Waze: Co-Creating Transportation Efficiency

Faced with debilitating congestion, Toronto should leverage data analytics and a geo-marketing powered incentive program to improve public mobility


Toronto’s traffic problem is no secret: the city is ranked the ninth worst for congestion across Canada and the United States. The mere mention of transportation in the Greater Toronto Area (GTA) conjures images of gridlocked highways, overcrowded public transit, and sluggish traffic on major thoroughfares. In fact, analysts estimate that congestion in the GTA accounts for annual delays of 11.5 million hours, equivalent to 22 million litres of unnecessary fuel consumption. Travellers across the GTA can tell you that Toronto’s transportation inefficiencies elicit frustration among city residents, commuters, and tourists alike.

To combat these transportation challenges, Toronto should harness the knowledge of the crowd. By creating a strategic partnership with Waze through the Connected Citizens Program, the city of Toronto can use mobile technology to track and analyze valuable traffic congestion data. These analytics can then be used to redistribute traffic and encourage citizens to move through the city more efficiently. To incentivize users to change travel patterns, the city of Toronto can employ geomarketing software to identify user’s most-visited locations, and offer them incentives in the form of customized coupons, discounts, and rewards. In this manner, drivers will receive benefits for accepting alternate travel routes or travelling during non-peak periods.

With Toronto’s transportation environment slated to undergo many disruptive construction projects over the next decade, a co-creation initiative between citizens, public transit agencies, and private enterprises could dramatically improve transportation efficiency in the city. By leveraging data transmitted through mobile technology, the city of Toronto could redistribute traffic through existing systems and reduce its dependence on costly, and problematic transportation infrastructures.

Transportation Challenges

No matter the method of transportation, Torontonians across all demographics and occupations agree that urban mobility is one of the city’s most salient and pressing problems. According to a survey conducted by Ipsos Reid in 2014, Torontonians reported that public transit (31 per cent) and transportation infrastructure (15 per cent) are the most important concerns for the municipality of Toronto.

Despite general consensus around the problem, the solution to Toronto’s congestion plight remains unclear. With metropolitan areas of the city expanding by approximately 100,000 new residents each year, Toronto’s transportation challenges continue to grow in scale and complexity. As population density increases, the inevitable difficulty of building transportation infrastructure continues to rise. Historically, Toronto’s municipal administration has struggled to bring transit development plans to fruition, resulting in decades of forgotten promises and under-investment in transportation. The repeatedly delayed launch of the Toronto-York Spadina subway extension provides a recent example of the city’s struggle with infrastructure development. Although originally scheduled to begin operations in 2015, the line is now slated for opening in December 2017. Similarly, the Presto payment system has brought GTA citizens little more than frustration; in fact, the Toronto Transit Commission (TTC) reports that, on average, Presto terminals fail 12 per cent of the time.

Reflecting the troubled state of the city’s transportation environment, each municipal election in Toronto has featured numerous transit proposals and infrastructure development plans. John Tory’s administration recently pledged 74 per cent of Toronto’s 10-year capital budget to SmartTrack and other transportation developments. However, even if implemented, the proposed infrastructure will not solve Toronto’s congestion problems on its own. SmartTrack, a regional express rail designed to provide relief to Toronto’s subway system, could improve long-term mobility outcomes in Toronto. However, this alleviation would come at a substantial cost of $8-billion. Additionally, the proposed route would require major infrastructural developments in central Toronto, many of which would disrupt traffic flow and cause inevitable travel delays throughout the city.

Waze Graphic 1 - Donut Chart

In the short-term, infrastructural development could actually exacerbate the city’s mobility challenges; citizens will contend with road closures, construction zones, and public transit interruptions as they navigate the city. Confronted by a growing population and a convoluted transportation environment, how can Toronto improve long-term transportation efficiency without demobilizing citizens in the short-term? Furthermore, if the proposed transportation improvements falter, how can Toronto improve mobility outcomes without relying on infrastructure that may never materialize?

