CANADIAN NATIONAL RAILWAY COMPANY LIMITED (CN) · CANADIAN NATIONAL RAILWAY COMPANY LIMITED (CN) Hunter Harrison sat in his office at CN headquarters in Montreal reflecting …

CANADIAN NATIONAL RAILWAY COMPANY LIMITED

(CN)

Hunter Harrison sat in his office at CN headquarters in Montreal reflecting on his experience as CEO of North Americarsquos most successful railway On the wall beside him was the large screen monitor he had installed that was linked into the railwayrsquos computer system allowing him to see every train on the railroad its exact location and its status He had identical systems in both of his weekend homes in Connecticut and Florida He was known to wake up at two in the morning and check the screen ldquoI might pick up the phone and call Edmonton and make a suggestion or twordquo Harrison notedi When he arrived at CN in 1998 Harrison did not anticipate he would end up becoming the CEO He came in with a job to do and he did it ndash he turned the company into the best performing company in the industry In 2003 he transitioned from COO to CEO leading one of the most highly praised cultural transformations of all time Now as he prepared to pass the reigns to the next CEO he wondered whether there was anything else he needed to do to ensure his legacy was sustained

History of CN

CN is one of the six major Class I North American railways Currently a Class I railroad is defined by the Association of American Railroads (AAR) as one with annual revenue exceeding $3193 million CNrsquos competitors include the other five Burlington Northern Santa Fe (BNSF) Norfolk Southern (NS) Union Pacific (UP) CSX Corporation and Canadian Pacific (CP) CN operates the largest rail network in Canada and the only transcontinental network in North America The CN network covers 12900 route miles across eight Canadian provinces including the nationrsquos five major ports ndash Vancouver and Prince Rupert British Columbia on the Pacific the key Great Lakes port of Thunder Bay Ontario and Montreal and Halifax Nova Scotia on the Atlantic The US network is made up of 6400 route miles in 16 states and connects the Canadian network to the US Midwest (including Chicago) down the Gulf of Mexico and the ports of Mobile Alabama and New Orleans Through a marketing alliance with the Kansas City Southern Railway Company the company can also offer its customers access to Mexico and the US Southwest

CN transports diversified freight over its rails including petroleum and chemicals grain and fertilizers coal metals and minerals forest products automotive products and intermodal services (the movement of trailers and containers on railroad freight cars) This has helped balance the companyrsquos performance in the difficult economy over the years

CN was formed in the post-World War 1 era when two of the countryrsquos largest railroads Canadian Northern and Grand Trunk were integrated and nationalized after their near collapse This consolidation prevented a default on $13 billion in loans held by the companies and it also gave Canada the second largest railway system in the world with about 100000 employees and over 22000 miles of track almost double its closest competitor Canadian Pacific Railway (CP)

On November 17 1995 after 78 years as a Crown corporation CN was part of the largest privatization in Canadian history through an initial public offering (IPO) that raised CAD 226 billion for the Canadian government This was led by a new management team of ex-federal government bureaucrats including Paul Tellier and Michael Sabia who began preparing CN for privatization by improving productivity and enhancing profitability These objectives were achieved by massive cuts to the companyrsquos management structure massive layoffs (CN went from 32000 employees to about 23000) and the sale of its branch lines In Tellierrsquos final year as CEO the publicly traded company earned $800 million

But it is under the leadership of Hunter Harrison that CN has become the continentrsquos best-managed railway By all measures CN is much more efficient than every other major North American railroad For example one key metric in the industry is an organizationrsquos operating ratio and CN has led the way Whereas CNrsquos competitors have remained in the range of 77 to 85 cents on the dollar CNrsquos operating ratio has dropped from about 77 cents to 62 cents during Hunter Harrisonrsquos tenure (see Exhibit 1 for a comparison of CN and its competitors) In addition CNrsquos sales have increased by nearly one-third and profits have almost doubled even during tough economic times (see Exhibit 2 for CNrsquos financial performance) Today CN is worth $25 billion in stock market capitalization more than ten times what it was in 1995

During his time as CEO Harrison has received many accolades including Report on Business Magazinersquos CEO of the Year Award in 2007 and Railroader of the Year in 2003 by Railway Age Magazine In October of 2009 Harrison was again recognized for his success ndash this time on the front page of the Globe and Mailrsquos business section where he is described as leaving CN ldquowith a reputation as one of the most successful railroaders on the continentrdquoii How did he do it

Hunter Harrisonrsquos Arrival at CN

Hunter Harrison arrived at CN in March of 1998 but he did not plan it that way As the CEO of IC (Illinois Central Railroad) in the US he met Paul Tellier a couple of times before the company was acquired by CN in 1998 It was clear that acquiring the IC was part of Tellierrsquos strategy to penetrate the US market -- CNrsquos lines ran from Halifax to Prince Rupert in Canada and only as far as Chicago in the US By acquiring

2 Professor Shawna OGrady Queens University at Kingston Canada wrote this case as a basis for classroom discussion Not to be used without permission copy 2010 Shawna OGrady

the IC it allowed CN to increase its lines through Mississippi and Alabama all the way to New Orleans Whereas Hunter was getting ready to hand in his resignation Paul Tellier made it clear to him that the deal was conditional upon him staying with the company Harrison recalled their agreement ldquoPaul said lsquoIrsquoll run the company yoursquoll run the railroadrsquordquo As CEO Tellier handled government investment and major corporate decisions as well as the Board of Directors as COO Harrison was responsible for the efficient and effective operation of the railroad In 2003 after five years serving as Tellierrsquos right hand man Harrison was promoted to CEO within hours of Tellierrsquos announcement that he was leaving -- what may have been one of the most rapid successions of all time

Hunter Harrison recalls his first experience at CN ndash a company he knew nothing about

