Open for Business: Harnessing Open Innovation at the Massachusetts Bay Transportation Authority

Still recovering from record-setting snowfall in the winter of 2015 that crippled public transit in greater Boston, the Massachusetts Bay Transportation Authority (MBTA) faced a projected $335 million operating budget deficit and a $7 billion maintenance backlog. Searching for innovative solutions to these challenges, the MBTA decided to tap into the ideas of the constituents it serves, comprising some of the most innovative businesses and academic institutions in the country.

“Open for business” is not a slogan often tied to a government agency, yet that was the tagline used by General Manager Brian Shortsleeve (HBS Class of 2001) to describe the new state of affairs at the Massachusetts Bay Transportation Authority (MBTA) in the fall of 2016.[1] Still recovering from record-setting snowfall in the winter of 2015 that had crippled public transit operations, the MBTA faced a number of financial and operational challenges that the terrible winter had exposed to the broader public. In particular, the agency confronted an operating budget deficit that was projected to exceed $300 million by FY 2018, as well as a $7 billion maintenance backlog.[2] To complement internal reform efforts already under way, MBTA officials hoped to solicit innovative solutions from outside the organization to tackle these problems. After all, the MBTA served some of the most innovative businesses and academic institutions in the country throughout the greater Boston area. Why not tap into their ideas for solving the myriad challenges facing the organization?

To engage with the outside world on potential innovations, the MBTA developed an “Innovation Proposals Policy” that went into effect in October 2016. The MBTA created a portal on its website through which ideas and proposals for service improvements could be submitted (Exhibit 1). According to Shortsleeve, the goal of the policy was to “encourage private industry, associations, groups, to put ideas in front of the [MBTA] on an unsolicited basis on ways that we can operate more effectively and serve our customers better.”[3] Interest was strong from the business community in particular, and the MBTA received 12 “innovation proposals” within the first month.[4] This new open innovation platform provided the resource-strapped government agency with the means to generate innovative ideas at no additional cost to the organization.

Proposals have ranged from innovative ways to provide late-night bus service to radiant heating technology capable of preventing snow accumulation on station platforms. One of the first proposals was submitted by the on-demand transportation company Bridgj, which proposed to deliver late-night bus service in a more cost-efficient manner than the MBTA’s traditional fixed route model (see Exhibit 2, the MBTA had been forced to cancel late-night bus service in 2015 due to high per-trip costs).[5] As a further example, the Dutch technology company HSI BVBA offered to install specialized heating coils under station platforms to melt away snow during the winter and reduce the need for labor-intensive shoveling and plowing.

Since the policy’s inception two years ago, the MBTA has received 111 innovation proposals, only 3 of which (2.7%) have been procured and/or implemented (Exhibit 3).[6] These proposals have proven a useful tool for retrieving fresh ideas on operational improvements from the private sector. But given the relatively low uptake of submissions, the MBTA should take proactive steps to maintain active external interest and engagement in the medium-term.

First, the MBTA should strive to be more transparent and responsive with regard to the scarce internal resources it has available to assess the feasibility of innovators’ proposals – a key limiting factor that has prevented the acceptance of more ideas.[7] A resource-strapped agency like the MBTA does not have executive-level managers with ample spare time to evaluate proposals. And even if the agency has the resources available to perform feasibility assessment, the internal evaluation process often takes up to the full 60-day timeframe that the MBTA allots itself for a go/no-go decision. The MBTA should actively communicate with proposers throughout the internal evaluation period to better align on expectations considering these circumstances. Second, the MBTA should make it routine practice to thank publicly all proposers whose ideas are not ultimately selected in order to incentivize continued participation, whether online or at weekly board meetings.[8,9]

In addition, the vast majority of proposals have been submitted by for-profit companies hoping to do business with the MBTA. Noticeably absent from the submissions are ideas from academic institutions, transit enthusiasts, and ordinary citizens who have no extrinsic motivation for participating.[10] Of the 111 innovation proposals received to date, only 11 have been submitted by individuals and non-profits (see Exhibit 4).[11]

