Nancy Kete: Redefining public transport
Alejandro Litovsky
April 6, 2010
Established in May 2002, EMBARQ – The World Resources Institute Center for Sustainable Transport – acts as a catalyst for socially, financially, and environmentally sound solutions to improve the quality of life in cities. Working with politically and financially empowered
authorities at local and global levels, EMBARQ works to reduce the costs, risk, time, and complexity required to diagnose key transport problems, and design and implement sustainable solutions.
Through the formation of public-private partnerships, EMBARQ works to turn the attention of the private sector towards the needs of cities, their citizens, and their environment.
EMBARQ has also proven that the design and implementation of sustainable urban transport strategies in the developing world can translate into economic opportu
nities for the forward-thinking business. In this interview, Alejandro Litovsky picks the brains of Nancy Kete, Director of EMBARQ, on her experience and reflections on scaling the impact of EMBARQ in some of the world’s most complex cities.
Q: What impact do you expect to have and how do you plan to achieve it?
Nancy Kete: We aim to have a substantial impact in solving complex transport problems in 8 to 10 cities around the world by 2012, by catalyzing sustainable transport solutions. In concrete terms, we agreed a set Key Performance Indicators with our board that includes having at least 2 bus rapid transit (BRT) systems operational before 2011 and another 4 BRTs at final investment decision by then. BRT is not all we do but these systems are the most expensive and have the biggest impact so they drive our costs and outcomes, or did when we set our targets.
BRT and our other projects are expected to yield tangible impacts such as reduced CO2 emissions and improved air quality, as well as improved customer service and quality of life. We work hard to develop quantitative measures of these impacts but sometimes measuring the impact costs as much as achieving it so there are tradeoffs as to where you put your scarce resources. To date the projects we’ve catalyzed in Mexico and Turkey are carrying 1.3 million passengers per day over 107 kilometers of BRT corridor. The first BRT corridor in Mexico avoids some 26,000 to 36,000 tons per year of CO2, and, according to Mexico’s National Institute of Ecology, has avoided on average 3 deaths per year from the reduction in air pollution on the corridor and avoided 7,700 lost work days.
Taking all the BRT corridors implemented to date, the CO2 savings is on the order of 70 to 80,00 tons per year so far. If, eventually, all the 34 major cities in Mexico were to rationalize their bus systems and put BRT on the major corridors, there is a potential CO2 savings of 25 to 40 million tons per year of carbon to be realized, as well as health, safety, and quality of life benefits.
The quality of life benefits come in a number of ways, but not least from the time savings delivered: in Istanbul the BRT corridors are reducing commute times by at least 50%!
Our strategy get to scale has always been to start in one place with a project and a partner we are likely to succeed with, and then build out from there. We are aiming for a couple of big, visible successes with particular projects in iconic cities such as Mexico City or Istanbul. After attention is focused on these high visibility projects, we scale out from that project both to other transport projects in that city as well as to other cities in that country. Then, hopefully, it goes viral.
We don’t just leave the lessons learned to fate, though. CTS-Mexico and EMBARQ host a major international congress on sustainable transport every fall in Mexico City, for example, which has generated a lot of knowledge and fostered information flows across Mexico and Latin America. This has been very important in generating spread and influence.
EMBARQ has quite a sophisticated website with a blog called “The City Fix” where we connect discussions about what is working in city transportation projects around the world.
Q: Can you think of a defining moment for EMBARQ’s potential to scale?
Nancy Kete: I can think of many. Mexico City was our first city partner, and where the first of our five Centers for Sustainable Transport was created. The whole strategy worked very well there. It was difficult and challenging but it worked and we learned a lot. We were able to promote, help design, and help them launch a BRT corridor in less than 3 years. This work and experience has allowed us to refine our key performance indicators, and think about the methodologies with which one could replicate this work in other cities. The more cities we are engaged in the more we learn about the critical path ahead. I guess the key lesson is the importance of learning by doing and moving forward.
Q: What made Mexico City such a success?
Nancy Kete: Luck was certainly a factor. The preparation and hard work of getting the city to focus on exploring the solutions and building organization around such an effort were obviously very important and a factor in building buy-in progressively. But the timing of the whole thing was essential: the project was ready when the Mayor needed a project. This was a key to success. We had just the right amount of money to take the Bus Rapid Transit (BRT) program forward at the right time. The strategy essentially worked from the management and from the technical side. We had enough money and staffing, the right people to lead the center, and we were able to leverage others’ funding and similar efforts, notably the World Bank.
