: the transportation infrastructure of North America is vital to the well-being of the continent. Without freight railroads, the economy would be crippled, so why not make them the best? He was all about being the best. Why couldn’t everybody else be?

After three hours of talking, he was weary. But, in the fourth hour, the adrenalin kicked in and the old Hunter Harrison reappeared. An extra store of energy is one of the defining characteristics of the CEO. They can go fourteen hours a day, seven days a week, for months on end, with calendars that would induce anxiety attacks in the rest of us. But Harrison was in a league of his own, even when physically unwell. The reason? There was only one version of Hunter Harrison. Many people have multiple personas they present to the world, depending on the situation or person with whom they’re interacting. But Harrison was the same with everyone. He didn’t waste precious energy playing roles. He just was. That meant his battery pack always had a bit more juice.

I first spoke with Harrison around 2004 while he was running CN. At the time, I hosted an interview program on Canada’s business television network, BNN. Harrison became a fairly regular guest. I tried to ask informed questions and challenge him, which I think he appreciated. On one occasion, when CN had a strong year and the amount of Harrison’s particularly enormous compensation became public, he was in front of a camera in Montreal when I asked what he was going to do with all the money. He thought I was asking about what the railroad would do with its profits and began giving a fairly standard answer. I quickly butted in and said, “Not that money, your money!” He laughed and told me about his interest in horses, and I think that episode created a relationship, of sorts. When he was about to leave CN, I invited him to Toronto to do a full-show exit interview, which he did. It was something he reminisced about a number of times in later years. Bit by bit, I was getting to know Harrison’s story, and we stayed in touch. He’d always take my call, often on a Sunday afternoon. Clearly, when he came back to run CP after CN, his story only got richer and rougher.

I’d heard reports that Harrison was a “mean guy,” given that he took no prisoners at CN and cut so many positions when he arrived at CP. You don’t turn around capital-intensive businesses with legacy costs and thousands of employees, making them the most efficient major railroads in North America, without leaving some “blood on the tracks.” Without a doubt, Harrison was tough. As an employee, if you didn’t get with the program, you were gone. You got a chance to mend your ways, but only one. If you were dragging down the team, he believed, the consequences for the company could be a disastrous spiral that would be bad for everybody. But this was a man for whom an efficiently operating railroad was like the performance of a Mozart symphony by one of the world’s great orchestras. It’s what he loved and what accounted for his peerless skills. That love, however, made him vulnerable to emotional wounds, as it frequently does to true believers who throw every ounce of their being into what they do.

The first time I asked him whether he was mean was during an interview on my television program during his CP chapter. He looked puzzled, smiled in an “aw shucks” way, and brushed off the question as unfair. Certainly, the label “culture of fear and discipline” bothered him, a description of CN under Harrison in a government of Canada review of the Railway Safety Act in 2007. He preferred to call it a “culture of consequences.” During the research for this book, I asked him the “mean guy” question again. He smiled. “I’ve been watchin’ these talk shows [on business channels] for three years now and I ain’t heard anybody ask anybody else if you’re mean.” He referred to the litany of business leaders who would also be candidates for the question, but whom he hadn’t heard it asked of. “What the fuck? Why they askin’ me, ‘Am I mean’?” The answer is yeah, he said, probably in some people’s eyes. Even his daughters, who loved him beyond measure, had heard him on the phone and asked him why he was so harsh. “Let me tell you something,” he had explained to them. “I’m savin’ someone’s life.”

“But why do you have to holler?” they had asked.

“They won’t listen if I don’t holler.”

Harrison yelled at people and fired many. But he also cared deeply, lending a helping hand to many in personal distress. He coached countless employees, drastically altering their lives, and could be generous to a fault, inspiring decades of loyalty from many. And while he didn’t seem to work solely for the money, he was unquestionably motivated by what he could earn by being the master of his craft.

That he could improve a business with so many pieces—thousands of employees, locomotives, railcars, and miles of track—demonstrated that Harrison was a compound of innovator, field general, motivational preacher, efficiency expert, and virtuoso of railroad minutiae. After more than a half century in an industry where he had started at track level and worked his way to the executive suite, he knew how a railroad worked in such molecular detail that he could envision how inefficient scenarios would play out and how to avoid them. He became a piece of very high-end, pricey human software with the nose of a bloodhound. There’s a now famous story of him checking into a Vancouver hotel room that happened to be equipped with binoculars and had a view of a CN rail yard. Harrison spied a locomotive—number 5867—sitting idle. A half hour later, it was still there. He made a call and asked what was happening with 5867. The worker was startled. How did Harrison know about one damn car sitting there? The incident reverberated through the company.

The flip side of the railroad genius was dismissiveness and distaste for corporate protocol. Harrison had little patience for boards. Put simply, they were a pain, a waste of time and money. They didn’t increase shareholder value or improve the operating ratio, the key metric for a railroad that’s constantly scrutinized by investors. Boards at publicly traded companies essentially have two jobs—hiring and firing the CEO and oversight. No wonder they drove an action-oriented CEO like Hunter Harrison up the wall. It ain’t railroadin’. The public fuss about compensation and executive jets—both obsessions of corporate-governance watchdogs—was an acute irritation to him. Just more boolshit, when you’re makin’ billions of dollars for shareholders. This was not a man who lost sleep over optics.

The overbearing, one-man-show approach certainly appealed to the press and many investors as a gripping story. But to get away with it these days, you have to produce superstar results, which he did. Harrison would say that he actually built teams and knew how to put great people in the right positions at the right time to get the job done. It’s hard to argue with that. But he also intimidated people, and it was only a small group that would tell a boss like Harrison that he was wrong about something. He was not exactly wired for an era that embraced “soft skills.”

Harrison commissioned me to write his biography, but he did not dictate what I should write, nor did he read any draft or portion of the manuscript. Our agreement was that the book would be “unauthorized” and I would have final say over content. Given his serious health concerns, the only instruction he ever gave me was “write fast.” But why me? I never asked, but I assume it was the relationship we’d developed, which included testy exchanges. My guess is that he wanted someone who’d written books, could interview him at length, would give him a fair shake, and would write about his remarkable journey, warts and all. He had a knack for sizing people up quickly and he must have decided that I “got” him. He wanted to run railroads, but he also desperately wanted to be understood.

Hunter Harrison had both a substantial ego and a desire to be remembered as one of the greatest, if not the greatest, railroaders ever. While he knew his family and certain close colleagues loved him, Harrison was unsure about others. Many readily called Harrison a railroading genius, revolutionary, and mentor; others called him mean, ruthless, and a bully. But all labels—good and bad—can be simplistic and easily applied. Harrison was a complex human being. This book tells the story of his life, extraordinary career, and accomplishments in an attempt to paint him not just in broad brushstrokes but also in the nuances—a portrait of the man as he truly was. Given his stormy upbringing and turbulent adolescence, it’s unlikely anyone could have predicted who he would become.

Excerpted from Railroader: The Unfiltered Genius and Controversy of Four-Time CEO Hunter Harrison by Howard Green. Copyright © 2018 by H&H Media Inc. Produced by Page Two Books. Reproduced by arrangement with H&H Media Inc. All rights reserved.

Howard Green was a broadcast journalist for thirty-three years, best known as founding anchor at Canada’s Business News Network where he hosted the flagship interview program, Headline. He lives in Toronto.




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