A Different Mindset Drives RGRTA

It was a cold, snowy day in January that I was standing at a bus stop in downtown Rochester, N.Y., waiting to catch a bus to the other side of town. At 11 in the morning, standing there in the snow, in a city of its size, I was surprised to be standing there with so many other people.

The Rochester Genesee Regional Transportation Authority (RGRTA) is growing, seeing the highest ridership in nearly 20 years with a 20 percent increase in ridership since 2004 and a growth rate at two times the national average. In 2004 it faced a $27.7 million operating deficit on a $70 million budget. It was a crisis situation looking at service cuts and layoffs when the authority was looking for a new CEO.

Politics in Transit

Growing up on a farm in upstate New York, RGRTA CEO Mark Aesch never expected he would have accomplished all he has. After going to college in Rochester, he went to work for a local town as an assistant to a town supervisor and then it was off to work for a member of Congress.

After about six years, Aesch came to RGRTA looking for a new challenge. He worked in a staff role then left the authority to work on a major quarter-of-a-billion-dollar construction project. Following that he came back to the authority in the spring of 2004 as the CEO.

He says one of the things he’s often asked is if he misses working in politics. He responds, “If you’re going to run a public institution, there’s every bit as much in politics as I do today as when I worked for a member of Congress.

“If you think you’re divorced from that because you’re not working for an elected official, you’re missing the whole point.

“The job is very political by its very definition. And it should be; that’s not a bad thing, that’s a good thing. It should be very political.”

When it comes to facing the challenge of management, Aesch thinks there’s a “woe-is-me” mentality to manage in this industry when the reality is that it’s difficult to manage in any industry.

“If you’re going to get breakthrough results and be successful in what ever industry it is, it isn’t easy,” he says. “I think I’ve learned there tends to be an Eeyore-ish approach to how hard it is to be us.

“It’s hard to be every day, so suck it up, lift our chins up and get on with it.”

At the End of Its Rope

When Aesch came to RGRTA in 2004, there were 750 employees, about 100 vehicles and it was looking at a $27.7 million operating deficit on its $70 million budget. “Turn out the lights,” Aesch now laughs.

RGRTA had a six-zone, complicated system and the fares were between $1.25 and $3.10. The cost recovery at the time was 28 percent and the on-time performance was 76 percent.

Today it is paying employees more, healthcare costs have gone up and fuel costs more, but despite that, it has become less reliant on taxpayer dollars than it was before.

It’s also grown to 840 employees, more than 400 vehicles, an on-time performance up to 90 percent, it’s eliminated the six-zone system and went to one fare for all rides. In 2008 the fares went from $1.25 to just $1.00 for a ride. And the cost recovery is up to 41 percent.

This strategic shift is something the team has been really focused on, Aesch says. RGRTA has increased ridership six consecutive years, up to just shy of 18 million folks a year and it has had five straight years of surpluses and will have made $33 million over the last five years.

Aesch says they have made a lot of changes over the years, but those changes weren’t designed to save money; they were designed to achieve a strategy.

Aesch recently authored the book, “Driving Excellence,” which highlights his management style and what has evolved at RGRTA.

He said he wanted to make a point about management in “Driving Excellence,” about survivors vs. succeeders, about sad decisions vs. tough decisions, about “I think” vs. “I know,” those kind of fundamental points and to tell stories to illustrate the point. The stories come from the evolution of the Rochester Genesee Regional Transportation Authority.

“My hope is people will be able to understand the larger management points that we’re making and that the stories are just illustrative about transit.”

Whether reading the book or talking directly to Aesch, you quickly find he has an expressive way of communicating his ideas in an engaging narrative. He says he wanted a business book with a novelistic flair and that same energy and passion comes through when talking to him one-on-one.

Changing the Game

There were three parts that made this success happen, Aesch says of the evolution of RGRTA. “We had a crisis, we had a board with a business mindset and a management team that said we’re not about surviving, we’re about succeeding.

“We were broke, and when you have a crisis, you have to change,” he explains. “We had a crisis which was obviously helpful to get everyone to realize, ‘Holy smokes, the building’s on fire.’

“The second thing is we had a board which very much has a business mindset, they define success very clearly. They don’t get in our way to manage the company; that’s our job.”

The third piece he says is the management team’s thought process. “We all come to work and we’ve made a lot of decisions over the years where we realize making the decisions, we might get fired, but we made the decisions because we felt they were the right things to do for the organization.” He adds, “We put our own personal survival at risk in order to make smart business decisions.”

Aesch says he thinks a lot of people make decisions about whether or not they will survive or succeed but if you’re cutting just to save money, you’re in a survivor mindset.

“Some people would say we’ve cut service. No, we were looking to drive productivity,” he says. “We were strategically trying to become more efficient in our delivery to the community.”

He continues, “They look at other people and they say, ‘We’re going to cut service on some route.’ Well, there are two people riding it.