Moving forward, the MBTA faces a fundamental choice about how to manage its new open innovation platform. Should the MBTA continue to promote the competitive market environment that has emerged organically since the introduction of its innovation proposal policy, with the bulk of submissions coming from for-profit entities?[12] Alternatively, should the MBTA attempt to market the online portal as a more collaborative community for the joint development of ideas among individual contributors and transit enthusiasts?[13]

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Endnotes:
1. Jack Sullivan, “Business Unusual at the T,” Commonwealth Magazine, October 31, 2016, https://commonwealthmagazine.org/transportation/business-unusual-at-the-t/, accessed November 2018.
2. Fiscal & Management Control Board, “Operating Budget Stability: Fiscal Year 2018 – Financial Review,” PowerPoint presentation, August 13, 2018, Massachusetts Bay Transportation Authority, Boston, MA.
3. William C. Vantuono, “MBTA Develops Innovation Proposals Policy,” Railway Age, September 29, 2016, https://www.railwayage.com/passenger/commuterregional/mbta-develops-innovation-proposal-policy/, accessed November 2018.
4. MBTA Internal Data.
5. Jack Sullivan, “Business Unusual at the T,” Commonwealth Magazine, October 31, 2016, https://commonwealthmagazine.org/transportation/business-unusual-at-the-t/, accessed November 2018.
6. MBTA Internal Data.
7. Daren C. Brabham, “Using Crowdsourcing in Government,” IBM Center for the Business of Government, 2013, https://www.cbs.dk/files/cbs.dk/using_crowdsourcing_in_government.pdf, accessed November 2018.
8. Daren C. Brabham, “Using Crowdsourcing in Government,” IBM Center for the Business of Government, 2013, https://www.cbs.dk/files/cbs.dk/using_crowdsourcing_in_government.pdf, accessed November 2018.
9. Giordano Koch, Johann Fuller, and Sabine Brunswicker, “Online Crowdsourcing in the Public Sector: How to Design Open Government Platforms,” Online Communities and Social Computing 6778 (2011).
10. Kevin J. Boudreau and Karim R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, No. 4 (Summer 2009): 68-76. “Extrinsic motivations”, such as financial reward, signaling and career concerns, and user needs, refer to motivations that tend to be characteristic of “competitive market” open innovation platforms
11. MBTA Internal Data.
12. Kevin J. Boudreau and Karim R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, No. 4 (Summer 2009): 68-76.
13. Ibid.

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16 thoughts on “Open for Business: Harnessing Open Innovation at the Massachusetts Bay Transportation Authority

  1. Thank you for the great article! Public transportation in the US is certainly under increasing stress due to re-urbanization and weather-related stresses. The US public transportation industry as a whole seems to be undergoing an open innovation revolution as new ideas pop up every day from Elon Musk’s hyper loop to autonomous taxi driving services within cities.

    For the MBTA specifically, the challenges they face are similar to most other major metropolitan areas, including New York and Chicago. I would recommend opening their open innovation platform to “peer cities” and engaging in workshops to take the ideas and hone in on particularly promising solutions to the problems they face. The assistance of peer cities would help the MBTA test and legitimize any open innovation proposals, and learn from the experiences of other public transportation agencies.

    To your point on where the submissions are coming from, I think it is actually to the MBTA’s benefit that the majority of solutions are sourced from the for-profit world as a key challenge to any public transportation implementation is scalability and feasibility: two elements that a for-profit will be acutely aware of and able to solve for. That said, in partnership with the peer cities, I think it would be helpful to test any finalist concepts with a team of economists and engineers from a respected academic institution to ensure the MBTA has conducted ample due diligence on the open innovation concept.

  2. “Open For Business” as a slogan leaves some room for interpretation: are they “opening” their private operations to new innovators? Or are they so desperate that they must remind people that they are, in fact, not closed? Certainly when West Virginia adopted “Open For Business” as their state slogan, it was the later – their coal-based industry collapsed leading up to and during the Great Recession. With MBTA, the meaning seems to be somewhere in the middle.

