Water sector - staying ahead

In being successful its vital to know what the strategies of your customers are and what the competition is doing.

• What are the aims and objectives of your customers?
• How do they define success?
• How well placed are your competitors to deal with the ‘New Normal’?

I know from my own exoperience its very easy to become internally focussed, particularly during difficult times – but its precisely at these times that an even stronger external perspective is absolutely vital. It provides vital intelligence and understanding of changes ahead, a useful sense check and challenges what you are doing.

• Do you know what your customers are doing to meet the demands of the “New Normal’?

There’s a lot of information available but even more importantly its vital to be talking directly with your key customers and others in the industry. As you would probably expect me to say, you can always enlist the help of cosultants to give you that external perspective. 

Building a succesful future

We have already discussed the new normal and its consequences and short and long term successes. What I propose is a set of challenges designed to assess just how ready your organisation is to deal with what ever the future holds.

Firstly let’s consider management

1            Do you managers undestand the potential implications of the new normal?

By this I mean do they have a good understanding of the main drivers in the water market, do they really understand what are the critical objectives for  customers and are they clear about how value can be added and how the service/ product offering can be clearly differentiated from the competition?

2            Have your managers identified the critical success factors to adapt to the changing market and economics?

This means having a highly capable and flexible team, having everyone focussed on how they can help customers achieve their goals as well as being strongly focussed on cost effectiveness and constantly striving to improve.

The key is smart management. This means:

• Really knowing your customers and their requirements
• Being able to identfy where value can be added and having the flexibility to develop the products required
• Being clear on who the customer’s key decision makers are and building excellent relationships 

Success in the water industry

In the previous post I referred to the ‘New Normal’ and what it might mean for water industry suppliers. Today I cover the question of what success will mean in the new normal.

The new normal prediction means that we are very unlikely to return to a repeat of the boom years of profitability.

So what success will mean is:

• Firstly being ahead of the competition – across a balanced scorecard of key benchmark indices as as well as less tangible factors such as innovation and people development
• Being profitable and having the funds to selectively invest in winner projects as well as organic growth
• Achieving sustainable improvements that leave you well positioned for the future e.g. innovation, training, organisation and process improvements

So having defined success the question is how do we achieve it?

Water industry strategies for the new normal

At this time of year it is customary to review the last year and think forward to 2011. A phrase we hear endlessly in the press after every event is “learn the lessons”. The water industry may be highly regulated but this last year was a salutary lesson that it is not immune to the wider economy. So what is the ‘New Normal’ for the water industry?

The term ‘New Normal’ was coined backing March 2009 by Bill Gross, founder of PIMCO, the California based investment solutions provider. PIMCO was one of the few organizations that warned of the risks associated with the sub-prime housing bubble that drove the American economic boom years.

In terms of the economic recovery, PIMCO discredited the idea of a sharp rebound from recession and a rapid return to the activity of the boom years. Instead they referred to a “New Normal’ which would bring lowered living standards, higher unemployment, stagnant company profits and disappointing equity returns.

So what is the ‘New Normal’ like in the water industry?

Customers are focusing on outcomes not services or products significantly changing spending behavior

Financial crises, fear of double dip recession and Government spending cut backs are driving a more risk adverse climate and a constant need to reduce costs

Customer expectations are steadily increasing

The net effect is a constant desire to do more for less. This is creating a major headache for suppliers in the water sector.

How to deal with this headache will be the theme of blog posts this week.

Yorkshire partnership to achieve excellent bathing beaches

Photo source: Yorkshire Water

Yorkshire Water are one of the first to aim to achieve the new “excellent” standard coming into force in the 2015 revised Bathing Water Directive. As part of the  AMP5 settlement Yorkshire Water has secured £119 million to help fund the work to upgrade its wastewater treatment facilities on the East coast.

Yorkshire Water have recognize that to achieve its aims it is vital to work in partnership with other organistions including the National Farmers Union and Defra as well as councils. Tackling bathing water quality is not easy given the impact of diffuse pollution as well as sewage discharges. Its vital to ensure investment is targeted where it will have the biggest impact and this means taking a holistic approach and being prepared to work with other stakeholders. Partnership working is absolutely key to ensuring the real problems are identified and Yorkshire should be applauded for taking the lead on this.

Full speed ahead on anaerobic digestion partnership

Photo source: Berrys

The Government is moving rapidly ahead to increase energy from waste through anaerobic digestion (AD). It is working to a remarkably tight timescale publishing its plans last week and with a deadline to respond to the invitation to work with Government on the strategy of 12^th December. This clearly shows that the coalitions business orientated approach of having clear deliverables and prioritising effort to meet its structural reform plans is working.

The use of AD technology is well understood in the water sector, where companies like Severn Trent have used AD for many years. Similarly in Europe AD is a well used technology for generating renewable energy on farms where the feedstocks are usually animal manures and energy crops.

The key to further growth is in getting the economics right so that it becomes an attractive investment and the necessary finance is opened up. Rightly the Government has identified the need to focus on commercializing the markets for input feedstock and digestate use in order to facilitate commercialization. The partnership approach proposed between Government and industry to identify the actions needed to allow the AD industry to flourish and identify the blockers is to be applauded.