“You’re going to jeopardize 60,000 people a day over two people that you’re running a bus one way 30 miles for? I’m not sure that’s cutting service, I think that’s silly.” He stresses, “It’s all very strategically driven.”

There were two changes that were critical to this process. One was changing the thinking from customers to passengers and the other was becoming less reliant on tax dollars.

“We wanted to get us to no longer pick up passengers but to pick up customers,” Aesch says. “You can easily get people to just parrot that. ‘Fine, if the boss wants us to call them customers instead of passengers, that’s what we’ll call them.’

“But it’s getting people to culturally think of it differently.”

As Aesch explains, a passenger is a passive term for someone that has no choice; take it or leave it.

“When you walk into a Wal-mart store and there’s a Wal-mart greeter there, you expect them to have a smile on their face. You expect the store to be open on time. You expect the store to be clean,” he says. “It’s not a service; it’s a product that they sell.

“We have stores. We have 450 stores; our bus is our store.

“It needs to open on time; you would expect that at Wal-mart. You expect it to be clean; you expect that at Wal-mart. It needs to be a product worth buying; you would expect that at Wal-mart.”

In “Driving Excellence,” he says he tells the story of one of their employees that he had an encounter with. “He essentially said, who cares if we get the buses cleaner, they were riding before, what difference does it make if we make them cleaner?”

He talks about bumper sticker mentality, where it’s easy to make a statement and get everyone on your team to parrot it. But achieving that shift in the way employees think and having that impact on the process in how they work as an agency is moving beyond bumper sticker mentality.

It went from employees thinking it’s not that big of a deal as to how clean the buses are because they will still have passengers, to employees wanting to present customers with a clean product.

They now have a dozen or more employees that are involved in the bus cleanliness process. “It’s a whole new process for bus cleanliness; it’s completely different, ground up,” Aesch says.

“That moves it from bumper sticker talk to real destination-driven management where you’re saying bus cleanliness is important to customers and we’re going to drive this.”

Setting a Path

Sunday-afternoon-drive management is what he describes as a common management style that many places adopt. “They don’t adopt a plan, they adopt a budget and a budget is just how you’re going to spend how much money you have this year.”

“It’s where we’ve all been out on a Sunday afternoon drive with our parents when we were little and dad sort of paternalistically drives the car wherever he might feel like going, but it’s difficult to keep everybody engaged if dad’s just very ego-driven, driving the car wherever he feels like going.”

What changed it at RGRTA was putting together a plan with a vision, strategies, operating tactics and a measurement system so that everybody can follow where the agency is headed.

And in six years Aesch says they haven’t adopted a budget, they adopt a plan.

The plan is the vision statement that he says tells them what they are trying to be “when they grow up.” The plan also outlines the strategies needed to implement to achieve that vision.

The last piece, he says, is aligning the money to realize those operating tactics and then building a measurement system to outline whether they are successful.

“One thing I just love about the plan more than anything, this is very transparent, we put this out in front of everybody so for each one of our four strategies … we say 14 months ahead of time on March 31, 2011, ‘The authority is successful if,’ and there are numbers with each one of these things.

“We’re putting a stake in the ground and we’re saying this is destination-driven management. This is where the stake is. This is how you’ll be able to tell if you’ve had a successful year or not.”

He relates it to sports management. “They evaluate the manager not based on how much does he pay the assistant manager or did they procure the left tackle the right way when they hired him; they measure the Major League Baseball manager on how many wins did you get?

“Pretty clear what success is,” he says.

“Most public agencies have a rolling definition of success. It’s whatever a reporter wants to say success is, it’s what ever an elected official wants to say success is, it’s what ever a board member says; the definition changes every day as to what success is.”

He stresses, “There’s nothing unique about what we did here. We’re not smarter than anybody else; we didn’t necessarily make better decisions than anybody else.”

Going the Distance

Aesch describes the moment that he knew RGRTA was going to succeed. It was at its pep rally, the defining moment.

“We saved ourselves so we’re having the big pep-style rally,” he shares. “Typically when we develop a plan for the board, the CEO signs a letter to the board saying here’s the plan for the company.

“What I said to the employees was, if you felt like you helped this year, to dig us out of this massive hole to succeed, you can come up now and we’re all going to sign the letter submitting the plan to the board for the coming year. “

He explains how they ended the pep rally, with U2’s “Beautiful Day” playing in the background, the high energy and excitement in the garage and employees coming up and signing their plan.

One of the drivers that had challenged policies when Aesch came on board, came up at the rally and said he wasn’t going to sign the letter.

“He’s looking down — tall guy — and I said, ‘That’s OK, Caesar, don’t sign the letter.’” And Aesch says he was thinking at the time, “Don’t bring me down on a day that’s exciting.”

The driver said he couldn’t sign the letter. “I kind of hesitated for a minute thinking if he can’t read or write, that’s not why he’s going to sign?

“He says, ‘I’m not going to sign the letter because I don’t deserve to. I didn’t help, I was in the way, I was an obstacle, but this coming year I will help, I will do the right things, I will advance the organization and next year I’ll be able to sign the letter.’”

