We have customers?

I am blogging from the Australian Water Association annual conference, Ozwater, in Sydney. It has been a relatively quiet conference, as the local water industry is in a bit of a hole. Sydney Water has spent all its capex budget on a big desal( which will be mothballed in a couple of months) and is not releasing much work while they go through yet another round of restructuring.

The interesting narrative I am taking away from the conference is an increasing focus on customer value. In his keynote address the new MD of Sydney Water, Kevin Young, placed the focus of his organisation squarely on generating value for the customer.

Australian East coast water utilities have as much as doubled their customer tariffs to pay for the emergency drought infrastructure they built in the latter part of last decade. Customers were not too thrilled to be paying so much for drought infrastructure while they were trying to deal with floods (welcome to Australia).

In one case community anger actually compelled the struggling Queensland government to reverse the amalgamation of three local government utilities into one more sensibly sized entity. Watching one senior water executive being (figuratively) torn down by an angry mob seems to have really got the attention of the rest. Cochabamaba style civil insurrection seems just around the corner (okay…i am dramatising a bit for effect here).

At previous Ozwater conferences it would always amuse me how little the word customer would come up. If you were to do a word cloud with the different words appearing in the conference proceedings customer would be microscopic. At this conference it would still come a long way down the list after asset, corrosion, disinfection etc. but after having front row billing in the keynote speech of the MD of one of the country’s biggest utilities, you can bet it will pop up a lot in 2013.

Water Leadership – the H2Otalent doctrine

The global water industry is going through a transition. A transition from  an industry focused on the incremental improvement of a century-old water management paradigm, to an adaptive industry that can manage the rapid and dramatic changes occuring  in climate, technology and society.

Incremental improvement and rapid adaption require very different leadership approaches, and this has created  a leadership deficit throughout the industry.

This is complicated by the fact that water management is one of the most challenging wicked problems we face. It has more stakeholders than any other industry, making for a highly complex socio-enviro-political environment. It intersects pretty much every human endeavour, meaning to optimise water management at a society/ecology-wide level is a task of extreme complexity, ambiguity and uncertainty.

Leadership is this kind of environment is really as hard as it gets.

In this post I am putting forward a universal model for leadership in the water sector. This is based on H2Otalent’s experience recruiting across the sector, as well as the latest thought on leadership in complex systems. I would love to get readers views on this set of leadership qualities/strategies as this is just one step of an iterative process.

Leaders need not be managers, and leadership can be displayed at all levels of organizations, as well as outside organizational structures. Leadership is also much more about what you do than who you are.

1. Self-Aware
Having a good understanding of ones self is absolutely the most critical leadership skill. If you don’t know your own strengths and weaknesses, and your own biases and tendencies, you will never be able to lead effectively because you will not be able to manage yourself. Self-awareness naturally leads to an understanding of others.

2. Internal locus of control

Individuals with an internal locus of control fundamentally believe that they can influence outcomes (rather than being the victims of circumstance), and are willing to take responsibility for outcomes.

3. Visionary
In a changing environment leaders must drive for change, and that requires clarity, a big-picture perspective, and a vision of what can be.

4. Authentic
People will follow you if they believe what you believe. Leaders must take a position and be true to their values

5. Enabling
Leaders must empower others to act. You can achieve nothing on your own. This requires giving authority and control to others, not just delegating tasks.

6. Emergent
While leaders must provide vision and values, in complex environments it is better to allow solutions and tactics to emerge in a bottom-up way rather than take a hierarchical directive approach. In complex environments undergoing rapid change, there is no way that one person can always know the right course of action. It is the leaders responsibility to create an environment where this is possible, and let go of certainty over outcomes.

7. Experimenting

Complex system environments are non-deterministic, so planning and forecasting are often doomed to fail. The best way to test ideas is by trying them, and trying lots of them.  Leaders must provide an environment where early stage failure is encouraged, so that major failures can be avoided.

8. Disruptive

Continuous adaption to a changing environment is much more desirable than the step-change phenomenon that tends to occur in natural systems when a system is pushed beyond its level of resilience by external change and collapses. Leaders need to be able to continue disrupt the status quo to provide room for change

9.Transcendent

Powerful leaders have the ability to consider a choice of two or more undesirable alternatives, reject both and find a third previously non-existent path which combines the positives of both.

Readers, tell me why I am wrong and where I am right on this list of key leadership qualities/approaches. Different parts of the industry will have radically different perspectives, so I am keen to hear them.

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?