One of the best business biographies I've read in years. Howard Green's book on Hunter Harrison is a multifaceted look at the greatest railroad CEO of all time. Green effectively balances the examination of both the personality and business accomplishments of the 4-time railroad CEO.
Harrison's larger-than-life story started in his teenage years when he worked at a rail yard. Eventually, he rose to be the CEO of Illinois Continental, a relatively small Class I railroad (at least $250mm in annual revenues) in the US. Harrison was known for his intimate knowledge of all the ins and outs of railroad operations, having risen from the very bottom of the railroad to be the CEO. He implemented a set of ideas which later came to be known as Precision Scheduled Railroading (PSR). PSR was built on the then-radical idea that if trains were scheduled at specific times and left at specific times, they could deliver faster service and gain pricing power. Although this sounds obvious, coordinating a large railway system was logistically very complex, and few trains ever left on time before Harrison changed the industry. Hunter Harrison was relentless on pushing for efficiencies, which meant driving his workers harder, having fewer workers overall, and increasing asset utilization to minimize time that trains weren't moving. Harrison was able to take the operating ratio (OR), which represents the percentage of revenues spent on operating expenses, of IC from the high-90s all the way into the high-50s, a 40% improvement, in his time as CEO. Eventually, IC was acquired by Canadian National (CN), where Hunter would later become CEO and implement PSR into a larger railway system.
Harrison did amazing work for CN, but he was eventually pushed out as CEO when the board decided it was time to plan for succession. Although transition was planned well ahead of time, Harrison always felt bitter about the way his career at CN ended. Part of this was due to his hard-driving nature and his inability to walk away from the industry that had come to define his life. Fortunately, he would have a third act. The activist hedge fund Pershing Square Capital Management took a large position in Canadian Pacific (CP), the other large Canadian railroad, and recruited Harrison to be CEO. CP was the worst-performing railroad in terms of operating metrics, while Harrison was a proven operator. Bill Ackman, the CEO of Pershing Square, was able to launch a successful activist campaign to replace the board and the CEO, installing Harrison on a 4-year contract. Harrison went to work quickly, taking CP's OR from the mid-80s to the high-50s in ~3.5 years. Harrison did it again, making shareholders like Pershing Square billions of dollars in the process. The partner at Pershing Square who led the campaign, Paul Hilal, had a fourth act in mind for Harrison.
Paul Hilal led Pershing's investment in CP, but wanted to strike out on his own. He raised a billion dollars for his own new fund, Mantle Ridge, which he told investors would be deployed into a railroad investment he had in mind. Hilal took a large position in CSX, an American railroad servicing the eastern US, and recruited Harrison to become CEO. By this time, Harrison was in his early 70s, and his health was beginning to falter. On top of that, Harrison was still the CEO of CP, subject to a non-compete, and would be owed $100 million in pay if he were to leave. Hilal was able to negotiate a successful exit for Harrison and install him as CEO of CSX, although at a steep price. The day that this was announced, CSX's stock jumped ~12 percent. Harrison managed to work at CSX for just ~9 months, before dying from health complications in December of 2017. Yet in the short time he was at CSX, he made an enormous impact, cutting thousands of jobs and improving the OR of CSX by ~5%.
The book was exciting to read. It's an All-American story of a man with extreme energy, passion, and dedication to railroading. Although Harrison was characterized by many to be a mean, hardheaded CEO, others close to him knew him as a kind and generous mentor. For employees, he was often a menace as he had little patience for incompetence or waste. For shareholders, he was a savior, turning around some of the worst railroad operations to industry leaders. This book does a great job of painting the picture of a storied business career.