    As is, this “digital suggestion box” seems too idealistic to work properly. As mentioned in the article, most submissions have been from for-profit companies looking for contracts. Best guess as to why academic institutions haven’t gotten involved: a lack of incentives. And, sadly, a public ‘thank you’ online from the MBTA is unlikely to change their tune. I think the MBTA needs to offer financial incentives to encourage participation at the highest level, otherwise they are going to be sorting through half suggestions of self-interest from corporations, and half frustrated riders complaining about issues on the busses and trains. Given they are budget conscious and cash strapped, they may need an innovative idea as to how to create financial incentives. Perhaps that could be the next prompt in their “proposals policy”.

    1. Great point about creating financial incentives for participants who aren’t just “looking for contracts”. As you correctly infer, there really aren’t available funds for providing direct compensation to innovators — not to mention the fact that it’s hard to properly value an idea if it isn’t directly connected to some sort of end application. The way that a lot of government organizations have gotten around this is by creating crowdsourcing competitions with a lump sum of cash given to the contributor who offers the best idea for solving a specific problem that the organization is facing (e.g., we will give $10,000 to whomever comes up with the best design for the newly renovated city hall).

      What’s challenging for the MBTA is that there are so many issues facing the organization that no one problem merits its own crowdsourcing competition, per se. What is more valuable to the organization is the ability to field a lot of ideas that touch many different areas of the organization, then implementing the ideas that are feasible to execute and produce some sort of tangible benefit to the organization. Which still begs the question of how to compensation the generators of these ideas — maybe the next innovation challenge should be to field ideas on how to properly compensate contributors!

  3. Very interesting perspective on the novel but flawed process the MBTA has pursued in order to generate innovative ideas! The open question which stuck out most to me was with respect to who the appropriate providers of ideas are. I agree completely that the overwhelming majority of ideas coming from for profit companies will drive the evaluation only of ideas which benefit the MBTA and its passengers as well as the for-profit proposer. The flaw with this is that the MBTA is concerned first and foremost with the provision of a public service, before the benefits to a third party.

    I think that in order to entice individuals and non-profits to participate, the bar for what it is included in a proposal must be lowered. I believe the current system which a detailed proposal dissuades average citizens from submitting. Lowering this bar will help achieve the goal of a “digital suggestion box,” where every idea is welcome.

    1. Great article on some of the unique challenges in the public transportation industry. I agree that as a public service provider, there are benefits to for-profit partnership, but these submissions should ultimately benefit the key stakeholders of the government, community, and especially riders. I am sure portions of each idea have been considered and even implemented as the MBTA makes other changes.

      I worry about a lower bar given the challenges the MBTA already faces evaluating these suggestions but think it could be done specifically for riders or community members while maintaining current expectations for for-profit companies. It ultimately comes down to who MBTA plans to serve and what its goals are. Does it believe it on-the-ground riders and drivers know what is best or economists and for-profit companies? I don’t know what ideas have been implemented but would assume riders and front-line employees could provide a number of small ideas that could add up to be quite impactful if there is a more streamlined process.

  4. I love seeing public organizations find ways to incentivize innovation coming from its main clients and stakeholders – the users of the transportation system. This kind of open innovation is essential to find creative ways to solve the complex challenges organizations like the MBTA face. That being said, I understand the recourse constraint in the evaluation process. My question is: what is the long term cost of not innovating? I believe this should be a priority for organizations that are facing the risk of being disrupted by alternative mobility platforms like Uber. Nevertheless, it is in society’s interest that public alternatives like the MBTA are not substituted by private organizations that may alienate disadvantaged communities in cities

  5. I do think that the current state of the innovation proposal policy runs the risk of amplifying the voices of for-profit entities at the expense of other community members without the know-how or access to the current portal. I’d encourage an outbound strategy for gathering user feedback, distilling them internally into a strategy, and then creating a competitive RFP or separate procurement process for the development. This would help mitigate against undue sway or conflicts of interest.

    Additionally, my experience in City government (shared during the design thinking case) suggests that internal capacity of MBTA staff will likely be a binding constraint on the ability to execute on ideas that are crowdsourced from the community. This is likely reflected in the 2.7% procurement rate – not sure what the best strategy would be for improving this capability internally.