There had been a number of employee reductions there was a history at CN of being a Crown corporation and it showed If I thought I was going to be CEO at the time I would have done things differently I may have made a great political speech shook everyonersquos hand and so on But Paul had explained the sense of urgency to me and I only planned to stay two to three years And I had a job to do I had a blueprint for how to run a railroad that was extremely effective So the first day I called in one hundred of the top operating officers of the company to the Bonaventure Hotel and I told them ldquoThis is how wersquore going to run a railroad What you have been doing is out And Irsquom going to tell you why If therersquos feedback Irsquoll be glad to listen But when we leave this room we need to all have a clear understanding of where wersquore goingrdquo

When Harrison returned to CN around 630 pm later that night Paul Tellier said ldquoI understand you stood up for 10 hours today without a slip of paper in your hand talking about railroadingrdquo Harrison replied ldquoPaul I can talk for 1200 hours about railroading without any paper in my handrdquo What Tellier was referring to was Harrisonrsquos concept of ldquoPrecision Railroadingrdquo that he had developed and implemented while working at IC and that had been responsible for turning it around He was now responsible for rolling it out at CN This was a totally different operating philosophy that involved running the railroad according to a schedule Under Precision Railroading the plan is sacred discipline is paramount and people are expected to do what they say they will

Traditionally rail carriers were in the habit of holding trains until they were completely full before departing While this maximized efficiency for the railroad it meant customers were delayed in receiving their shipments Traditional railroading moves full trains from point A to point B Precision Railroading is focused on moving a customerrsquos shipment from point A to point B as quickly as possible (versus the whole train) To do this requires disassembling and reassembling trains as required and


transferring customersrsquo railcars from train to train to keep them moving Precision Railroading is a simple concept but executing it requires a great deal of discipline planning and leadership

Precision Railroading transformed CN and is slowly transforming the industry In 1998 when Harrison arrived customers would ask how long a shipment would take and their order was always quoted in days More importantly CN would often quote customers using a loose approximation of the time such as seven to nine days Under Precision Railroading a quote is provided to the customer in hours making the quote considerably more precise In fact the results show that Precision Railroading is 24 times more preciseiii

Harrison began to explain the concept of Precision Railroading to the hundred top operating officers of the company that day and explained what people at CN needed to do differently He knew that if they ran with fixed schedules and better planning they could run with fewer locomotives fewer staff and improve service at the same time He knew because he already had success using these principles while he was CEO at the IC Yet Harrison remembered the poor initial reaction he received ldquoIrsquoll tell you there was no red carpet when I walked in there I could sense that the room was cold Here was some sermonizer from the South trying to tell them how to run a railroad And at the end there were certainly no Amenrsquosrdquo Felismina De Oliveira was an analyst at the time Hunter Harrison arrived at CN She described the reaction

The kind of change he was requiring of us was riskier He had over forty years in the railroad and he knew routing protocols he knew how the industry worked and he wanted not only CN to be the best but also to improve the entire railroad industry and make it more efficient for the customers and the railroads And he was really operations focused Not cost cutting per se but how to do it better in any area of the business It may be cost cutting but it may not And he really did bring the company to another level The problem was that not everyone took it as seriously as they should have at first

Keith Creel who was District Superintendent Battle Creek Michigan at the time had worked with Harrison at the IC He commented ldquoI was definitely an ambassador for Hunter Harrisonrsquos scheduled railroading model But most people didnrsquot think it was possible There was a lot of pain and suffering convincing the nay sayers initiallyrdquo

Early Quits

Although the company had been privatized for three years when Harrison arrived a culture of permissiveness pervaded the company dating back to its days as a Crown corporation For example Harrison discovered the unacceptable practice of ldquoearly quitsrdquo This occurred when a supervisor allowed a worker to go home early often


half way through a shift For example an engineer or a conductor came on duty and worked six hours and got paid for twelve It was a norm that had developed at CN and had become institutionalized Harrison reported on a conversation he had at one of the field operations in Battle Creek where he discovered the practice of early quits

Harrison Stop this immediately Wersquore not going to do this on my watch

Supervisor Well itrsquos worse in Canada

Harrison Where in Canada

Supervisor Everywhere but if you change this in Vancouver those cowboys will shut this company down

Harrison Then letrsquos start in Vancouver

Tough decisions such as this one were part of the process that Harrison set out to implement as COO to raise expectations and set standards He challenged individuals about why they were doing the things they were He explained ldquoI began asking employees whether it was the policy of this company as a crown corporation to get paid for a full day but only work halfrdquo The reply he received was ldquonordquo He continued ldquoWell who allowed this to happenrdquo People started saying ldquoI donrsquot have an answer to thatrdquo It was embedded in the culture

Harrison reflected on the difficulty he had making this one change ldquoYoursquod be amazed what I went through trying to change this one practice No union leader had the fortitude to come to me on this one they knew they couldnrsquot fight it The employees didnrsquot like it but they knew it was right You know who had a problemhellipthe spousesrdquo Harrison recalled a classic call he received from an angry spouse who said ldquoYoursquove cost me my second careerhellipmy husband used to be home by 1 pm every day and now hersquos not home until 4 pm and Irsquove just lost my second jobrdquo That was just the CN way

Les Dakens SVP of People at CN at the time remembered the reaction CN employees had to Hunter Harrison confronting ldquoearly quitsrdquo ldquoHe set the tone and became known as the guy who came in and fixed things He was the bad guy There was a lot of resistance to him for a number of reasons First he was American And he was very direct and forceful And if you didnrsquot get on board with his philosophy you probably didnrsquot stay very longrdquo Some of the supervisors who had been allowing people to leave early were part of what Harrison termed ldquoweak leadershiprdquo and what he believed needed to be changed or removed quickly ldquoIf people didnrsquot have leadership skills they were gonerdquo Harrison noted A number of personnel changes were made within a short period of time after his arrival Les Dakens supported Harrison ldquoDuring his time as COO he also developed a reputation as someone who knew the business


