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Joshua Schank on Transport Innovation and Learning From Failure

Joshua Schank recently talked with VerdeXchange in advance of next month's 15th Annual VerdeXchange VX2022 Marketmakers' Conference. The full article can be accessed here and is quoted below.

With track work completed on new Downtown LA’s subway tunnels, LA Metro is continuing to build out its ambitious regional rail and bus system. Yet, per Joshua Schank, Metro’s former Chief Innovation Officer, more than capital is needed. Schank, in this interview, notes that in addition to capital investment, the LA County agency needs to continue to seek creative solutions to solve the region’s mobility problems. Schank explains that not being afraid of failure and tapping more into the potential of public-private partnership are two ways Metro can move forward successfully, especially with appropriated funding from the State and Federal governments expected and on the way.


Joshua, you recently joined the private sector after seven years heading LA Metro’s Office of Extraordinary Innovation (OEI). Looking back on your tenure at Metro, elaborate on OEI’s record of accomplishments and successes.


We had a window of time in which real change was possible. We took advantage of that and did some really exciting things that we can be really proud of.

"It turns out that often some of the biggest barriers to change lie not within the politics, but within the bureaucracy of the organization itself. There are entrenched interests within any large organization that are going to fight very strongly to keep things the way they are.” -Joshua Schank

For example, we were able to bring private sector investment back to public infrastructure and set up a public private partnership program that now is allowing private sector investment in the Sepulveda Transit Corridor, West Santa Ana Branch, and potentially, bus electrification. That's a huge step forward for Metro and for the region.


We were also able to get an on-demand transit system operating with Metro Micro. It's a publicly-operated on demand transit system that can carry multiple people within a region. It’s a much more convenient alternative than what existed previously.


We set a new course for Metro with the development of the Vision 2028 Strategic Plan. I'm really proud of the fact that, in part due to Vision 2028, we moved the conversation forward on congestion pricing because ultimately, that's one of the biggest issues that we have to make traction on in order to deal with transportation and mobility in the region.

Finally, a lot of new ideas – including Metro Micro - came in through our Unsolicited Proposal process. It was a window in time, and we got a lot of cool stuff done.


What organizational “conditions” existed to allow that window for innovation to open?

A couple of things. One was you had a mayor who wanted to highlight innovation and technology at the forefront. And, you had Measure M and a desire to focus on infrastructure investment.


At the time that we started in 2015, if you asked Angelenos the top issues on their minds, it was transportation and mobility and traffic; that’s not true anymore. Homelessness is now the top issue. Innovation and technology have been replaced to a large extent with issues of equity and how we deal with the larger crisis that have come at us with Covid.


Political winds change with people’s priorities, but we had a window that was created by the Mayor and Phil Washington, who was brought in to be Metro’s CEO as an outsider with a very different perspective. During that window, OEI had the political support to consider and invest in change.


Related to federal infrastructure investment, do regions, localities, and the state presently have the technical acumen to wisely invest using the incoming infrastructure funding coming from Washington?

I think we have some work to do in that area. There is a bias within transportation—LA is no exception—towards building infrastructure. Towards putting people to work as opposed to trying to achieve greater mobility. Building is not always the way to get there. Building is hard, takes a lot of time, and is very expensive. There are many other ways that you can get there, including things like congestion pricing, incentives for people to not drive alone, and fareless transit.


Much of the transportation industry is very focused on what we can build next. The federal government is no different. Unfortunately, the federal government spits out this money and it is oriented towards capital, instead of providing operating funds and pushing agencies to do better with what they have. We have to change that mindset. We need leaders who will help change that mindset if we're going to use that money effectively.


Innovation and organizational experts repeatedly assert, that organizations learn from failure, from trial and error, from making midcourse corrections, and from overcoming the challenges of securing alignment across silos. But the latter organizational learning environment is not typically the environment one finds in large government agencies. Address the challenges of fostering innovation within a large government fishbowl, like Metro.

Certainly, most anytime we were trying to push a new idea, we were going to face opposition, particularly from within Metro. People would say, “We tried that 20 years ago, and it didn't work”, or, “We've always done it this way and we know this is safe.” There tends to be a bias towards the status quo, particularly within government, because they perceive that under the status quo, the risk is lower. New things are perceived as having a much higher risk.


We were constantly up against that challenge. It's true for the board members and anybody out there, this idea that if they take on this new thing and fail, that's a bigger deal than if they just go the same way they’ve always gone and fail.


