Managing Change – The Power to the Edge approach

If you are a senior executive in a large organisation, you are unlikely to have the knowledge required to make major strategic decisions for your organisation.

This is a challenging idea for traditional hierarchical managers, but it is now pretty much accepted wisdom amongst management theorists. I have just been reading an article in the HBR titled Adaptability: The New Competitive Advantage . It makes the excellent point that in a rapidly changing and complex world, rapid adaption is itself a source of competitive advantage…if you can move faster than your competitors then you can beat them to new opportunities.

The article suggests a few different organisational competencies required for rapid adaption, but one of the key requirements is the shifting of authority in your organisation to the people on the front-line. This follows very closely the thinking of US military strategist John Boyd. He proposed that the military force that can adapt most rapidly to circumstances can outmaneuver an opponent. The critical point is that the individual on the front-line has the best knowledge of how to respond at a tactical level, and should be empowered as far as possible to make decisions themselves. Too much time is wasted referring decisions up a command-chain and the opportunity is lost.

That is fine as far as tactical decision-making is concerned, but how about strategic decisions? Strategic decisions must certainly be made by management, but the information that informs that decision-making must be collected from the front-line in the form of quantitative or qualitative data. The pathways for information to flow upwards in the organisation are even more critical than the pathways for information to flow downwards.

In summary, transferring the power in your organisation to the edge is the best way to create an organisation that can respond rapidly to external changes.

Leadership has to be performed at all levels of the organisation.

Unfortunately I come across very few organisations that do shift power to the edge. Most large organisations have heavily centralised decision-making and frustrated employees who see opportunities pass-by and are unable to act on them.

 To create an adaptive organisation, it is critical that individuals at all levels of the organisation have leadership qualities. Check out my post on leadership qualities for the water sector here.

You can find the US Command and Control Research Program publication Power to The Edge here

talent – THE source of sustainable competitive advantage

One of our market contacts that delivers white label package treatment plants and skids recently informed us that clients are increasingly willing to accept copies of well-known water product brands produced in countries with minimal intellectual property protection.

So with intellectual property increasingly under assault as a source of competitive advantage, how can organisations survive with reasonable margin in the water industry?

It will come as no surprise to readers that in my view, talent is the only true source of competitive advantage. As long as you have an innovative R&D team in your organisation, you can keep ahead of the imitators.

With the water industry capex set to grow at around 6% year-on-year for the next five 5 years (Global Water Intelligence) the competition for that talent will remain intense.

So how do you attract and retain the best people? The good news is that most organisations are not very good at this so it is easy to outperform. The bad news is that your organisation is probably one of the bad ones.

Here are my top three tips.

1. Have a coherent strategy! 

I rarely come across a company in the water industry that has a coherent strategy which all members of the organisation are able to articulate clearly.

Smart people know that working in a company without a coherent, comprehensive strategy can be hell. Have a great story to tell…people love a great story. Make sure it makes sense from every angle because great people will see any inconsistencies.

2. Give real responsibility with accountability

 Great people want agency. You must give your star employees the room to do great things. If you have the high-level strategy in place then micro-management will be unnecessary.

3. Be generous

Reward high achievers. Give your people the best technological support available. Make their work lives comfortable. Give them access to plenty of training and development opportunities.

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If you can nail these three things then you are well on the way to attracting and retaining the top people, and achieving sustainable competitive advantage.

Leadership in uncertain times

The water sector is in transition. For almost 100 years urban water managers were concerned almost purely with three major issues.

1. Delivering a reliable and clean potable water supply at minimum cost

2. Moving wastewater away from population centres

3. Moving floodwater away from population centres

Risk was the enemy and a static highly centralised, controlling management approach was employed.

Now much of the world is facing water supply pressure, and climatic variability is increasing, making for planning uncertainty. Technology is changing rapidly. The population is much better informed so everyone is a stakeholder, and  we cannot afford the ecological consequences of a pipe-bound, one-way water “cycle”.

