how to innovate while taking care of business as usual

Understanding the need for (and the hurdles to) innovation

Times are tough for UK water companies, and expected to get tougher. The population is growing, as is the impact of climate change. Demand for water is predicted to increase by up to 30% by 2050, when the country will need an additional 4bn litres of water per day (National Audit Office 2020 report). On top of this there is growing pressure from the public for higher standards, reflected in an Environment Agency report just released that calls for water bosses to be jailed for serious pollution.

And it’s not all demand side challenges. Ageing assets are driving up maintenance costs and creating more frequent service issues. A government report has suggested that more than £350bn in investment is required just to eliminate storm overflow problems across the UK. As operators seek to modernise their infrastructure and respond quickly to weather events and public expectations, the need for investments in IT systems and data & analytics, and for operations to be more agile, is ever more pressing.

Managing the tension between innovation and Business as Usual (BaU)

To meet these challenges, UK water companies need to find efficient new ways to deliver services economically, sustainably and to ever higher quality standards. We often find that meeting this need for innovation, while maintaining BaU service levels, creates a tension that can unwittingly manifest as multiple barriers to innovation.

For example, there is the hunkering down to optimise performance in silos scenario, which inhibits the free flow of information and ideas that fuel innovation. Another example is maintaining the constraints of legacy assets or systems focused on long term asset management in which RoI is the main motivator, vs the short term ‘test and learn’ initiatives typical of newer data analytics approaches and technologies. And, most often, there is procrastinating – the demands of BaU mean that despite all best efforts, innovation is ‘something we’ll get to when we can’.

So how do you manage this tension, and find the space to innovate while taking care of BaU?

Act as if you’re starting with a blank slate

The cleanest, most efficient way to innovate involves starting from scratch without the legacy of a traditional business, with clear priorities, ringfenced funds and resources. This is what has happened with companies like Revolut, Octopus and Tesla in the banking, energy and car industries. As an existing water company, you obviously can’t start from scratch. But what you can do is apply some of the principles of this approach.

Clearly separate priorities, budget and resources

A new organisation will have a clear vision, along with objectives and priorities which are unencumbered by legacy thinking, systems or previous stakeholder expectations. This gives them the freedom to test and learn from new ideas within a framework which sets its own limits on budgets, resources and timescales.

We are applying this principle in our work with a current client, helping them to rethink their approach and operating model to support intelligent decisions. The vision, objectives and budget are clearly established and do not compete with those of the mainstream organisation. While resource constraints don’t allow for a dedicated team, allocated days are ringfenced so that people are able to work on the project without competing demands on their time.

Establish a focused innovation process

Make your idea development process as efficient, effective and agile as that of a start-up. Have a clearly defined process for getting ideas into the hopper, and clear parameters on moving the ideas through the pipeline. Whether your organisation suffers from innovation initiatives that peter out, or a cascade of new initiatives that swamps the frontline, the answer is the same. Prioritise, focus, accelerate. First, revisit your strategic initiatives and map each innovation against them. Then prioritise the innovations based on alignment to the strategy, clear business case and potential impact.

Evaluate your idea development process

Is it steeped in bureaucracy with too many gatekeepers? Managing risk is important and you can do that without strangling ideas before they’ve had a chance to prove themselves. Embrace the principle of develop, test, fail, learn. This will accelerate the progression of ideas through the pipeline.

Develop Minimum Viable Products (MVPs)

An MVP is the staple innovation vehicle for new industry start-ups. At its heart is the principle of developing a new product to the point of enabling the most validated learning about its viability, with the least effort. MVPs fully embrace the circular principle of develop, test, fail, learn. The aim here is for incremental but frequent innovation, breaking potential solutions down into smaller manageable chunks which can be tested and learned from quickly, and then fed into the next iteration of innovation.

Create a climate that embraces new ideas

This doesn’t mean providing beanbags and interior designed thinking spaces. The key to creating the space in which to think and act quickly is discipline. Set up robust working practices, such as effective meeting frameworks to make sure decisions and actions are taken. Instil a Plan-Do-Review structure into all workshops and daily activity to ensure focus and progression. Establish a clear set of team accountabilities, with a steering team who have the authority to act fast, and ringfenced resources who don’t get snatched back into the mainstream organisation to firefight.

Remove the noise

It’s hard to create the space to innovate and free up the resources when BaU activities are creating a lot of interference, or noise. When working with clients, we often find that we first have to help address inefficiency in legacy ways of working and processes which are both hampering operational performance and distracting teams from new thinking. People simply don’t have capacity for both. And sometimes, practices don’t require innovation, they require fixing.

We are currently working with a client to derive value from an increasingly intelligent asset base. Before looking ahead to innovative practices, we first looked at how to reduce noise in the current asset monitoring and management practices.

Adopt an innovative mindset into the everyday

So far, we have discussed the merits of establishing a dedicated team, drawing on the experience of new industry start-ups. This is an ideal way to invent a radically different way of working, but the rest of the organisation doesn’t need to get left behind.

The water industry has to manage risk and health and safety daily. This can result in a cautious culture, where ideas come from the top down and frontline operatives can be afraid to take the initiative. Equip your teams with the skills to problem solve locally. Show them how their actions impact company performance. Actively encourage collaboration across departments, facilitating events where knowledge sharing is expected. Review your team KPIs: do they reward siloed thinking, or do they facilitate a line of sight all the way through to the customer? Do they encourage firefighting and responding to events; or anticipation and prevention? In short, bring innovation to everyday BaU activities.

In summary

Innovation is not just a nice thing to have, it’s vital. It is demanded by our environment – both literal and metaphorical – and required by Ofwat. If you can reduce the organisational noise, create the right climate and establish an MVP discipline, you can accelerate the path to a radically different future. A future in which the all-important intersect between people and technology delivers breakthrough change.

This article was written by Laurent Elfassy and Cameron Clarke and was published in the Autumn Edition of Institute of Water

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