That's why having a leader like Phil Washington made a huge difference because he said from the beginning, “I will own the failure.” He pushed the entire organization to accept failure by creating an innovation office and making it a focal point of his tenure.


The window for innovation appeared to be closing a bit before Phil left for Denver and DIA. What contributed to that window at Metro starting to close?

Well, a few things. One was the Covid pandemic and the crisis it created, which could have gone two ways. You could either take it as a time to think about what major changes we can make because even though it was a tragedy it was also an opportunity for change.. Maybe it was a time where you could do stuff that would make a difference because people are open to it.


Alternatively, COVID could lead towards retrenchment and saying, “We’ve got this bigger issue to deal with so I'm not doing anything different right now.” Unfortunately, it kind of went the latter way. Transit and the city were in crisis. Everyone was wondering how we stay alive, not how to do things differently. And then later once Phil announced he was leaving, people were wanting to see what was going to happen next. They were less willing to take the risks they might have taken.


Elaborate further on the political and organizational challenges within the public sector of attempting to learn from “failure.” Is it even doable?

I think it is doable as long as it is promoted as something that is acceptable and part of the culture of the organization. For example, at Google, 10 percent of every employee's time is dedicated to new projects and innovation. That's real support.


That's very difficult to do in the public sector. If you did that in the public sector, people question why their tax dollars are paying for people to think about new things. I think that’s the wrong perception. By spending that 10 percent of time thinking about innovation, you're going to save money in the long run if you do it right. You have to have the support from the top saying they expect there will be failure, and they will accept that failure by enabling you to spend time trying to do new stuff.


Give us one example of a “failure” that you/Metro’s OEI learned from during your tenure.

I'll give you an example of a project we did where we learned how difficult it can be to do something very simple. We were approached by a company called MobileQubes. They wanted to put these vending machines at stations that allow people to buy chargers for their phones that would cost Metro nothing. In fact, they would give us a percentage of the revenue.


What we didn't understand was that it would touch almost every department in Metro to do that. We were going to have to get a buy-in from every one of those folks. They all had a reason why we shouldn't do it. It took us two years to go through that process of building support and making it happen. In retrospect, I would have tried to better understand what it would have taken to get that done and whether it was worth our time. Also, if I was going to do it, I would have made sure that there was a full agreement before trying to go forward, so we wouldn't waste two years trying to build this thing before we knew that people actually bought into it. The key to innovation is not so much having a good idea; it's building support for that idea by having it aligned with other people's interests within the organization.


Both Phil Washington and you were involved in pressing the case for “congestion pricing” in LA. What’s the status of that effort?

Before I left Metro, we launched our Traffic Reduction Study, which is looking at where in the region we could test the idea of congestion pricing. It's coming down to a couple of different places, perhaps Downtown Los Angeles, the Santa Monica Mountains, or the 10 corridor that have the potential for congestion pricing to make a real difference.

The fact that it's even being talked about in Los Angeles, a place where people presume that they have the right to drive as much as they want for free, is amazing. That's a testament to the fact that Mayor Garcetti was backing this idea and that Phil was a strong leader.


Whether it can move forward depends very much on the next mayor and whether there’s a real project champion for this. If there's a project champion and people are willing to try it, I think it has a shot. Most places in the world where congestion pricing has been implemented, people have been opposed to it before implementation, but after implementation, they're in favor of it because they see the benefits that it creates.


Metro introduced pricing years ago on express lanes on certain LA County freeways. Has that experience changed the politics of congestion pricing?

No, I don't think it has. I have a couple of reasons for that. First of all, those lanes, which I think opened in 2012, have not been expanded since. Also, the difference was that those lanes were additional lanes of traffic. They were not taking existing lanes and converting them. That was slightly easier than full-on congestion pricing.


What I think is illustrative is if you went today and said you were going to take those lanes away and make them free for everybody, you would have strong opposition to that. They certainly are now taken for granted as being an amenity that people really appreciate.


What now are the central opportunities and challenges remaining for LA Metro to accomplish?

The central challenge in Los Angeles is if you want to build infrastructure, you need right-of-way. You need to secure a place for the trains or buses or whatever vehicle to be able to move. Right now, almost all of that space that's available is secured for private vehicles or is underground, where it's very expensive to build.


The essential problem that we’re facing in LA is trying to convince people to give up some portion of their space that they currently have for driving and give it to mass transit in a place where we've got a very small percentage of the population using mass transit. The people who have the most power and wealth are definitely not using it, which is an enormous challenge you face every time you try to build something new.


