(FORTUNE Magazine) – Michael Walsh wades into the crowd at the Omaha Marriott, Phil Donahue-like, for what he says will be a Socratic dialogue. He begins asking questions that the ancient one would find more leading than educative. (We set out some pretty daring objectives, right? Yessir. And a lot of that sounded like old wine in new bottles, right? Yes.) But he knows what he is doing. Walsh extracts the extra dram of adrenaline that comes from fear of being called on. Everyone is gratefully attentive to the more standard presentations of operating and financial goals that follow. The scene is Union Pacific's two-day Leadership Planning Conference. Held each year for the railroad's top 200 managers, the meeting is one of Walsh's main media for spreading his message about the culture he craves. The theme of this October's conclave, a mixture of lectures, workshops, and audience- participation sessions: Where have we come from and where are we going? At the center of each day's session are success stories presented by real live customers and panels of UP staffers. First, the customers tell of neglect and insensitivity; the Idaho Growers Shippers Association, for example, had been getting beat-up freight cars, and UP crews had left loads of tender spuds on the siding when their shifts ran out. An interdepartmental group called Team UP got them decent cars and made sure the potato trains made their connections with the main line. In-house groups tell how cross-functional teams knock down internal obstacles like coal trains flattening pennies. Just two weeks before the conference, as it happens, coal customers began rejecting damaged freight cars at an alarming rate; UP's repair program had not been up to speed. Within 24 hours UP leased replacements and began an accelerated repair program on its own cars, protecting $10 million a year in traffic. In the old days, the panelists say, that business would have been gone. The grand finale is a question-and-answer session, and the queries are not cream puffs. Among the posers put to Walsh and other executives: Middle managers feel they are doing more work for less pay; what are you going to do to improve morale? A: They are doing more work for less pay. But the people you saw today had high morale because they're doing significant work. That's the key to improving morale. Q: A bright and enthusiastic staff buys into your program despite their fearful manager; how will you know about him? A: Increasingly we'll get third-party opinions by asking customers how our managers are doing; but if a guy is standing on the airhose who we don't find a way to deal with, my advice to you is blow right by him. That culture-disseminating imperative is, in the end, the main purpose of the meeting. Within two weeks, UP will have edited the highlights into a one- hour videotape. By Christmas all managers will get to see it as participants in little clones of the Omaha sessions.