How water utilities can accelerate innovation

How water utilities can accelerate innovation

Finding new ways to meet big challenges within any organisation takes going beyond ‘business as usual’ and venturing into the unknown, into the space we call innovation.

Why is innovation important for utilities?

If COVID-19 has taught us anything it’s the need to be adaptable, and to be adaptable, water utilities need to embrace experimentation when responding to industry pressures like capital constraints, water scarcity and rapid urbanisation.

In the water industry, innovation isn’t just about solving a problem once and ticking it off the list. It’s about looking for how you can do more with less within a landscape that is constantly changing. Without a culture that fosters lateral thinking, experimentation and creativity, it’s difficult to push the envelope on what is possible.

The challenge is, water utilities are highly regulated and risk averse and for good reason. Mistakes can impact peoples’ lives. This can make embracing an innovation culture difficult and slow.

Mistakes can impact peoples’ lives. This can make embracing an innovation culture difficult and slow.

So, given all that, how do you embed an innovation culture and speed up the process? The answer lies, in part, in formal innovation initiatives.

In this post, we look at three distinct approaches to corporate innovation; open innovation, corporate partnerships and intrapreneurship.

You can also get a more in depth view of each approach in our Future Water podcast series: Stretching Your Innovation Dollar.

You can listen to the first episode in this series here or just click the play button below:

What is Open Innovation?

The term Open Innovation was first coined by American organisational theorist Henry Chesbrough in his 2003 book “Open Innovation: The New Imperative for Creating and Profiting from Technology.”

Chesbrough challenged the closed-lab culture within corporations and argued that corporations were missing opportunities by maintaining a secrecy culture.

Open innovation is broadly defined as advancing technological development through the combination of internal and external ideas and pathways to market.

Removing the boundaries for Open Innovation

Until recently, David Camerlengo was leading an open innovation program in the resources sector called Unearthed. He’s recently taken up a role as Head of Advanced Technology Centre of Excellence with Austrade.

David firmly believes that for open innovation to succeed, companies need to create a culture that invites outside businesses in.

“[Open Innovation is] very much focused on building the internal culture, the internal mindset, the internal governance and framework to empower and enable individuals inside of their business to take things outside of their business. And that can be really difficult,” David says.

“… then once you get past that, it’s “how do we actually make it? How do we reduce the barriers so that we can actually engage with all of these capabilities that sit outside of the business?”

An example of reducing the barriers is bringing the procurement team on board to support startups working with the company.

Embedding Open Innovation in corporate culture

Much of what David did at Unearthed was focused on building, designing and embedding open innovation into company culture.

He says that while people inside corporates can have rich domain expertise, that can create barriers and silos. Shifting the internal culture can short-circuit those barriers and help employees identify new approaches and ideas.

Shifting the internal culture can short-circuit those barriers and help employees identify new approaches and ideas.

“One way of doing that is by harnessing or accessing capabilities outside of their business. Another is identifying solutions that might be even from outside of the sector that can either advance them or their agenda or solve a particular problem that they might have,” David says.

For more on open innovation, listen to AquaLAB’s interview with David Camerlengo on Future Water.

What is a Corporate Partnership?

Corporate partnerships create a value exchange between two or more entities to accelerate business outcomes for both parties. They can be project-focused or whole-of-business related.

Partnerships can be with organisations, startups or even individuals. They can be hugely beneficial to corporations and for water utilities, they can enhance technological capability, supply chain efficiency, workplace safety, customer experience and more.

In some cases, all parties equally share liability and the day-to-day running of the project or business, and in others, some partners have limited liability or are silent. Some partnerships are highly collaborative and some are co-created.

Great partnerships begin with the end in mind

Nick Shewring is the Strategy and Innovation Lead for D-Lab at GHD Digital and one of our team members at AquaLAB. In his past business life he worked with Air New Zealand and co-founded successful New Zealand startup BizDojo as well as other startups. Nick says that the key to good partnerships is knowing what the divorce will look like at the start.

“I’ve built, managed and developed many, many partnerships with all sorts of different organisations, and it’s really about understanding, “What happens if something doesn’t work out? ” he says.

Nick emphasises that no partner should be left out in the cold. If a project doesn’t achieve the traction it needs to continue, agreements need to reflect what will happen in these cases.

