innovation in the water industry - how to get it right

When the Great Fire of London destroyed most of the city in 1666, the renowned Sir Christopher Wren was left with a difficult challenge, to design 51 churches at once, in small sites and often between the remains of damaged buildings on awkward plots of land. In modern times the equally visionary Frank Gehry was set the task of creating a building-sized sculpture to house the Bilbao Guggenheim. In both cases they used their constraints as inspiration. At its best in our water industry today, innovation is about similarly reconfiguring boundaries into opportunities. More than the process of creating something new, innovation is really the impact of that newness. We describe it as ‘creativity that creates value’. In the context of water, this means not just innovating the product - the assets and customer services, but the factory - the people, processes and technology behind them too.

Water companies must do more with less. Less money, less energy, less chemicals, but also more regulation, more reporting, more extreme weather events and more demanding customers.

In July OFWAT CEO Cathryn Ross telegraphed her intentions – in no uncertain terms – that water companies will have ‘a very tough review’ unless they deliver ‘more of what matters to customers’ via ‘ambitious and innovative’ business plans. Perhaps we should add a third type of innovation - innovate as if your life (if not your career!) depends on it.

So we have a situation where water companies are being mandated to deliver innovation but to do this in any sort of controlled fashion they should not only understand how to foster innovation in the first place, but implement a set of processes that enable it to be predictably planned, assembled and delivered in the years ahead. That’s no mean feat however brilliant you are. The shorthand is to divide the innovation effort up into short term (1-3 years), medium term (3-5 years) and long term (5-10 years) plans with a portfolio of ideas coming to maturity at different times forming your innovation pipeline. This triple pronged approach allows focus on the long-term, whilst driving the majority of time and effort of teams on near term incremental opportunities that ensure consistent delivery of value.

Good short term innovation should be 60% of your focus.

Use frontline teams to identify incremental innovations in the current capabilities and assets - “do what we do now, only better”. This approach worked to great effect with the British Cycling Team. Everyone was asked to identify one small element that could be improved, even if it would only make a 1% difference. Cumulatively they made Britain the best in the world, yet individually none of these changes defined perfection. For water companies short term innovation comes from operational excellence, giving frontline teams not only the right data but empowering them to experiment, to fail fast, to succeed and finally to have management support the roll out of their improvements. It starts with listening to your people. Not just staff, but suppliers and contractors also. They’re the ones who’ll come up with the practical, simple innovations that will drive better core operational processes boosting productivity and cutting costs to deliver incremental benefits day in, day out.

Medium term innovation should be 30% of your focus.

Its secret is alignment and collaboration between teams to identify the right problems to solve and put the effort in innovation behind solutions which will make the biggest difference in adding new capabilities to the business. This holistic ‘end to end and top to bottom’ approach is the Amazon model. Amazon is notable for getting the customer experience and delivery process not only right first time, but leagues better than its competitors. Only once the foundations were rock solid was attention spent on out-of-the-box thinking like Alexa to place your orders without needing a phone or computer and drones to deliver your order within minutes. For water companies it’s all about how you create focus on innovation by supporting a step-change in performance in the right place in the organisation, aligned against the overall strategic objectives. This could lead to thinking about innovation in places not normally considered a focus, like a new activity based costing model as an innovation in finance. Identify the exec-level objectives across people, process, customer and finance and work out how to measure each one at every level, to create a ‘line of sight’ cascade of KPIs. This allows you to regularly and consistently review your performance enabling you to problem solve and identify trade-off decisions at each level of your organisation. There are lots of potentially innovative ideas, this approach helps focus on the right ideas for your strategy.

Long term innovation is the last 10%, this small but critical horizon still needs dedicated resources and management commitment.

The reaching into the great unknown. Think future-back. Invest in research and trials. Explore the art of the possible to develop new capabilities and assets and collaborate and challenge your peers and the regulator to consider a future that is contrary to the prevailing wisdom. With pressing day to day concerns it isn’t easy to invest the time and energy to consider what the world of water in 2030 will look like, but it needs to be done. What will our world look like? How will demographics, environment and politics shape how we live? What are the implications for our industry and our company? Unlike the short and medium term the problem to solve (let alone the solution to it) isn’t immediately obvious. That’s where future-back thinking comes in to help identify what the constraints and limitations might be first of all. Think like Uber and turn a weakness (most cars are unused for most of the day) into the strength (they can be unleashed as a lower cost taxi service). There’s no getting away from the fact that future-back innovation involves risk, uncertainty and failure. The questions we need to ask ourselves are not only are we willing to fail? But how can we challenge and collaborate internally and cross-industry to test boundaries and learn what can work?

The thousand-mile innovation journey starts with a single step.

So rather boringly unglamorous as it is sounds we should start by getting the foundations in place. Getting access to the right data and problem solving with the front line to eke out incremental gains from existing capabilities and assets will generate the results and goodwill to tackle the bigger problems further ahead into the future. Get the measurements right across your organisation so you can identify the biggest opportunities and best course of action, and be prepared to fail a few times along the way. Sounds easy doesn’t it? You’d be surprised. Most water companies don’t have the Operating Model or the leadership commitment to support this three-horizon focus on Innovation. Make yours the exception.

This article first appeared in Institute of Water on 12th September, 2017.

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