People held him in high regard People knew he knewrdquo It did not take many to be removed for the message to get out there was a new expectation at CN

An Inability to Say ldquoNordquo

Permissiveness had crept into a number of behaviors and at many levels of the company Lax standards and an inability to say ldquonordquo were prevalent across many parts of CN On his second day in the office Harrison was asked to sign a forest products contract that had a one million dollar signing bonus attached to it He remarked ldquoIrsquod never done this in my liferdquo Harrison made it clear that he was not signing it Furthermore he challenged anyone to come into his office and present their case for why CN ought to have contracts with signing bonuses No one showed up According to Harrison a mentality had developed at CN that the customer was always right leading to this type of outcome He stated ldquo95 of customers are right and I love them to death Five percent may not be and this customer was notrdquo No one was saying anything and the plan was to continue to reinforce this type of agreement Giving the functional areas the power to say ldquonordquo was part of the standard setting Harrison believed was necessary to create a positive culture

An Early Win

In the first fourteen months using the concepts of Precision Railroading CN was able to remove 35 of its fleet saving the company millions of dollars Keith Creel EVP Operations at CN pointed out ldquoWhereas some people might say that we saved $2 million per locomotive Hunter looked at it differentlyrdquo He saw all the costs associated with each locomotivehellipthe maintenance the fuel the parts and the fact that each locomotive requires more peoplehellipand that means unnecessary man hourshellipso therersquos a compounding effect for every locomotive we were able to remove Itrsquos so simple itrsquos brilliantrdquo Harrison commented ldquoI really needed to establish credibility and the best way to do this was with something I knew would be a winner and this was with locomotives It was at this point that I saw the first breakthrough Momentum began to build and people were finally beginning to think ldquowe can do itrdquo Plus externally magazines were describing CN as an organization that had gone from ldquoworst to 1strdquo and we got some recognition for our resultsrdquo

Hunter Harrisonrsquos Transition to CEO

By the end of 2002 CN had risen to North Americarsquos top performing railroad (see Exhibit 2 for CNrsquos Financial Performance) During Harrisonrsquos tenure as COO CNrsquos stock rose 1200 Only six years after taking CNrsquos stock public CN had generated the highest total shareholder return of any Class I railroad With Bill Gates as CNrsquos largest shareholder the excitement around CNrsquos performance continued to build The results of Precision Railroading were compelling ndash CN was definitely ldquobest in classrdquo


Hunter Harrison was promoted to CEO of CN formally taking over from Paul Tellier on January 1 2003 Tellier moved on to become the CEO of Bombardier Paul Tellier commented ldquoI always think of my legacy at CN as not only what I did but what I leftrdquoiv referring to Harrison as the right person to lead CN Despite CNrsquos excellent financial success and some early alignment around a new way of doing things Hunter Harrison knew that the changes that had been made were not deeply ingrained into the culture at CN He became painfully aware of this one day in an elevator at CN when he overheard a woman say to another ldquoldquoHave you been Hunterizedrdquo Harrison couldnrsquot believe it but came to find out that what he was hoping was an internalized culture of support for doing the right thing had merely become a ldquoHunter Saidrdquo culture Harrison noted ldquoPeople began relying on my position on issues and telling people that I told them it was that way as a cop-out to avoid having to take a position themselvesrdquo Mina De Oliveira Supply Manager Fuel and Logistics suggested that Harrisonrsquos direct style may have led some employees to defer to their leader in this way ldquoSometimes he would call people directly on the phone and ask them about their area This scared peoplerdquo she said Getting a call from the CEO was a significant event and these stories began to travel throughout the company

Harrison set out to change this His ultimate objective was to produce a culture where employees were engaged and completely committed to achieving new levels of performance He began in simple ways by spending time coaching people asking them questions such as ldquoWhat do you want to dordquo and requiring them to take the decision themselves He reinforced it stating ldquoThere are a lot of leaders in this company besides merdquo It became obvious that he would need the help of his entire leadership team working as hard as he was to transform the culture Only then would CN have deep and lasting cultural change

Harrisonrsquos first task as CEO was getting his senior leadership team on board Les Dakens SVP of People at CN commented ldquoBecause he had been COO and often the COO is all about results many on the senior leadership team feared he was going to clean house There was a fear of the unknown But Hunter kept the entire team and it sent a great signal to everyone There was a collective sigh of relief when this happened and the whole team got behind himrdquo Then the team could focus on achieving Harrisonrsquos vision

The next most important task that Hunter Harrison had was documenting the five principles that had been guiding his decisions for over 35 years The five principles (Service Cost Control Asset Utilization Safety and People) are outlined in Exhibit 3 ldquoHe communicated to all of his direct reports the importance of becoming aligned with the five principles and how alignment meant that no other competitor could touch usrdquo Dakens noted ldquoWe had to get our people aligned in each area and it became an expectation of everyonerdquo CNrsquos performance management system was changed to


reflect the five principles and performance appraisals and feedback were provided based on the five areas Mina De Oliveira Supply Manager Fuel and Logistics commented ldquoWhen Hunter Harrison took over as CEO Precision Railroading was translated into five principles (Service Cost Control Asset Utilization Safety and People) that became part of everything we did Even our presentations had these five concepts in them You really had to get your hands around it [Precision Railroading] But he had the knack of taking difficult concepts and making them simplerdquo

CNrsquos communications department inundated employees and other stakeholder groups with messaging around the five principles Newsletters annual reports quarterly letters to shareholders and other communications vehicles were used to get the message out about the importance of the five principles and their implementation Ninety-five percent of Hunter Harrisonrsquos time was focused on the five principles Harrison was known to never be very interested in politics The reason why it didnrsquot fit into one of the five principles Les Dakens Senior VP of People commented ldquoI remember him saying lsquoIrsquove been living with these five principles my entire life You will not see the flavor of the month with mersquo And he was always very consistent so employees saw thisrdquo The result was that the level of knowledge of managers in the company began to increase and their desire to learn about the business also increased