  6. I like this comment and I think that Open Innovation can indeed help MBTA. What surprises me is the very low percentage of solution that MBTA is implementing. The article mentions that MBTA gets this ideas “for free”, which means that they are not offering any price to the people coming up with the ideas. I wonder if this might be the reason why the implementation rate is so low. Offering no price will not incentivise many people to participate in the competition and therefore the very good people who could deliver the best solutions will probably choose to take part in other online challenges, where they can actually win a price. I would suggest MBTA to start offering rewards.

  7. This is an interesting piece on the MBTA’s Innovation Proposal Program. Compared to some of the other open innovation programs written about for this assignment, the MBTA has done a good job of making the requirements to submit high enough such that the quality of ideas is relatively high. That being said, higher quality ideas are in direct trade-off to both quantity and end user input. People who use the T are using it for a practical purpose and often don’t have the time or energy to submit their grand idea on how to make public transportation better. Advertising the program more widely and using the “often idle” time that users are on the T along with lowering the barriers to entry could help in sourcing more and smaller ideas for the program.

    In addition, I wonder whether there is a role for collaboration with schools for this program. For instance, engineering classes might assign a project to design technology that helps the T (i.e. heating coils) and operations classes might assign a project on how to optimize the T schedule. As Boston is such a student and university-driven city, there is a huge amount of free untapped potential that the MBTA should look into.

  8. Thanks for sharing this thoughtful post, Danny. It’s great to see the MBTA – a commuting network I’ve used many a time – reaching out to important constituencies to solicit potential ideas for service improvements.

    I guess it’s not surprising to learn that most of the crowdsourced responses have been from for-profit entities who are trying to do business with the MBTA – and I don’t see this as a bad thing in and of itself. These for-profit entities likely (1) have pattern recognition and prior experience across other public transportation networks that they can bring to bear in Boston, (2) are highly motivated to effect change in the near term (after all, they want to sell their products!) and (3) are incentivized to make sure their services work well in order to garner repeat business with and referrals from the MBTA. Also, I’d hope there are multiple competing proposals from vendors, which the MBTA could use to drive the price down for the benefit of consumers.

    However, I worry that (1) these for-profit entities might be trying to “push product” rather than solve the MBTA’s highest needs and (2) may not know – or care to invest in learning – the local MBTA “idiosyncrasies” (e.g., unique routes, protocols, weather challenges) as well as local Boston constituents. Accordingly, it would be great to see the MBTA tapping into the robust student population in the greater Boston area who know (or could, at least, take “field trips” to determine) MBTA-specific engineering challenges. Boston is home to incredible academic institutions – e.g., MIT, Harvard, Boston College, Boston University, Northeastern, Tufts and Brandeis, among many others – all of whom are well equipped to contribute collective brainpower to the complex logistical and operational challenges the MBTA faces. Could the MBTA create inter-school competitions that award a prize to the school team with the most effective or efficient solution to a particular issue the MBTA faces? This would provide both a valuable and practical learning experience for student teams while also hopefully unearthing creative solutions that could improve our community’s transportation network!

  9. Well done! This is a really unique peek inside a public entity that a lot of us know intimately as consumers, but know very little about as managers.

    With regards to whether open innovation has a place in the organization moving forward, my first recommendation would be to clearly define parameters (financial constraints, scope of solution, deadlines) in order to receive more actionable ideas. If the MBTA is able to implement this, I do believe there is a role for open innovation in the organization in the future in solving a specific type of problem. I do not see open innovation as the best solution for larger, more systematic issues the organization is facing. I do, however, see open innovation as a means to outsourcing creative solutions for smaller, targeted, yet costly problems (late night bus volume).

  10. I loved this article. I have never heard of a public agency like the MBTA utilizing open innovation to “crowd source” ideas for its more difficult operational issues. Though low yield thus far, I think that efforts like this will give the MBTA credit in the court of public opinion. Unlike New York City where the status quo seems to be accepted, Boston and the MBTA are so smart to be leveraging all the great institutions in this city to try to come up with potential solutions to vexing problems.

    I think the author does a great job laying out his or her concerns about the program. Though alluded to, I think the biggest challenge for the MBTA is maintaining enthusiasm amongst its constituents to submit innovative ideas. How can the MBTA incentivize those non-profits and academic institutions that are as cash/time/labor strapped as they are to submit proposal that have a small chance of being accepted? More transparency would be helpful but some type of financial incentive or sharing in total cost reduction / savings could encourage these non-commercial organizations to get involved. I also worry about some key-man risk. Is the organization still committed to this with Shortsleeve no longer involved?

