The bombs rocked the London Underground within 50 seconds of each other near the end of rush hour on July 7, 2005, killing dozens of passengers and injuring hundreds more. Investigators sorted through the wreckage for days before determining that three suicide bombers had boarded the subway trains. A fourth bomber destroyed a bus an hour later. It was the worst attack on London since World War II. 

But the majority of the Underground, or the Tube, as it’s known locally, was operating again as the next day dawned. “We were very conscious of the fact that getting the system running was the thing that would make the system safest in that, if we didn’t reward people with chaos, they would likely leave us alone,” said Tim O’Toole, the Underground’s managing director and chief executive.

What made that possible, according to O’Toole, was the response from the Underground’s frontline employees. “Not only at the sites of the bombs did employees step right in, but across the entire network,” O’Toole told attendees at the recent 11th annual Wharton Leadership Conference, sponsored by the Center for Leadership and Change Management, the Center for Human Resources and Wharton Executive Education. The theme of the conference was “Developing Leadership Talent.”

“We evacuated 250,000 people out of our tunnels and trains during rush hour and not a single person was injured,” O’Toole said. “That doesn’t happen because of management intervention. That happens because people in the field are in control and understand what needs to be done. The thing that makes 14,000 people behave that way is training and competence.”

Training, competence — and the confidence that they instill — lie at the core of O’Toole’s management philosophy. Leadership on the frontlines beats orders from the front office any day, he said. And to show that sort of leadership, employees have to not only know their jobs well but also believe in their own abilities. “Being senior management of the London Underground is about taking credit for goals that other people kick,” he said.

O’Toole’s philosophy has been to create and communicate a vision that people can rally around, to ensure that they have the resources to get their jobs done and to enforce accountability if they don’t. Since arriving in London from Philadelphia in 2003, O’Toole has worked on putting these objectives in place, and in the process, has gotten credit for beginning the turnaround of a subway system. The Tube, though storied in its history, had become antiquated and inefficient, weighed down by outdated equipment and infrastructure and acrimonious labor-management relations.

Under O’Toole’s direction, it has managed to hammer out a multiyear labor agreement and has begun a $40 billion modernization, replacing tracks, stations, signals and its radio system, all while continuing to carry its usual number of passengers. “We’ve got to perform heart surgery on this patient while he plays tennis,” O’Toole quipped. Delays and cost overruns have dogged the construction, as is often the case with large public projects, but O’Toole expressed confidence that it will be done by the time the Olympics are held in London in the summer of 2012. “My employees know that they will take the world to those games and take them home.”

The Tube, which carries 3.5 million riders daily, also has managed to pull off a trick that has eluded many big-city transit systems. Over the last six years, it has persuaded people to park their cars and take the train. Around the world, a number of public transit systems are seeing greater use, thanks to growing urban populations, but they haven’t managed what O’Toole calls a “modal shift” by luring drivers out of their autos. That effort was aided in London by the imposition of a congestion tax on cars that enter the center of London during the day.

An American, O’Toole earned his bachelor’s degree at LaSalle University in Philadelphia and his law degree at the University of Pittsburgh. He spent much of his career with Conrail, the Philadelphia-based freight railroad, which is jointly owned by Norfolk Southern and CSX. He started as a staff lawyer and rose through the ranks, becoming CFO in 1996 and president and CEO in 1998. O’Toole led a turnaround of Conrail, and his results with the railroad attracted the attention of London’s transportation authority.

Given his nationality, however, he wasn’t an obvious choice to lead a British institution with iconic status. As he recalls one of his employees asking shortly after he arrived in London, “With 60 million people on this island, what do we need you for?”

Men Pulling Brass Levers

The Underground began in 1863, the same year that Abraham Lincoln issued the Emancipation Proclamation. It was the world’s first subway and thus a British point of pride. For decades, it was also the envy of transportation planners, carrying more people, more reliably, than other systems. During World War II, its status among Britons was enhanced when its stations sheltered Londoners from German bombing raids.