The Hunter Camps

Hunter Harrison noticed that CN was a transportation company yet it did not have many people trained in transportation issues Also there were few great places to send people for training in the types of issues and challenges that he believed needed to be part of a core program for CN people Harrison commented ldquoI just wish I had time to sit down with 22000 employees and share what I have learned Irsquove always had success in the past with face-to-face smaller scale meetings so my SVP of People said ldquoLetrsquos get 20-25 employees together at a time and provide them with a training programrdquo Originally Harrison was focused on running four training sessions per year and targeting Operations Managers at CN Les Dakens Senior VP of People and Peter Edwards VP of HR at the time challenged him suggesting that the training should be attended by all functional areas and run more frequently so that the objectives could be met more quickly Edwards coined the training sessions ldquoHunter Campsrdquo

The Camps had three main objectives First they provided CN with the opportunity to educate its employees on specific examples of Precision Railroading Who better to provide convincing responses to ldquowhyrdquo change and ldquowhatrdquo do you need to do differently than the companyrsquos CEO He had inspirational stories to share from 35 years in the business Second the Camps were intended to promote cultural change by removing ldquoorganizational mudrdquo ndash a favourite term of Hunter Harrisonrsquos Mud is what gets in the way of the flow of communication between the executive suite and frontline


managers He would have chance along with Camp attendees to discuss issues to air concerns and to participate in a QampA hopefully overcoming resistance points and creating alignment amongst those who attended Hunter Harrison commented ldquoI thought the early training ought to be held at my residence and with a BBQ so I could get to know the employees and they could get to know the real me When you donrsquot have a necktie on people say lsquohersquos not as big a jerk as we thinkrsquordquo One of the camp attendees commented ldquoPeople at the bottom saw him as having a military approach (as COO) ndash a ldquothis is what yoursquoll dordquo style It was a perception Once you went to the Camp you saw him completely differentlyrdquo

The third objective of the training was to provide employees with the opportunity to apply what they had learned back on the job Harrison had an eye for results in everything he did and he knew that this was the best way to convince employees customers and shareholders of value Each employee was expected to come to the training prepared to discuss a key challenge in hisher business unit Their assignment following the training was to use the principles taught to return to work and produce a positive change in the area of their challenge

Initially high potential individuals were chosen for the training based upon supervisor ratings Each department sent one representative to the Camps Les Dakens Senior VP of People noted ldquoOnce we had well over 800 employees come through the Camps they were no longer our high potentialshellipthen we were into our good managers By the time we got down to the final Camps our objective was to put everyone throughrdquo A total of 79 Camps have been held during Harrisonrsquos tenure as CEO

The early training sessions were a tremendous success Les Dakens commented on the impact of the Camps ldquoPeople came into the Camps very nervous about the process Most had never met the CEO Within 90 minutes they were saying it was unbelievable By the end they were writing testimonials When it was over and the message got out people were clamoring to get on theserdquo Stories began to spread throughout the organization about employeesrsquo experiences at the sessions their follow-up actions and the positive results that were produced for the company Harrison reinforced these results creating an award for the best change made for CN and listing the pictures and stories of these employees in the companyrsquos annual reports For example one employee in the accounting and finance area who was inspired from the Camp saved the company $600000 upon her return She checked her airline ticket on the way back home from the training and noticed that the airline had taxed her incorrectly She applied for a refund and then proceeded to apply the same savings across the company


The Camps evolved over time into a three-day session with one day spent on ldquorailroadingrdquo one day on leadership and one day on strategy (where CN is moving as a company) Hunter Harrison continued to conduct every camp himself believing in the power of one-on-one face time with his people Les Dakens remarked ldquoI was at all the Hunter Camps and I can tell you that his level of passion over those three days never changed Hersquos a very inspiring speakerrdquo

Not all employees were equally interested in the Camps Harrison noted ldquoOf every set of 25 we put through three or four never should have been there They are thinking that itrsquos BS the whole time Six to eight become passionately engaged They become disciples They get back on the job and do great things for CN The middle group is not a group of natural born leaders They are competent individuals who are the backbone of companies You increase their confidencerdquo Harrison took the time to learn about every attendee prior to the training studying their CVrsquos and pictures so that he could call upon them and engage them in discussion One camp attendee commented on the positive outcome for her ldquoI stayed in touch with five or six of the people from my Camp It developed a real network for me They are also high potentials so they are real movers and shakers in the companyrdquo

Given the popularity of the Camps for changing CNrsquos culture the company has invited Union leaders to the Camps ldquoWe donrsquot change the script at allrdquo noted Harrison ldquoSome canrsquot come because their constitution wonrsquot allow it because we pay (for meals etc) and it presents a conflict of interestrdquo CNrsquos competitors have also attended the Camps Harrison reflected on the time he devotes to the Camps ldquoSome of my peers (CEOs) think that itrsquos a horrible waste of my time but I violently disagree If I can do two things wellhellipI can railroad and I can lead people I think itrsquos my responsibility to help people to understand how to handle decisions around leading people Itrsquos powerful coming from the CEOrdquo After Harrison retires CN will no longer run the Camps However the company has created its own Railroader Trainee Program and Railroader Certification for any employee in the company who wants to learn about the business It also has a Railroad MBA program for selected senior executives Keith Creel EVP of Operations stated ldquoI want to develop a Leadership Forum in the next few years Hunter reached the top half of the pyramid Irsquom going to work with and develop to and through the base of the pyramidrdquo As retirements continue to create more leadership openings at CN the company continues to develop its own people to fill these positions Even at the executive level CN aims to fill at least 85 of these positions internally