Centralised, highly-controlling management cannot deal with rapid change and the new complexities of water management.

I read an interesting paper over the weekend on 10 qualities required of a modern leader, working in a changing and complex environment. This list comes from Leaders Make the Future: Ten New Leadership Skills for an uncertain world by Bob Johansen, and I think it is highly relevent to the water sector.

  1. Building skills: Can you build and grow things while connecting with others?
  2. Clarity: Do you see through contradictions to a clear vision?
  3. Dilemma flipping: Are you able to turn dilemmas into opportunities?
  4. Immersive learning: Can you immerse yourself in unfamiliar environments and learn from them?
  5. Quiet transparency: Are you open and authentic without advertising yourself?
  6. Bio-empathy: Do you see things from nature’s point of view, learning from natural patterns?
  7. Constructive depolarizing: Can you calm tense situations and bring together people from divergent cultures?
  8. Rapid prototyping: Do you learn from early setbacks and fail in interesting ways?
  9. Smart mob organizing: Can you create social change networks through electronic media?
  10. Commons creating: Are you a collaborator, nurturing shared assets that benefit other parties?

Skills shortages, water shortages, salaries and the price of water

The skills shortage, particularly for civil design and construction engineers, puts inevitable inflationary pressure on salaries as firms compete for talent. However as a professional you should not automatically expect a dramatic increase in salary when you next change jobs.  The main factor influencing salaries is actually the price of water and wastewater services.

In an increasingly corporatized water sector, the amount of money that will be invested in water and wastewater is largely determined by the potential revenue streams from the investment i.e. the price of water and wastewater services. The cost of supply is one factor, as is level of demand, but they all are all trumped by political imperatives and the decisions of regulatory authorities.

South East Queensland recently faced the prospect of running out of water, and as result engaged in the construction of a massive network of pipelines and reuse plants. The cost of capacity from this scheme is in the realm of US$5000/m³/d according to the October Global Water Intelligence report, as compared to $1333/m³/d for the average global desalination scheme.  The alliance contracting model and tight timelines on the scheme meant that professionals needed to be (and could be) hired whatever the cost. Consequently we saw a significant inflationary effect on salaries for design and construction engineers, making Australian salaries some of the highest in the world. I suspect it will also result in staff being laid off in the future because they will just be too expensive to be deployed on projects where cost is more important than timeliness.

The shortage of water created the political will to spend more on infrastructure, and that will be reflected in water prices down the line. That political will to spend more on infrastructure and charge more for water is only galvanized in the face of a crisis…so if you are looking to make the big dollars, don’t assume the global skills shortage will be enough to push up your salary…look for where the next crisis will be, and head there!

How globalised is the market for water professionals?

On one level, the water sector is clearly highly globalised. Multinational firms supply equipment around the world. Multinational design firms have global footprints, and French, Spanish and British firms provide design, build and operate services on every continent.

But how easy is it for water professionals to move internationally?

Even though the global design firms have a presence on every continent, in most countries domestic design firms are dominant…certainly in Australia the home-grown firms take away the bulf of the work.

I see a lot of movement on the UK-Gulf-Australia-New Zealand axis, and between the subcontinent and the gulf, and of course the European water giants like to have their people on the ground in every country they operate in. Beyond this I don’t see too much liquidity between countries. There is mysteriosly little flow of engineers into and out of United States, perhaps partly because of the largely closed-shop engineering certification system they run there.

Beyond the English speaking world, the language barrier starts to kick in. I am interested to hear how much movement there is between Spanish speaking countries and across countries within the Mandarin speaking world?

I think that the major factor in increasing the level of international movement will be the infrastructure cycle. Most governments will not spend significant money on infrastructure until there is a crisis, as we have seen in Australia. As countries around the world run into trouble with climate change, they will look to suck in talent from other parts of the world.