But since the war, the system has run down, even as its home city — and ridership — have grown. “Many of the trains were well over 40 years old,” O’Toole noted. “The track was just patched together. And the signal system was a museum collection — men still pulling brass levers.” Hence, the advantage of hiring an American. No matter what else the British might think about the United States, its policies or its citizens, they believe that Americans can get things done, according to O’Toole. “That’s why I’m so sore about Hurricane Katrina,” he said. “The response to Katrina put the lie to that.”

O’Toole’s first challenge upon arriving in London was to instill a can-do spirit, American or otherwise, in the Underground’s beleaguered workers. He figured that the modernization would help. After decades of neglect, policymakers were finally acknowledging how much the Tube mattered to London. Ironically, it was the employees who were suspicious. “Their initial reaction was, ‘We’re going to lose jobs,’ or ‘This is going to make my life harder.'”

The reaction seemed to stem from weak morale, so O’Toole set about trying to boost the esprit de corps. And that’s where his commitment to competence and confidence came in. “It all starts with competence,” he said. “Too often, consultants and others who try to predict whether an organization will succeed focus on organizational structure and measures. Those are of secondary importance.”

What matters is getting work done and, if you’re in a service business like the Tube, doing so cheerfully. So O’Toole stressed training. “We not only drill, drill, drill and train, train, train to make sure that our employees have competence, but we make sure that they understand that they have it.” The Underground encourages employees to seek national vocational certifications, known as NVQs, in their fields. “London Underground has more holders of NVQs than any other company in the country, and that’s because we pushed it,” he said. “We want our people to understand that they know things that other people don’t know.”

Getting People to Care

Managers also insist that everyone simulate crises, including biological and chemical attacks. They had done that even before the July 2005 bombings, and O’Toole believes that this training contributed to the employees’ effective response that day.

Once employees have competence and confidence, an organization has to add the last and hardest ingredient, a sense of mission. “You have to get people to care,” O’Toole said. Doing that at the Tube was harder than, say, at Microsoft or the U.S. Marine Corp. As the manager of a public agency, O’Toole couldn’t dangle cash bonuses and stock options in front of employees the way a private-sector manager could. And given the strength of unions in England, he couldn’t bully and berate the way a drill sergeant could. Instead, he had to convince and inspire.

“We brought forth a vision, ‘A World-Class Tube for a World-Class City,'” he said. “At first, it rang hollow for most people because they looked at the system and wondered, ‘Could this ever be world-class compared with the modern systems in the Far East, like Shanghai’s?’ We couldn’t oversell it. So we turned the story in terms of their history. We have a heritage that no one else can touch.”

O’Toole doesn’t pretend that every employee buys that vision or that he still doesn’t face labor challenges. “The transport unions in England had been untouched by [former Prime Minister] Maggie Thatcher’s reforms,” he said. “They had gotten into a pattern of paralyzing London every year” by striking over compensation issues.

O’Toole and his senior management team recently entered into a multiyear pay deal with the unions that should end the strikes. But work rules still create obstacles to the growth of the Tube, and, for that matter, the growth of the unions. Employees “don’t really understand that, if it’s impossible to get rid of people, it’s that much harder to bring new people in,” O’Toole noted.

Another challenge in building the right kind of workforce is breaking away from old patterns of seniority and status. Historically, train drivers were paid the most, so employees aspired to those jobs. The problem is that the sorts of gregarious people whom the Underground needs to staff and manage its stations are ill-suited to driving trains. When these people become drivers, they’re wealthier but less happy. “Driving a train is a very alienating experience,” O’Toole said. “You’re in this cab all by yourself all day underground in dark tunnels.”

He’s trying to move toward a system where each employee is trained for multiple roles and might, for example, spend two hours driving a train and then two hours overseeing a ticket gate.

As he puzzles through the Tube’s many management challenges, one thing that O’Toole says he doesn’t fret about is another terrorist attack. “Terrorism is a lightning strike. What I worry about is getting the work done before the Olympics. That’s a huge construction project.” And a complex one, O’Toole points out. Not only must the work happen while the trains continue to run, but it often requires the reconstruction of tunnels and stations that have existed since Jack the Ripper terrorized London in the late 1800s. “It’s one thing if you’re on a green-field [never-developed] site,” he says, “but almost every station we open presents some sort of new mystery or challenge.”