We are now working in Mexico to help the national infrastructure with the technical work on a recently created fund for urban transportation. This is an indication that we are generating systemic change by involving more and more actors in a sustainable urban transport ecosystem. We’ve moved now from working with just one city to other cities and the Mexican national government is now recognizing that we have a role to play. They’re putting Bus Rapid Transit (BRT) and light-rail and all the options on an equal footing. I’d like to see Brazil do something like that.
Q: What barriers you face in scaling EMBARQ’s impact?
Nancy Kete: EMBARQ has a very challenging model of making commitments to deliver outcomes in cities where we don’t really have control over the outcomes. It is difficult because it involves working mainly with cautious politicians and their staffs who can tend to be conservative and move slowly. Where we identify entrepreneurs who are willing to go out there in a persuasive way, we still have the challenge of delivering really high-quality technical advice with limited resources. Bringing these different speeds together can be very challenging. But if I had to pick the single most challenging barrier it would be the access to more upfront revenue now so we can continue to provide the high quality technical assistance to cities at the beginning of a mayor’s term, so that he or she can complete one of these projects and get the political credit for it. Without that, politicians won’t take the risk.
Q: How would that happen?
Nancy Kete: We’ve always been trying to figure out whether or how those who benefit from this could return some of that value to us or to the donors who invested in it, in a sort of revolving fund. Of course we would love to attract one or two more big strategic donors, like Shell Foundation and Caterpillar Foundation: the range of social and environmental benefits from sustainable urban transport projects is huge, and the benefits are large. So from a straight donor model, you’d think more would be interested: climate reductions, air quality and public health, safety, jobs for the poor, etc. But, knowing that staying purely donor-funded might not be financially sustainable we’re thinking through other blended models but are not quite there yet.
Q: Do you always work with local people, and how easy it is to find them?
Nancy Kete: We choose to work mostly through locals because once you start to really get going in a city, you need local staff to make it sustainable. Transportation and urban development projects are politically very sensitive. To be credible and to understand the political environment that you’re in, you really need to have someone there who can navigate all of that. Searching for talent is difficult at such a technical level. It can take a long time to land a talented transportation engineer who is bilingual and is committed to and understands the sustainable transport paradigm.
Q: What relationships and partnerships are most important to you today?
Nancy Kete: Certainly the relationships within the network between EMBARQ and the five Centers for Sustainable Transport that make up the EMBARQ Network. Most of the value and the outcomes are generated through the centers, the more mature a center is, the more it can deliver; so it is important to nurture that relationship as much as possible. The centers are creating intellectual capital and are delivering on particular projects that both advance what we can do in that city and what we can do for the network as a whole. That’s what makes us what we are. And of course, WRI our host institution and the Shell Foundation, which has been with us since 2002. They are an incredibly strategic supporter and are always trying to find ways to help us grow and become more sustainable. The Caterpillar Foundation is also a really fantastic donor. They made the decision three years ago back us and have remained active supporters. We hope they’ll stay with us for another five years.
Q: Is there a particular organization you would like to work with over the next 2-3 years?
Nancy Kete: An urban planning organization; someone like the Prince’s Foundation for the Built Environment in the UK. And we want to keep working with Gehl Architects. I like the work the Urban Land Institute and Center for Neighborhood Technologies has done to develop a joint housing and transportation cost index in the US. Why that matters is that traditionally you would get a mortgage based on what percentage of income you would spend on housing, but they’re looking at a combination of your housing cost and your mortgage cost and turn it into an index. We’re thinking about how relevant that would be in the developing country context. Of course we’d like some of the big foundations that have not traditionally funded urban transportation to come on board, like Ford Foundation, and others like Rockefeller Foundation to choose to support us.
We are working on a partnership with NASA’s Earth Sciences Group at Marshall Space Flight Center. The question we’re looking at together with NASA is: Can you make a simplified decision support system that combines information collected remotely from satellites with models that are reasonably reliable so that you can usefully provide guidance to planners and decision makers about the alternative scenarios and what the impacts would be for cities in developing countries?
Q: How did you team up with NASA?
Nancy Kete: I am an air quality person at heart, not a transportation person, and wanted to know whether we had good information about air quality trends in developing countries’ cities. When we looked, the answer was ‘No’. So I wanted to know, can we look at this from space? What would it take if you really wanted to build trends of observed air qualities around the world? The answer to that simple question led to: ‘Here’s how you do it…but we could measure much more than air quality’. We started moving on from there to think about how we could build on work they’ve started which we might adapt for developing cities to build alternative scenarios for how cities grow (in terms of transportation and land use), and then see how that would affect local climate, urban heat island impacts, local air quality, water resources, and agriculture. This has really powerful potential.