Waze Graphic 2 - Toronto Popul Growth

Behavioural Adaptations & Co-Creation of Services

To supplement the addition of new features to the city’s transportation landscape, the municipality of Toronto should apply behavioural economics to understand and influence how citizens interact with existing transportation infrastructure. If political and financial capital requirements are hindering physical improvements to the city’s transportation network, Toronto should collaborate with citizens to optimize traffic flow. Using digital platforms, mobile technology, and geomarketing tactics, Toronto could develop a co-creation environment, which enables citizens to interact with the transportation environment in ways previously unimaginable.

The convergence of transportation planning and behavioural economics is not novel. For example, tiered-fare transit systems encourage travel during non-peak periods. By nudging citizens to consider alternate travel times in exchange for a reduced fare, many cities such as London, Singapore and Milan employ these tiered-fare systems to ‘level out’ public transit utilization across time periods. However, these behavioural mechanisms do not need to be limited to public transit. Toronto can further integrate behavioural economics into its transportation environment by enabling a co-creation ecosystem that empowers citizens to make better travel decisions based on pooled intelligence. A precedent for this kind of system already exists: Waze, a popular mapping application owned by Alphabet, uses crowdsourced data to help drivers find the most efficient route to their destination.

Co-creation is defined as “the joint creation of value by the company and the customer, allowing the customer to co-construct the service experience to suit their context.” For example, consider a grocery store that promotes self-checkout services or a frozen yogurt restaurant that enables customers to build their own custom treat. Both parties win. Businesses save on operating costs by outsourcing tasks; customers gain a margin of control over their service experience.

Co-creation is particularly attractive in the public sector, where budget cuts often necessitate innovative methods of delivering public services. The city of Boston, for example, outsources roadside improvement initiatives through its 311 program, which allows citizens to report potholes and broken traffic-lights through an application complete with photo-uploading and geo-tagging capabilities. Brilliantly, Boston’s 311 program provides a cost-effective and user-centered method of identifying and repairing damaged infrastructure.

Like Boston 311, a co-creation effort to improve public mobility in Toronto would engender cost savings. By creating an application that tracks citizens’ transportation data and uncovers behavioural insights, more efficient transportation decisions could be made on behalf of citizens and city planners.

By collaborating with citizens to generate real-time data, the city of Toronto could:

1. Identify underutilized transit services, alternative travel routes, and non-peak travel periods that would enable a redistribution of traffic flow;

2. Incentivize behavioral adaptations from citizens to “optimize” traffic flow through Toronto’s network of roads, railways, and public transit services; and,

3. Make strategic, evidence-based infrastructure decisions that reflect insights and address frustrations provided by citizens themselves.

Operationally, co-creating transportation services is not a simple task. At the scale required by Toronto’s congestion problems, a co-creation platform would require marketing and analytics capabilities that most public administrations do not have the resources for. Without the requisite competencies, how can Toronto quickly build a co-creation system that improves transportation outcomes across the city?

Cross-Enterprise Partnerships

To implement a robust co-creation system, the city of Toronto should consider a third stakeholder that can facilitate collaboration between transportation planners and city citizens. Partnerships between Toronto’s transportation agencies (e.g., Metrolinx & TTC) and private consumer traffic applications (e.g., Waze) could develop, promote, and sponsor a co-creation platform that helps alleviate the burden of traffic congestion in Toronto. Imagine a government-sponsored version of Waze, powered by crowd-sourced travel data, real-time public transit information, and municipal traffic analytics.

A jurisdictional scan reveals that other municipalities have already entered into partnerships with Waze to solve a variety of traffic management and congestion issues. In fact, Waze’s Connected Citizens Program (CCP) has over 100 municipal collaborators, including Rio de Janeiro, Los Angeles, Tel Aviv, Boston, Jakarta, Washington D.C., and Barcelona. With a simple mission to “improve mobility through big data partnerships,” the CCP program has seen profound results. Consider Rio de Janeiro, where a partnership with Waze allowed the local transportation authority to manipulate traffic in real-time during the 2016 Olympic games. Likewise, in Boston, the municipal government collaborated with Waze to find innovative methods of routing traffic to accommodate large-scale construction projects. While Waze’s CCP manifests differently in each city, a recurring theme underwrites each partnership: city citizens, government bodies, and private enterprises can co-create transportation systems to improve the lived experiences of city-dwellers.