For those that are looking to develop a skill set that will take them around the world to different employers, I would say first of all you have two choices. Firstly engineering design is much more transferable than any other area. From where I am sitting, civil design engineers with pumps and pipes experience are highly employable and have good transferable skills. The other alternative is to develop a very specific skill set a high level in a particular technology or process which is increasing in popularity. The skill shortage in your area will then justify the effort of importing you from overseas.

Barriers like immigration regulation, local regulations and language mean that the globalisation of water is still in its infancy…but things may look very different in ten years time.

Career Equity

I have mentioned the idea of career equity previously, but I think that it justifies its own post. Career Equity is what you build up as you consistently add value as a professional. Just like a corporation, the value of your equity will fluctuate depending on how the market percieves the amount of value you can produce as a worker.

To carry on the analogy, your salary is your operational revenue, but like a company you also have to keep an eye on your balance sheet.

The career equity equation has a number of inputs.

  1. Acheivements: If you are a person who gets things done, and has a demonstrated history of success, then you will be in demand. Make sure that you never leave a role in an organisation without being able to point to some clear acheivements
  2. Education and Skills: It doesn’t have to be formal education, but in almost every professional field things change quickly. You have to keep on learning to stay ahead of the curve
  3. Keep your word: In my previous post I wrote about the social contract you enter into when you take on a new role. Make sure you complete your “contracts” so when people are thinking about hiring you they will be in no doubt that you will do what you are promising to do. The risk of hiring you will be reduced.

the employment “contract”

When you start a new job you usually sign a written contract. But this is not the most important contract you are entering into.

You have also agreed to a social contract with the line manager who hired you. You have  been hired to accomplish a certain task, or take on a certain set of responsibilities.

If you leave that company before finishing the task, or before the line manager has had a decent return on training you for the position then, you have broken that “contract” with your line manager.

Breaking this contract is what makes people perceive you as being a “jumpy” employee. They fear that the cost of hiring you may exceed the benefits.

You can move jobs every year, but if you have completed your social contract every time, a new employer will not perceive too much risk in hiring you.

Career and Age

While it is illegal to discrimate against employees on the basis of age in most markets, it is still an almost universal practice globally.

Virgin Airlines in Australia was recently found to have discriminated on the basis of age in their hiring practices. The authorities were not able to find any evidence of systematic discrimination during the hiring process, but instead did a statistical analysis of the age of all Virgin Airline employees, found a huge skew towards young people, and Virgin was found guilty.

This is unlikely to happen to many firms, and age discrimination will continue to be an issue for anyone over about 35. Employers now just use euphamisms like “over-qualified” to mean too old, or just use alternative reasons to reject candidates they feel are “past it”.

Being “too old” usually means that you are outside an age band which the employer considers typical for the given level of seniority. They may feel that an older person cannot be shaped as easily, or won’t be flexible enough to adapt to the corporate culture. If their qualifications and experience exceed that which is required, they will be concerned that the employee will get bored and discontented in the role. They may be scared that the employee will be more qualified than they are.

While we all know these concerns are unjustified, things are not going to change in a hurry, so it is important to factor this into your career plans. You may be 25 now, able to walk into a job any time you want in a talent short market, but in ten years time in the middle of a recession, things will look very, very different. It is hard to imagine, but make sure in 2017 you don’t find yourself across the desk from an interviewer (who was 15 years old in 2007), looking at you with contempt in her eyes and saying “we will call you”.

 Plan ahead. Make your you have a skill-set which will remain in demand, and keep it up-to-date. Don’t put yourself in a position where you have to apply for jobs you are “over-qualified” for.  Network heavily. Specialise, but have foresight, and if your specialisation will be extinct in ten years, make sure that you know what the next big thing is going to be in your industry.

Plan ahead!

Hot career planning tip

If you are considering whether or not to take a job, and you are having trouble deciding if it is the right move for you, try this trick.

 Put a date on your resume 3 years in the future, and write the job into your resume. Look at your resume with the opportunity included and examine how you feel. Are you happy to be that person? Does the job seem to lead naturally into the next role?

This will help you make sure that you are accepting the job for strategic reasons, not opportunistic ones.