  11. Super interesting!

    Regarding your comment about whether the MBTA should continue to focus its open innovation efforts around for-profits vs. members of the community, I think that in an ideal world, there would be a more balanced mix than what is currently observed. For-profits, attempting to drive follow-up revenue-generating work, are highly financially incentivized to make thoughtful and impactful suggestions, that community members may not have the time, resources, or motivation to develop. As such, it is important to continue to source ideas from for-profits.

    Alternatively, community members stand to add real value in that they are more likely to have direct experience riding public transportation and to suggest attainable, incremental suggestions as opposed to more transformative, expensive ideas. Conveying to the community that their feedback through open innovation can directly contribute to the efficacy of the transit that they rely on for daily commuting and travel as well as the quality of customer service is key to driving more feedback from this cohort.

  12. Thanks for a well-written, engaging article! I was living in Boston during the 2015 record-setting snowfall, and while I’m sure many of us would have been happy without a snowpocalypse, it’s great that the MBTA used the negative impacts of it as impetus to launch its open innovation platform. So many people take public transportation every day that I think this platform has huge potential to crowdsource a greater numbers of fantastic ideas from a wide base of consumers. In mind, what’s missing here is appropriate incentives. To encourage submissions beyond from for-profit entities, I would recommend the MBTA consider running its open innovation platform in a drastically different way.

    One idea: Instead of an ongoing portal for submissions, the MBTA could host limited time contests. People are moved to action when they see specific deadlines; otherwise, they may lack the urgency to act. Each of these contests should have a specific prompt to spur people’s brainstorming, and each contest should also offer a small prize. I understand the MBTA may not be able to afford a big cash prize, but in my experience running promotions/contests at my previous job, people are motivated by the excitement of the contest and being recognized for their win and less by the actual prize. Running these contests less frequently would also help the MBTA save the time and time-related costs associated with reviewing proposals constantly. Instead, they could designate this contest to happen in months where they could get temporary labor to help run the process and review entries, such as over the summer.

    I would hesitate to recommend running an open, collaborative platform; this requires a lot of monitoring and facilitation in order to make the experience a great one that people would want to engage in. Based on your article, it sounds like the MBTA is short on people resources/time so this doesn’t feel feasible.

    Lastly – both of your questions were around how the MBTA should move forward with its open innovation platform. I would like to pose a question back to you – do you think they *should* continue running it? Do you feel they are getting the return from the time and money they put into running the platform? While it’s encouraging that 111 individuals/organizations care enough to submit something, how much extra effort and resourcing would it take to drastically increase this number? Additionally, you mentioned the MBTA has implemented only 3 of these ideas; I would be curious to know what the return on these ideas has been for the MBTA. Were these truly novel ideas that encourage the MBTA to continue believing in the power of crowdsourcing? Open innovation is not for everyone. While it can be great for cash-strapped organizations in some ways, building and fostering an engaging platform may actually end up being more work and money than the benefit it brings to your organization.

    1. Wow sorry, I didn’t mean for this comment to turn into a mini-essay. Apparently I am very passionate about the MBTA 😛

  13. I love the idea of the MBTA crowdsourcing ideas from the public, who often view public transportation as more stagnant than innovative. Not only can this help the MBTA identify creative solutions from others in the transportation space and the (too few) transportation enthusiasts not associated with for-profit entities, but it can also help change the public perception of the MBTA. Open innovation shows that the MBTA is aware that there are logistical problems that need to be improved, demonstrates that they value the people they serve, and exemplifies a commitment to new ideas and innovation.

    In response to the fact that the MBTA is limited in its resources and has difficulty reviewing all of the evaluations, I wonder if they could also crowdsource responses to the different ideas rather than just crowdsource ideas themselves. Individuals could upvote ideas that resonate with them, thereby creating a triaged list of proposals that align with the needs of the community. In addition to providing the MBTA management with an already prioritized order of evaluations to review, this could also help solve the issue of the comparatively low engagement of individuals who utilize public transportation vs. for-profit entities.

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