Creating Leaders to Drive Change

Understanding of and commitment to Harrisonrsquos five principles was spreading And the Hunter Camps were an additional tool to help promote the five principles and overall cultural change at CN However neither of these was enough For one thing


even though Camp participants talked to other employees at CN there were approximately 22000 employees that the leadership team needed to reach to transform the culture Second CN had acquired a number of companies including Illinois Central Railroad (IC) in 1998 Wisconsin Central (WC) in 2001 Great Lakes Transportation (GLT) rail and related holdings in 2003 and BC Rail in 2004v Acquiring companies meant CN had also acquired several company cultures that it now had the challenge of integrating into one

Harrison met with his two senior HR leaders Les Dakens and Peter Edwards to plan how to achieve greater strides with CNrsquos cultural change Edwards commented ldquoWe had a range of employee engagement levels ndash people who were positively engaged -- to others who viewed the company in a negative wayrdquo CNrsquos goal was to move all employees to the engaged end of the spectrum As Harrison Dakens and Edwards analyzed CNrsquos culture it was disappointing for them to admit that while some areas of CN were in good shape other parts were out of control CN still had a long way to go to move these areas to fully engage

Based on Edwardsrsquo experience working with several other large organizations he was able to analyze CNrsquos workforce from a leadership perspective His analysis revealed that although there were many great employees at CN a very small group (about 5) of these were ldquonatural or positive leadersrdquomdashindividuals who would willingly lead and support the company Some were negative leaders (again about 5) ndash these were individuals regularly working against the company There were also a set of ldquopositive followersrdquo and ldquonegative followersrdquo (each accounting for about 7-10 of CNrsquos workforce) These individuals listened to positive or negative leaders respectively The biggest group at CN was the neutral majority ndash accounting for 70 -- this group is looking for leadership With the right direction and recognition this group can swing an organizationrsquos culture in a positive direction However without positive leaders available to lead them negative leaders can take over and create an opposite reaction

At this point Harrison noted ldquoI realized I had to develop [positive] leadersrdquo Until then the leadership team had been thinking that leadership skills were ldquonaturalrdquo Now they knew that individuals may hold positions of leadership but not all of them had a natural ability to lead and they needed to be trained if CN hoped to make the kind of cultural change it needed to Peter Edwards captured the thinking at the time ldquoWhy do we have this misconception that management is a natural act Why do we think people will know how to lead When were you taught that Are you supposed to have learned that innatelyvi CNrsquos next step was to embark upon a leadership development program that would ultimately transform its culture

Changing culture means changing behaviors The executive team had to decide how it expected its leaders to behave differently because this would define its culture


They decided that both ldquoDelivering Resultsrdquo and ldquoEngaging Othersrdquo or how you got the results were important criteria for a Positive Leader Harrison Edwards and Dakens believed that the majority of CNrsquos senior-level supervisors were good at ldquoDelivering Resultsrdquo but not very good at ldquoEngaging Othersrdquo while doing so On the other hand CNrsquos first-line supervisors were quite different They had experienced the results-oriented leader and didnrsquot want to be led that way so they had adopted the opposite approach Without much training to help them behave differently they frequently gave in to employee requests and had difficulty holding employees accountablevii

Helping its leadership team understand the types of new behaviors that were necessary was one thing Without specific tools and training CNrsquos executive team knew that the information would never be converted into action Les Dakens former VP of People at CN explained ldquoI had worked with a consulting company (CLG) when I was at Heinz and we were using them at CN to coach some of our executives They made a pitch to us about how they could help us drive our cultural change I made this pitch to Hunterrdquo Getting this past Hunter Harrison was not easy CLG promised a two-to-one return for its work as long as there was agreement on specific results to target This was the kind of program Hunter Harrison could buy into He agreed to three pilots

The ABCrsquos

The program that CLG introduced at CN is called the ABCrsquos which is based on simple elements of behavioral science The ABCrsquos stand for Antecedents Behaviors and Consequences It is based on the idea that ldquoConsequences are the key to changing behavior which is the key to changing a culturerdquoviii Consequences have a much greater influence on behavior (80) than antecedents (20) do Antecedents are what trigger a behavior (or what comes before it) For example when your colleague reminds you of a meeting you get moving to attend Behavior is action ndash or attending the meeting Consequences follow the behavior or action They determine whether you will do it again or not Consequences can be positive or negative Although the ABCrsquos sound simple they are not Applying the ABCrsquos takes a great deal of practice and coaching and thatrsquos why CNrsquos executive team chose to partner with CLG

Hunter Harrison and CLGrsquos Ned Morse agreed to three pilots of the ABCrsquos in three operating regions of CN ndash the US Eastern Canada and Western Canada All three sites had a tough unionized environment Harrison knew that if he could build leadership skills to improve relations in these three he could anywhere at CN They were all the right size ndash small enough to engage the employees yet large enough to indicate the ABCrsquos could work in a larger rail yard And they had leaders willing to give the change their best effort All were unique culturally so it was important to try it in each one to see if it would work


Leaders at each of the pilot sites were trained in the ABCrsquos by pairing one CLG coach with one HR manager from CN to help with the training Each site took on a different challenge but in each case they were expected to produce targeted behavioral change and the changes were measured Ned Morse from CLG had promised a 200 percent return on investment In two of the three pilots (the US pilot and the Eastern Region) CN achieved a 12-month ROI of 290 percent and 296 percent respectively In the third site there was only a modest ROI but individual behaviors showed marked improvement

CEO Sponsorship of Enterprise-Wide Change

Hunter Harrison approved the roll-out of the program to develop CNrsquos leadership using the ABC approach across the company Les Dakens commented on the effect that Harrisonrsquos sponsorship of this program had on producing widespread cultural change at CN ldquoOnce we put the program in place on how to manage for behavioral change (using the ABCrsquos etc) it really snowballed We could have got compliance but not full engagement without outside help We developed a leadership cult Ultimately the cultural change got filtered down to the average employee when they saw their first line supervisor acting differentlyrdquo