One of the things that we tried to do in the OEI to get around that was to bring private sector investment into that infrastructure. One of the things that such investment does is create a profit motive where there wasn't one before. Metro does not have a motive other than wanting to build stuff and do it well. We don't have enough of a financial motive. When you use a project delivery method that involves private sector financing, there is an entity involved whose bottom line depends on getting it done, getting it open, and operating within a certain period of time. That extra added incentive can be helpful in overcoming some of the barriers in infrastructure provision.


Pivoting to another transportation “opportunity,” P3 has not typically been favored for building large transportation projects by either California or the federal government – i.e. giving right-of-way and the opportunity for private transit operators to build the stations and use commerce to support the cost, construction, and operation in return for lower construction cost. From your experience at Metro, is that bias wise?

When you look at the P3 market in terms of investment and infrastructure, the US is way behind much of the Western world. That's largely because you've got 50 different states with 50 different sets of regulations. We've got a lot more local control than you'd have in a lot of these other areas. When you have local control, it becomes much harder to assign the risk appropriately within a construction project.


Because of all the local risks that Metro takes on every time we build infrastructure, we can't transfer those to the private sector. They're not going to take that on either; it's too big of a risk. They're not going to try to deal with every community, every city, and every council member. Metro has to do that. The benefits of P3 investment are not as large as they would be in a place with more centralized planning.


That said, there still is a huge role for the private sector in accelerating infrastructure investment. There is a resistance because the status quo is etched in the brains of many people in the Los Angeles region and across the United States because they just haven't done it before. They have a status quo bias against trying to do something that's different than what they’re used to doing.


Pivoting to your post Metro work, share what you now are doing professionally re transportation?

I'm working for InfraStrategies, which is a boutique consulting firm focusing on public-private partnership and strategic planning for transportation agencies. We consult with agencies around the world about big picture thinking, how to do things differently, and how to do things better.


I'm also a senior fellow at UCLA and the Institute of Transportation Studies, where I get to write and think about not just how to make transportation in LA better, but contribute to the larger body of work on that area.


Before accepting a position with LA Metro, you were in Washington DC “thinking” about “big” transportation policy issues. Question: What subsequently did you learn at Metro that complimented your experience in DC that's now applicable to your new position with InfraStrategies?

I’ve learned a lot, but mostly what I've learned is what it takes to take those big ideas and actually make them happen.


When I first came here, I had the idea that the biggest barriers to implementation would be the political challenges that we would face, because that was typically true in DC. It turns out that a lot of the biggest barriers to change lie not within the politics, but within the bureaucracy of the organization itself. There are entrenched interests within any large organization that are going to fight very strongly to keep things the way they are.


What I learned over the last six years was how to navigate internal challenges. Anyone can have a big idea. The question is, can you take that big idea and get enough people within your organization to buy into it, so that it becomes a reality? Innovation and big thinking are a lot more about building consensus and building relationships than it is about having big ideas.


And what did you learn at Metro from Phil Washington?

Phil Washington is the greatest leader I've ever seen of any organization. What I learned from him is that you can get people to do almost anything if you are an inspiring leader who has a strong message and a vision for what they could accomplish.


He was one of the few people in the world who commanded attention when he spoke because every word mattered. When you heard what he had to say, you felt like that is the team I want to be on because this is a person who knows what they want and how to get it.

One interesting story about Phil - academics and researchers get brought in all the time to talk to CEOs. Typically a CEO will bring them in to confirm their beliefs. Phil Washington was not like that. When he brought me, other researchers, and big thinkers in, he actually wanted to learn from us and learn how he could do his job better.


In June you will be participating in VerdeXchange. What do you hope your transportation panel focuses on?

I hope we can have a serious conversation about what types of transportation investments and changes can really affect climate. There is a bias in that area towards technology being the solution, and, of course, technology has a role to play with transportation emissions. The fact is in Los Angeles, there are many places where there are no sidewalks, where you have no choice but to drive because you can't possibly walk. Making it so people can walk safely, bike safely, or take the bus safely can have a substantial impact on climate.


Second, the entire issue of climate should not be heaped upon public transit. Public transit serves a lot of different purposes. The climate problem needs to be a shared responsibility beyond public transit. All of transportation has to take climate into account, and we can't just let everyone else off the hook for that challenge. Public transit also has to do the critical job of serving people who don't have cars. That portion of the population deserves to have a decent transportation system and can't just be ignored because we're making it transit’s responsibility to deal with climate.

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