Coming soon on the Future Water Podcast: Nick’s interview on partnerships provides golden insights into how partnerships could work for the water industry and some great tips for water startups wanting to create a competitive advantage through leveraging partnerships. Subscribe now so you don’t miss an episode.

What is Intrapreneurship?

Simply put, intrapreneurship is when an organisation empowers its employees to innovate within the organisation or in collaboration with another organisation. Intrapreneurs are self-starters, proactive, full of ideas and willing to fail. The main difference between an intrapreneur and an entrepreneur is that with intrapreneurship, the organisation supports them and absorbs the losses if projects don’t achieve the desired outcomes. Intrapreneurs have a unique position in relation to the internal needs of the business.

The incentive for companies is that they own the IP and outcomes and are able to retain top talent, grow their capability and commercialise successful projects, injecting more revenue into the business.

Melissa Witheriff heads up the innovation program at Credit Union Australia (CUA) and defines intrapreneurship as transforming ideas into profitable ventures whilst operating within a corporate organisation.

“The key difference from an entrepreneur is that these people need to work within the business risk appetite of a large corporate organisation. And so there’s a need for experimentation and digital transformation, but it’s working within the constraints and budget of large organisations and often with regulatory constraints,” says Melissa.

“But these game changers are able to take ideas through to commercially viable outcomes and also look at how to test viability, desirability and feasibility of ideas right through to commercial products at market.”

Intrapreneurs work alongside external startups and scaleups. They participate in hackathons, accelerator programs and the like and focus on strategically-led problems worth solving. They “co-create the outcomes rather than just outsourcing it through a procurement process,” says Melissa.

Defining what ‘good’ looks like in intrapreneurship

Melissa says that to define what ‘good’ looks like in intrapreneurship, it’s important to understand the “why” that’s driving the activity.

“Is it about urgency — there’s a burning platform and it’s about keeping the lights on? Is it more ambition or is it an extension in terms of curiosity? It’s by framing up the driver for the intrapreneur’s work that we can determine what good looks like,” she says.

Melissa points out that the context is also important. Is a program reactive or proactive? What are the benefits — social, monetary, environmental, cultural, customer facing?

The outcomes also define what good looks like. “Is the business seeking operational efficiency, a product or service offering, or is it about the experience of the customer? So, is it about the business model innovation? Is it about service products, organisation, marketing or social? Or maybe a green focus? And where’s the funding coming from? So there are a number of key questions that are critical to frame up what good looks like and define them for the organisation the intrepreneur is working within.”

Listen to Melissa’s interview on Future Water here or click the play button below:

Accelerating innovation in the water industry

Selwyn Rose is Innovation Strategy Manager at United Utilities in the UK. Each year his team runs an accelerator program where startups and scaleups work alongside employees in their Innovation Lab.

Startups in the program have 10 weeks to prove they can do what they promised in their initial pitch. Other utilities are invited to demo days and some of the projects are taken on by United Utilities through commercialisation contracts.

Selwyn believes the industry is ripe for accelerating innovation. “Innovation is just as important as sales, just as important as your HR and people function; it’s core to the business,” he says.

But he points out that because water utilities are geographic monopolies, there’s no competition between them and the driver to have a competitive edge over other similar businesses is missing.

The long planning cycles in infrastructure development can also be a cultural impediment to innovation.

“We work in these long asset planning cycles. In water, every five years is our big price review and investment pattern pace. Five years for me seemed like an insanely long amount of time. [When I was] in Vodafone, five weeks was a long time,” he says.

Selwyn thinks that for water utilities to really embrace innovation they will need to re-envision innovation as a core business function, rewire the pace at which things are implemented and put more focus on business development and commercialisation.

Coming Soon on the Future Water Podcast: Selwyn talks candidly about United Utilities’ Innovation Lab and the benefits of accelerating innovation in the water industry. Subscribe now so you don’t miss an episode.

The common thread in these approaches is the need to introduce new ideas, different perspectives and external stimuli into the mix. This has its own set of challenges for utilities experimenting with this for the first time, but has immense potential for long term gains.

Has your organisation experimented with any of the 3 above approaches? Tell us about that. What would it take for your organisation to be innovation program ready?

AquaLAB is shaping the digital future of water.