It was decided that for the program to have maximum impact each of the regional Senior Vice Presidents needed to drive the rollout This would increase commitment levels and ensure that the regions embraced the changes The three operating regions were offered six months of CLGrsquos help with the ABCrsquos paid by CNrsquos Corporate Human Resources group Beyond that the regions were expected to pay for any further costs themselves The regions agreed to extend their work with CLG beyond the six months provided that the results supported the investment Everyone knew that the cultural change would take several years but the reality was that this initiative had to prove itself every quarter and every project to continue At the end of the six months all of the regional SVPrsquos saw behaviors change results improve and they decided to move forward with the rollout of the ABCrsquos applying their own budget dollars to accelerate the pace of the change

Learning from a Strike

Within a short period after the senior leadership prepared to take the ABCrsquos companywide CN faced a challenge a strike of 4500 employees represented by the Canadian Auto workers representing about 20 of CNrsquos workforce (mechanics and clerks) Interestingly the CAW had unanimously recommended the deal to its members and its web site stated it was one of the best wage-and-benefit agreements out thereix Yet only a small percentage of union members voted and of this small number the majority took the rest out on strike CNrsquos leadership noted that in the past it would have


done what was necessary to avoid a strike including offering more cash or benefits etc consistent with its culture of permissiveness in general However this time it was viewed differently The companyrsquos leadership was changing the culture and this agreement was a ldquoswitchpointrdquo In railroading a switchpoint is where railroad tracks diverge going in different directionsx It is a very clear decision point that decides whether a train will go in direction A or direction B that is set by a mechanical switch When a railroader does not ever want to return to doing something the old way they refer to this as ldquospiking the switchrdquo ndash it means driving a heavy spike into a wooden railroad tie at a switchpoint to prevent the switch from movingxi This prevents anyone from moving in the old direction Stopping ldquoearly quitsrdquo was a switchpoint Knowing that the collective agreement was fair was another ldquoswitchpointrdquo ndash so CN took a strike As the company proceeded toward changing its culture it was necessary to ldquospike the switchrdquo

There was a month-long walk-out and 2000 managers temporarily replaced the 4500 mechanics and clerks They received the necessary training to do their jobs They gained an appreciation of the work being done and also developed many ideas for how to do things better The strike confirmed the importance of the supervisory position These roles had a huge impact on other employees and even more so before and after a strike So CN learned that it should begin training supervisors in the area where it had had the strike aiming to produce a positive result quickly and change any negativity as quickly as it could

Developing Internal Consultants

To ensure the sustainability of the change CNrsquos executive team realized that it would need to transition away from CLG consultants to its own It did not want to do this too fast and put leaders in a position to fail so it believed it required a hand-off time of six to twelve months The first step involved developing a curriculum to train the internal consultants so thirteen individuals were selected from the Human Resources Department All of these individuals had strong relationships with operations leaders and had potential to become strong coaches The internal consultants were certified at various levels by CLG and they began an apprenticeship program alongside their CLG trainers The original set of thirteen performed extremely well and there was a huge demand for more The challenge was to find ldquolocalrdquo coaches and individuals with enough time to take on this important role However over the next two years CN was able to certify more than 80 internal coaches Working together with CLG the other coaches and the operational leaders CN was able to accelerate its cultural change and build in sustainability


Cultural Transformation ndash Is it Complete

When Harrison joined CN in 1998 the company had an operating ratio of 784 which meant it was spending about $79 for every $100 in revenue ndash one of the most important metrics in railroading With all of his changes CNrsquos 2008 operating ratio is now 65 the lowest in the industry by far Canadian Pacific Railway its closest competitor had an operating ratio of 75 last year This gives CN an incredible competitive advantage over every other North American railroad According to Les Dakens former SVP of People at CN the best test of cultural change goes beyond the financial results He explains ldquoI always watch the number of employees who buy stock in the company In 1995 even when the company offered an incentive for employees to purchase company stock only 35 did In 2008 70 of the employees own stock in CN Not only are their hearts and minds engaged but so are their walletsrdquo He believes that it was when employees felt that their supervisors really cared about them that this shift happened Their engagement has little to do with how the company is doing financially

The leadership team is in agreement that cultural change is a continuous effort Peter Edwards CNrsquos former VP of HR assesses that CN is approximately half way toward its goal of converting all 22000 employees to being ldquofully engagedrdquo but he points out that CN has achieved an incredible amount so far and ldquowith change you first realize it never ends Ever Thatrsquos the challengerdquoxii Keith Creel EVP of Operations agreed with Edwardsrsquo assessment although he added ldquoWhen it comes to our managers wersquore further along Eighty to eight-five percent of our managers are believers When it comes to our employees itrsquos harder The more and better we can get at communicating the better we will be at making the changerdquo

CNrsquos leadership team knew that its journey would take several years And as Edwards states ldquoProtecting and preserving culture is a challenge every day Itrsquos something that if you donrsquot reinforce positively every day the negatives will come back againrdquoxiii Hunter Harrison agrees that it requires constant effort to ensure CN employees are on the right track ldquoItrsquos one thing to get the technical aspects right itrsquos another to be able to leadhellipto be able to explain why we need to be doing the things we are and to inspire people toward the right pathrdquo He noted that just recently he found managers at CN who had allowed employees to pressure them into doing the wrong thing once again This requires continual cleansing rebuilding and reinforcing of the right behaviors ldquoWhen it gets ingrained itrsquos continual not one week one quarter or one year And it takes someone with intestinal fortitude and gumption at the top And then strong leaders at every level throughout the organization If you donrsquot have that forget everything else Great leaders can overcome a bad plan But a great plan will not overcome bad leadersrdquo Les Dakens agreed ldquoPeople watch what the CEO does Our number one key to successful cultural transformation was that our CEO lived and


breathed it The second was finding smart people and getting them on the team around him and letting them do what they did wellrdquo CN took advantage of both