Success With Partners

With this change in mindset mirrored throughout the organization, there have been a lot of accomplishments at RGRTA and it has allowed the agency to grow in a variety of ways. With the Rochester Institute of Technology (RIT) nearby, the partnership they have in testing, implementing and utilizing technology has continued to grow.

One of the areas they’re working together on is with the vehicle diagnostic testing pre-breakdown so when testing equipment, it will send an automatic signal back to radio control before the bus breaks down, telling them the bus is thinking about breaking down.

“It’s really pretty neat because they’ve done some things where they have major relationships with the United States military to do similar work,” says Aesch.

“They will test on our fleet of buses, technology that they’re waiting to deploy on Marine Corps tanks in the desert.” He emphasizes, “They’re testing it on our equipment.”

And when he talks about technology advancements, Aesch stresses that it’s all about achieving a strategy. Another that they’re in the process of is rolling out signage at stops to let riders know when buses are coming.

“We’re not putting them up because they’re cool,” he says. “About 70 percent of our customers who call our call center are looking for information on timeliness of when the next bus will be. Seventy percent.

“We’re doing this investment to help reduce the number of incoming calls to the call center so that we will be able to address that from an efficiency perspective.” He stresses, “It’s a very specific investment that we’re making.”

He says of the partnership, for years it was the school subsidizing a route that they provided for their students and faculty and now that relationship has increased exponentially. “The relationship really works both ways now,” he explains. “They’re buying from us, our ability to provide transportation and now we buy from them, their intellectual strength to test, train and implement multimillion-dollar technology investments we’re making.”

He stresses, “It’s been fantastic. It really has become a two-way street of success.”

Talking about their partnership with RIT leads to a discussion of how RIT subsidizes the route and that it’s not the typical “paying for passes” that many educational institutions have with transit properties.

“Businesses would typically say, ‘Well I pay taxes, so run a bus, bring me customers, bring me employees.’ Our reaction to that is, you also pay taxes to have water lines put in but you don’t expect to just get your water for free, you’re clearly going to get a water bill at the end of the month for the water that your company consumes. So if we’re going to extend a bus line to bring you customers to shop at your mall or employees to work at your nursing home or students to go to your college, we will enter in to a business relationship to deliver that to you.”

Aesch says they share in the risk based on how many people the business and RGRTA believes will ride, but RGRTA doesn’t shoulder 100 percent of the risk. With this type of relationship, they have 52 business relationships throughout the region where the revenue exceeds what they take in through the farebox.

When providing service to the community, RGRTA questioned whether the responsibility of the agency is to provide a bus to provide service to people who ride it or if it’s to take as little money from the taxpayers to support it.

“After chewing on that for a couple months, we decided the answer was, ‘Yes,’” Aesch says. “What we did is we took and built a measurement system which takes the service side: how many people are on board a bus, and we give it a score. Then we take the cost recovery side: how much does the taxpayer have to put in, and then we give the bus a score.

“Then we add those two together and that tells us the answer to how are we doing and rather than ‘cutting service,’ as so many folks are apt to do, we’re able to go in with a microscope and then a scalpel.”

As he explains, if there are a lot of people on board a bus but very low cost recovery, there is a service obligation to provide that service. Conversely, if there are only a handful of people on board the bus but it has a high cost recovery score because it’s a subsidized route, the taxpayer’s not putting money in.

“What we’re looking for is, where do we have very few people, or nobody, and where is the taxpayer paying and that’s where we get the microscope and the scalpel to find those kinds of trips. We’re looking to balance all the time,” he says.

Moving Forward

“It’s not ‘I,’ it’s ‘We,’” Aesch says when I ask him what he’s most proud of at the agency. “We’ve worked very hard to make it ‘We.’

“So often, the CEO at the executive level becomes about demonstrating they’re in charge, rather than actually being in charge. If you’re focused on demonstrating you’re in charge, you’re not really leading the organization.” He adds, “If you’re going to really move the organization, you have to get the organization to recognize it’s not about you; it’s about the organization.”

About the success of RGRTA he says, “It takes a lot of work from a lot of people.” He stresses, “A CEO can not do what we did. It will not be successful.

“We brought in a whole group of people who are succeeders rather than survivors.” He says, “You just keep moving that ball and eventually people catch up with you.”

He suggests to other agencies: Build a road map, have a plan and have a measurement system which tells you whether or not you’re being successful in the implementation of your plan. And the last piece he says is to have the courage to make the right decisions.

Aesch will be leaving RGRTA at the end of the year. He really likes what he does and he says he’s really proud of how they do it, but the part that really excites him, that he’s really passionate about, is the public sector management piece.

He says, “It happens to be public transit today, but whether it’s a hospital, a school district or a sewer system, I like being able to take what people traditionally see as stodgy, tired government bureaucracy and turn that into a lean, mean efficient, less-taxpayer-dollars-needed business mindset organization.”