Review of Driving Excellence by Mark Aesch
Mark Aesch is the CEO of the Rochester Genesee Regional Transportation Authority (RGRTA) in upstate New York. When he took over in 2004, the authority had to contend with a $27.7 million budget deficit. Now, the authority consistently turns in annual budget surpluses. RGRTA even lowered fares a couple of years ago. What explained the dramatic turn around?
Aesch tells us in his new book Driving Excellence: Transform Your Organization's Culture - And Achieve Revolutionary Results, Hyperion, New York: 2011. Throughout the book's 239 pages Aesch recounts the story of his tenure with the RGRTA through a series of ancedotes and paradigm shifts.
The main idea of the book is that transformation of a public agency from treasury drainer to revenue supplier is possible if your mindset shifts from viewing the agency as one where service and accountability do not matter to a more private sector viewpoint where the customer comes first.
According to Aesch, an important part of the mindset shift is a change in vocabulary used in the transit industry. For example, passengers are now referred to as customers. A bus is now referred to as a store. Finally, the fare box is now referred to as a cash register.
More evidence of Aesch's attempted transformation of the RGRTA to a private sector mindset lies in the area of employee relations. Soon after he started at the agency Aesch introduced an extensive system of incentive pay that employees would receive if the agency achieved a series of benchmarks Aesch set up and presented in a dashboard-like setting. In addition, he attempted to minimize the union by contacting union members directly rather than through an union intermediary and referring to them first and foremost as RGRTA employees.
The most important part of the private sector mindset shift is the RGRTA's new dedication to financial accountability. Formerly, the RGRTA did not seem to care how their money was spent because they knew that if they needed more money the New York State government would bail them out. As a result, not only did the workers compensation department of the RGRTA not actively monitor the employees who were receiving the compensation but in some cases they encouraged employees who were injured off the job to file fraudulent claims. Now the authority investigates all claims and attempts to file criminal charges against those found to be gaming the system.
The basis of the financial turnaround at the authority seems to be the introduction of what Aesch calls the "Trip Scoring Index" (TSI). The TSI is a combination of passenger load and fare box recovery ratio applied at the individual trip level, and was used to reduce service levels by approximately 12% soon after he came on board. While of course useful, I feel that most transit agencies today have knowledge about how their individual trips are performing. The difficulty in removing unproductive trips lies in two major factors: one, staff is afraid to make even necessary changes and two, even if they desire to make changes political considerations make it impossible.
Aesch describes how he managed to overcome the first obstacle, primarily by becoming a data-driven organization rather than an instinct-driven organization. In an instinct-driven organization, where decisions are based on employee opinions, the opinions of the employee highest in the bureaucratic hierarchy will be the ones implemented. In a data-driven organization, the data inform the decision. In conjunction with this paradigm shift Aesch implemented changes meant to encourage all employees to offer ideas, not just senior management. Overall, the RGRTA went from being an organization based on cult of personalities to one focused on data and ideas.
Driving Excellence does not satisfactorily explain how Aesch was able to overcome the political interference that usually prevents transit agencies from operating like a business. He recounts one ancedote from a time when the RGRTA was attempting to eliminate an express route that carried eight passengers per day. Despite heavy pressure from the politicians in the area where the express route ran, Aesch convinced the board to cut the service through, apparently, nothing besides his personal power. It is likely that the RGRTA's focus on clear cut numbers derived from data played a role, but it is not explained as such. Since political success often lies in the muddy waters of mushiness, strict technocratic adherence to unassailable data could blunt political power.
A somewhat unique part of the RGRTA is their heavy reliance on subsidies from private business. When I had the opportunity to hear Mr. Aesch speak at a session at a California Transit Association conference a while back, he talked about how all new service expansions were completely funded by a combination of passenger fares and employer subsidies. In the book, he mentions that he got the subsidy the Rochester Institute of Technology paid the RGRTA for service provided to their campus continued by eliminating all service to the school until they resumed payments.
Overall, the success of the RGRTA can be summed up in three major ways: one, the change from an opinion-based organization dominated by upper management to a data-driven organization where contributions from all employees are not only encouraged but expected; two, a shift from a public sector mentality to a private sector mentality where the focus in on serving the customer and every dollar must be carefully spent; and three, the will of CEO Mark Aesch.
Of the three, the last one is arguably the most important. Many transit systems have attempted in recent years to become more data driven, more financially accountable, and more passenger focused. However, their CEOs are still likely to be long time transit industry veterans. While they no doubt have excellent knowledge of the transit industry, they have spent all their lives in it - which may make it more difficult for them to lead a transformation to a more private sector viewpoint. Although Aesch had worked previously for the RGRTA, he had spent most of his time outside of the transit field. Perhaps the most important take home message from this book is that in the future transit systems should consider hiring more CEOs with little experience in the transit field, especially CEOs with a lot of experience in the private sector. Hiring a CEO who is not married with the transit industry, like Aesch, may be the best way to transform your struggling transit agency to a successful one like the RGRTA.
Driving Excellence is available on Amazon.com .