In terms of sustaining its success Hunter Harrison has written two books that capture the essence of what CN has done called How We Work and Why (Volumes I and II) These are used internally to help employees better understand the organization and they are also handed out freely to anyone interested in improving their organization CNrsquos leadership understands that itrsquos not the content of the book that is whatrsquos most important ndash itrsquos CNrsquos ability to create exceptional leaders who know how to executexiv This has been built into the culture through the 5 guiding principles the Hunter Camps the organizationrsquos ABC training program its internal consultantscoaching program the reinforcing performance metrics and the learning programs such as RR-MBA and the Certified Railroader each designed to reinforce the other

The Future

On April 21 2009 it was announced that Claude Mongeau will succeed Hunter Harrison as CNrsquos next CEO taking control on January 1 2010 Mr Mongeau was CNrsquos EVP responsible for leading CNrsquos strategic planning process and its overall financial management as well as the IT function In 1997 the Financial Post named Mr Mongeau one of the Top 40 under 40 In 2005 he was selected CFO of the year by an independent committee of his peers Les Dakens commented ldquoIrsquom very confident about the decision We had a very good succession planrdquo Mina De Oliveira an employee at CN commented on the choice of Mongeau as CNrsquos next CEO ldquoWe were expecting Claude Mongeau to be chosen as the next CEO Hersquos much lower key than Hunter Harrison but everyone knows that he is brilliant He has been more of a behind the scenes strategist than in the spotlightrdquo David McLean Chairman of CNrsquos Board of Directors offered the following comment

Hunter is a seminal figure in the railroad business with his ground-breaking lsquoPrecision Railroadingrsquo operating model thats driven significant efficiency gains and shareholder value at CN He has provided outstanding leadership and service at CN leading to the creation of a great North American railroad and grooming an excellent successor Hunter also devoted countless hours to training the next generation of great railroaders at CN Todays announcement begins an orderly period of leadership transition at CN that will maintain CNs position as an industry leader in creating value for customers and shareholdersxv

As the next CEO at CN Claude Mongeau will have a special set of challenges Perhaps the greatest challenge is that CN and its current CEO Hunter Harrison have had so much success making it a tough track record to follow On the other hand Mongeau has been a part of the success supporting Harrison with the cultural transformation As part of this Mongeau became certified as a railroad conductor Also


using the ABC toolkit the Finance unit was able to seamlessly integrate the activities from two of its acquisitions The unit was able to produce cumulative billings that were 48 higher than the year before and increase collections by 52 percent from the year earlierxvi Harrison commented ldquoNo doubt he will want to make some changes and enhance what Irsquove donerdquo Mina De Oliveira noted ldquoI think wersquoll see changes Itrsquos time to rebalance and focus on the customer more and Claude Mongeau is very strategic But we canrsquot lose that Operations focus because we know how important it is to our business We have a lot of executives in transportation trained by Hunter Harrison and he has been able to transfer his thinking into our culturerdquo Les Dakens stated ldquoIrsquod be surprised if it changed very much Hunter Harrison has done a terrific job of training and development So Claude will let his Operations guy do Hunterrsquos old job and focus on building more customers Then he can focus on the broader vision of allowing CN to become the best transportation company which means developing other lines of businessrdquo Finally Keith Creel EVP of Operations weighed in ldquoClaude is definitely the right person for the job He is an insider he understands how we work and why and while he will put his fingerprints on it I donrsquot think he will alter our model drastically And therersquos a kinship among the senior officers of the company Yoursquore only as good as the people you work with Second Hunter taught me that the legacy of a true leader is how well the organization runs when that leader is not there For the past two and a half years Irsquove had the autonomy to run the operation and Hunter has coached and developed me Irsquom not going to allow anything to change in a negative wayrdquo

Hunter Harrison came to CN with a job to do and he did it He did not plan to come to CN or to be CEO yet he turned the organization into the best performing company in the industry Harrison does not have any future business plans for now One thing that we know from watching this Master Railroader is that he has an incredible gift for moving people and things from one place to another

Discussion Questions

1 Are the changes that have been made to transform CNrsquos culture sustainable If so why If not why not

2 What should be done now to ensure CNrsquos continued success 3 What is the role of a great leader Do you think that Hunter Harrison has fulfilled

it If so why If not why not 4 Describe Hunter Harrisonrsquos leadership style ndash what are the strengths of his

leadership style What are the potential weaknesses How has he changed as a leader during his time at CN

5 Outline what factors led to CNrsquos success in changing its culture


6 What can be learned from CNrsquos success that could be transferred to other organizations interested in making a change

7 What role should Hunter Harrison play in CNrsquos future


EXHIBIT A CNrsquoS OPERATING RATIO VERSUS ITS MAIN COMPETITORS

(number in percentages)

2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754

from annual report or 10K for each company

Company Code

CN Canadian National CP Canadian Pacific UP Union Pacific NS Norfolk Southern BNSF Burlington Northern Santa Fe CSX CSX Corporation (the former Chessie System)


EXHIBIT 2 CNrsquoS PERFORMANCE IMPACTED BY HUNTER HARRISON

(Canadian dollars in millions)

YearEvent Operating Ratio (adjusted)

Free Flow Cash Revenue Net Income

(adjusted) Employees

(end of period)