Q: Where do you look for market research to help you think through the markets for your products or services?
Nancy Kete: It’s such a tricky market. If you or Volans have any ideas, I would take the advice. We find it challenging even to define what our market is. If EMBARQ were just consultants, we wouldn’t have much trouble figuring out what the market, but I’m not sure the world needs another transportation engineering consultancy. I don’t think that’s what we want to be. Where’s the social entrepreneurship in that? I mean, if there is a market failure, how do you do the market research? What we do look for is where we are likely to be successful, in terms of having impact, but that is not necessarily the same place that might pay us to work.
Q: If you could have a market research firm work for you, what questions would you ask?
Nancy Kete: I would love to find someone who would know how to approach transport markets in cities in developing countries, and figure out what the right approach is, who to trust to develop a robust business case for turning around the transportation system and land use situation, knowing that it’s an incredibly sensitive set of questions. One very precise question we have is, what clients could we charge or what services could we charge for without adversely affecting our reputation that has earned our place working for cities in the transformative role we play today.
Q: Where does EMBARQ currently fit on the 5-stage model?
Nancy Kete: I see EMBARQ between Stages 3 and 4. We have a bit of an ecosystem going but are not quite there. It is patchy depending on the cities where we work. We have some very good strategic partners and we’re continuing to develop the revenue model, but we’re undercapitalized. We’re working on strengthening our management. We’re working on standards in education, as a critical step in what would be Stage 4 – but we’re not financially sustainable yet, which is a big challenge.
Q: Would EMBARQ ‘be around’ in Stage 5?
Nancy Kete: This is what we are asking ourselves right now. I think the organization would still be around. Ours is essentially a service model and the world is not going to figure out how to plan, deliver and sustain high quality transportation and urban environments without help to build that capacity.
Q: In what stage would you plan to be by, say, 2015?
Nancy Kete: Stage 4. By 2015 in Mexico I think we will be even farther along towards a transformation, because we’re really getting to scale nicely there. We won’t have achieved a complete transformation, but we already are achieving important changes in institutions and different levels of government.
Q: What could your investors do better to support the scaling up of your impact?
Nancy Kete: Investors bring to EMBARQ more than funding, for instance Shell Foundation is currently providing support via pro-bono management consultancy looking at a strategic path for EMBARQ to achieve scale in a financially self-sustainable way. It is clear to us that the global strategic donors consider themselves pretty much like seed capital providers, and that sets clear expectations to come up with a hybrid business model that becomes less dependant on grants. In that regard investors could help transition to this new business model by continuing to provide business insights and potentially becoming investors in future funds or corporate clients for our products as opposed to pure donors.
Q: Are funding requirements likely to become easier or harder as you scale your impact?
Nancy Kete: Definitely harder. What we do is very labor intensive. The more work we take on the more resources we need, unless we could think about the impact model differently. Experience shows that once we are successful in triggering changes, for example a Bus Rapid Transit (BRT) investment, then a whole wave of other changes and investments come into play. I think we’ve probably leveraged at least $885 million of investment. Some people care about that as a measure of scale. We’ve had a great scale effect that way. But if you look at scale in terms of there being 25 mega-cities in the world, and we have only worked in 3 or 4, have we gotten to scale? These are things we haven’t totally settled.
Q: How helpful has your Board been in thinking strategically about scale?
Nancy Kete: Well, we are in the middle of a strategy review, internally, and we’ve presented the preliminary framing to the board already. There is a need to think harder and with more clarity and realism about what it is we are doing and what scale means in the context of that. Sometimes board members tend to loose realism about what we are doing and the challenges we are up against. Now that we’ve been at this long enough, we can see that going to scale – say doubling or quadrupling the number of cities we work with, using mainly donor funds would be very, very expensive. That has brought everyone to a consensus that we need to either redefine scale or redefine our business model.
Q: Is there an insight you wish you had known at the very beginning?
Nancy Kete: In setting up a network the biggest challenge is the tension between having people with the drive and passion to lead in their own space and the willingness and commitment to be part of a larger social network. This really isn’t like a corporate franchise. I don’t have a lot of hard control over the other centers in the network. Keeping quality and brand identity across the network while having individual centers be local enough and vibrant enough and motivated enough is really a challenge.