For Toronto, challenge predicates opportunity; with a unique set of transportation issues, Toronto has potential to become an innovator with Waze’s CCP. The benefits of a co-creation application are relatively intuitive, but what about the costs? Under the current CCP structure, Waze enters into a free data exchange with municipal partners, but Toronto would still be responsible for funding custom application features. Luckily, mobile applications are cheaper to build than roads or subway systems. Depending on the complexity, high-profile applications cost $1.5 to 3-million to develop. For comparison, John Tory’s administration has pledged $2-billion over seven years to cover the $3.7-billion SmartTrack development alone. While infrastructural improvements are certainly necessary, the cost efficiency of mobile co-creation boasts an unparalleled return on investment in Toronto’s transportation environment.

To maximize the benefits of CCP, governing bodies must generate a compelling value proposition for both citizens and private partners. With Waze’s CCP program actively seeking municipal connections, the City of Toronto would face little trouble inciting a partnership with the traffic management application, especially given that Montreal has entered into Waze’s CCP in 2016. For Waze, access to municipal traffic databases is incentive enough to engage in a free exchange of information with major municipalities. After all, the CCP program does not exist by sheer virtue of Waze’s sense of integrity or altruism; with each new user or dataset gained through municipal partnerships, Waze’s value proposition grows stronger and more robust.

Citizen Incentives & Geomarketing

While the prospect of more efficient travel would provide a baseline incentive for citizens, the City of Toronto should consider a reward system that provides citizens with immediate, tangible pay-offs. Specifically, Toronto should consider a nuanced approach of encouraging citizen participation that strengthens local business and unlocks ancillary revenue streams for Toronto’s transportation agencies: geomarketing.

Consistent with a mandate to encourage citizens to interact with their city differently, geomarketing would be a natural complement to the proposed behavioural adaptation system. Geomarketing uses customer data to identify a user’s commonly visited locations, enabling marketers to target the distribution of discounts and coupons to consumers. By allowing local businesses to integrate user-centered advertisements into the mobile application, the city of Toronto could improve public mobility and promote local commerce simultaneously. Moreover, by providing a platform for local businesses to connect with nearby citizens on an individual level, Toronto could provide rich, user-specific incentives that not only improve transportation efficiency, but also strengthen interactions between citizens and businesses across the city.

Using geomarketing technology, the application would operate with three simple steps. First, users would input their current location and desired destination. Second, the application would analyze crowd-sourced data and municipal transit databases to determine the user’s most efficient route and departure time. Third, the application would cross-reference the user’s reward preferences with available promotional offers to create a custom incentive package related to the optimal route for each trip. For example, a user could be offered a coupon for a coffee shop along their proposed route or at their final destination. If users were uninterested in the incentive, they could simply bank transit credits, nudging them to take public transit when convenient and appropriate. The figure below depicts a typical user journey through the city, co-created by city citizens, transit agencies, and local businesses.

Waze Graphic 3 - User Journey v2

In addition to promoting local commerce, geomarketing could have a positive financial impact on Toronto’s transportation agencies. Projecting 28.5 per cent compound annual growth, analysts predict that geomarketing will represent an $18.2-billion industry by 2019. Harnessing this trend, Toronto’s transit agencies could sell geo-targeted media space to bolster advertising revenues, which accounted for only two per cent of TTC’s total operating revenue in 2015. At its core, geomarketing revenue could offset the operating and promotional costs required to sustain a mobile co-creation effort.

Call to Action & Conclusion

Co-creation has the power to optimize transportation development in Toronto. Facing rapid population growth and crippling congestion issues, the city must move beyond infrastructure development plans that waver whenever a new administration takes office. While a mobile application will not relieve Toronto’s traffic problems on its own, the rationale behind co-creation rings true: city citizens, public transit agencies, and private enterprises can collaborate to make Toronto a better place to live, work, navigate, and explore. As governments continue to digitize public services, the importance of vibrant co-creation ecosystems grows in size and intensity. Why not start with transportation?