1995 (privatization) 89 (118) 3802 204 23999

1998 (Harrison arrives) 753 228 4078 569 19198

End of 2002 (Harrison

promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695

Source Canadian National Railway Annual Reports andor Investor Fact Books


EXHIBIT 3 CNrsquos FIVE GUIDING PRINCIPLES

Source E Hunter Harrison Change Leadership Mud and Why copy 2008 Canadian National Railway Company Principle 1 Service

bull The first rule is ldquodo what you say you are going to dordquo bull Letrsquos get faster What are you doing on your job that this a faster railroad bull Letrsquos get more reliable How can you make a difference here bull Letrsquos listen more Principle 2 Cost Control bull Itrsquos cost control not cost cutting bull If you truly need more money to make CN better ndash ask If you have some left

over give it back - before we ask bull Look at everything A thousand little things is a lot of money Principle 3 Asset Utilization bull The missing ingredient in the recipe for success in the rail industry bull Look at every asset and ask ldquoDo we really need it Can someone else make

better use of it How can I get 24-hour use out of it every day bull Our estimates say we can probably do 10-15 more business with just what

we have today How can you make your part happen bull If you didnrsquot use it last year you probably wonrsquot this year Scrap it sell it or

recycle it Just get it out of the way Principle 4 Safety bull Make sure no one gets hurt bull Never overlook even the slightest rule infraction With the nature of our

industry yoursquore not giving anyone a break Yoursquore giving them a death sentence

Principle 5 People bull We canrsquot do any of the other four without people


EXHIBIT 3

CNrsquos FIVE GUIDING PRINCIPLES

(continued)

Source E Hunter Harrison Change Leadership Mud and Why copy 2008 Canadian National Railway Company

Principle 5 People (continued)

bull People drive the service manage the costs and ensure our safety standards are met

bull Look after each otherrsquos safety bull Take people to their level of excellence



Endnotes

i Source httpwwwtheglobeandmailcomreport-on-businessarticle799851ece iiSource Globe and Mail Tuesday October 27 2009B4 iii Judy Johnson Les Dakens Peter Edwards and Ned Morse Switchpoints Culture Change on the Fast Track to Business Success NJ John Wiley amp Sons 200812 iv E Hunter Harrison How We Work and Why Volume II copy2008 Canadian National Railway p 46 v Op cit p 16 vi Op cit p 5 vii Johnson et al p 46 viii Johnson et al p 58 ix Johnson et al p 93 x Johnson et al p xxxi xi Johnson et al p xxxii xii Hillary Sirman ldquoSwitchPoints Culture Change on the Fast Track to Business Success ndash An Interview with Peter Edwards Vice President Human Resources CNrdquo Queenrsquos University IRC 2009 p6 xiii Ibid p 2 xiv Johnson et al p 189 xv Source httpwwwnewssirecaenreleasearchiveApril200921c3546html xvi Johnson et al p 120

CN was formed in the post-World War 1 era when two of the countryrsquos largest railroads Canadian Northern and Grand Trunk were integrated and nationalized after their near collapse This consolidation prevented a default on $13 billion in loans held by the companies and it also gave Canada the second largest railway system in the world with about 100000 employees and over 22000 miles of track almost double its closest competitor Canadian Pacific Railway (CP)

On November 17 1995 after 78 years as a Crown corporation CN was part of the largest privatization in Canadian history through an initial public offering (IPO) that raised CAD 226 billion for the Canadian government This was led by a new management team of ex-federal government bureaucrats including Paul Tellier and Michael Sabia who began preparing CN for privatization by improving productivity and enhancing profitability These objectives were achieved by massive cuts to the companyrsquos management structure massive layoffs (CN went from 32000 employees to about 23000) and the sale of its branch lines In Tellierrsquos final year as CEO the publicly traded company earned $800 million

But it is under the leadership of Hunter Harrison that CN has become the continentrsquos best-managed railway By all measures CN is much more efficient than every other major North American railroad For example one key metric in the industry is an organizationrsquos operating ratio and CN has led the way Whereas CNrsquos competitors have remained in the range of 77 to 85 cents on the dollar CNrsquos operating ratio has dropped from about 77 cents to 62 cents during Hunter Harrisonrsquos tenure (see Exhibit 1 for a comparison of CN and its competitors) In addition CNrsquos sales have increased by nearly one-third and profits have almost doubled even during tough economic times (see Exhibit 2 for CNrsquos financial performance) Today CN is worth $25 billion in stock market capitalization more than ten times what it was in 1995

During his time as CEO Harrison has received many accolades including Report on Business Magazinersquos CEO of the Year Award in 2007 and Railroader of the Year in 2003 by Railway Age Magazine In October of 2009 Harrison was again recognized for his success ndash this time on the front page of the Globe and Mailrsquos business section where he is described as leaving CN ldquowith a reputation as one of the most successful railroaders on the continentrdquoii How did he do it

Hunter Harrisonrsquos Arrival at CN

Hunter Harrison arrived at CN in March of 1998 but he did not plan it that way As the CEO of IC (Illinois Central Railroad) in the US he met Paul Tellier a couple of times before the company was acquired by CN in 1998 It was clear that acquiring the IC was part of Tellierrsquos strategy to penetrate the US market -- CNrsquos lines ran from Halifax to Prince Rupert in Canada and only as far as Chicago in the US By acquiring













Early Quits
















An Early Win












The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes













Early Quits
















An Early Win












The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes







Early Quits
















An Early Win












The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes















An Early Win












The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes





An Early Win












The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes









The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes




The Hunter Camps























The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes





















The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes
















The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes










The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes




The ABCrsquos























The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes





















The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes














The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes









The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes




The Future



















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes
















2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes







2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes




2003 2004 2005 2006 2007 2008

CN 709 680 648 618 636 659

CP 801 798 772 754 753 786

UP 815 894 868 815 793 773

NS 835 767 752 728 726 711

BNSF 823 845 775 766 779 881

CSX 931 876 819 775 775 754


Company Code








(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes







(end of period)

1995 (privatization) 89 (118) 3802 204 23999



promoted to CEO) 705 513 6339 1059 22114

End of 2008 659 794 8482 1895 22695













EXHIBIT 3


(continued)







Endnotes












EXHIBIT 3


(continued)







Endnotes


EXHIBIT 3


(continued)







Endnotes



Endnotes


Documents

CANADIAN NATIONAL RAILWAY COMPANY LIMITED (CN) · CANADIAN NATIONAL RAILWAY COMPANY LIMITED (CN) Hunter Harrison sat in his office at CN headquarters in Montreal reflecting …