Leading Water Utility Innovation Urban Water Institute | February 20,

Leading Water Utility Innovation Urban Water Institute February 20, 2020 Jason Carter, PE - Arcadis Water Strategy & Innovation Lead

First critical steps Kristen – Engineering “What do you think I have Robert – Executive been doing for the last 20 years? It is about time others get in the game.” Ginger - Operations John – Finance “We have been pretty successful to date and it sounds risky. Let’s table this until next fiscal year.” “Sounds great, but we have heard this stuff before. By the way – can’t you just approve my purchase order?”

Headwinds to innovation Driver 8% Risk 6% 33% Cultural Inertia Process 14% 30% Tenured Employees Culture 54% Resources 18% 26% Organizational Silos 11% Executive Management

Leading utility innovation Getting Started Define your aspirations and key focus areas Benchmark your environment

Define your aspirations and key focus areas Over 90% of utility employees believe that innovation is critical to the future of their organization. Less than 40% say their organization has described urgency or shown a vision for innovation. Only 30% have identified key challenges or opportunities that need to be explored.

Define your aspirations and key focus areas Implementation of strategy Business sustainability / agility Customer expectation Workforce of tomorrow Digital transformation Innovation scans the far future and empowers the current workforce.

Benchmark your environment Direct Influence Selecting, investing, developing an idea. WRF Utility Innovation Framework (WRF 4642) Indirect Influence Creating the environment for idea creation, development and adoption.

Leading utility innovation Getting Started Define your aspirations and key focus areas Gather a critical mass of leaders and influencers Draft an innovation strategy Benchmark your environment

Drafting an innovation strategy “Without an innovation strategy, innovation improvement efforts can easily become a grab bag of much touted best practices “A company without a strategy won’t be able to make trade off decisions Aping someone else’s system is not the answer.” Pisano, 2015

Building an innovation strategy Urgency & Commitment Vision & Definition Measures of Success Process Resources Next Steps An innovation strategy is a map that provides direction, pathways, and tracking.

Engaging your people Percent of Practicing Tactics % 0% 0% 0% 00% % 0 0 2 4 6 8 1 Communicated by executive leadership 74% Stated in organization strategic plan 64% Encouraged by example regularly 42% Included in performance appraisals 30% Provided time for innovation activities 19% Included in employee orientation 13% Reported as an innovation metric 13% No tactics 4% Only 2 in 10 feel empowered to participate in innovation No need to go big early. Focus on key leaders and influencers.

Innovation leaders and teams Innovation Leaders 88% with 10 years in water sector 71% recruited from within the organization 37% are female 6% had formal innovation training Vision caster, communicator, networker, explorer, facilitator [CELLRANG E] 0.18 [CELLRANG E] 0.24 [CELLRANG E] 0.59 Innovation Teams or Working Groups 43% of utilities had some form of innovation team Usually one team (avg 11 people), representing multiple generations and departments

Leading utility innovation Getting Started Define your aspirations and key focus areas Gather a critical mass of leaders and influencers Build idea infrastructure Benchmark your environment Draft an innovation strategy Refresh your partnerships

Build idea infrastructure Capture Horizon-scanning, recruiting idea submission, evaluating operations to identify concepts. Screen Sorting ideas that are aligned with organizational goal and focus areas. Develop Generating creative dialog to combine and refine ideas for prototyping and testing. Evaluate Deploy Adopt into daily use and measure impact. Testing ideas in increasingly relevant settings and evaluating for impact and alignment.

Refresh your partnerships Number of Partners by Organization Research - 69 Supplier - 31 Peer - 25 Industry - 58 Consultant - 28 Funding 4 Government 16 Accelerator 13 Entrepreneur 2 Customer 1 Other 12 Surveyed utilities maintained an average of 12 partners for innovation. Only 26% of partnerships were perceived as being effective.

Refresh your partnerships Value Exchange Process Culture Complementarity provides a motive for alliance formation as it yields a higher return than the sum of returns if it were used independently Compatibility in partners' org. structure and routines reduces uncertainty about intentions, interests and competences Good fit stimulates joint sensemaking, misfit undermines the quality of work relationships

Leading utility innovation Getting Started Define your aspirations and key focus areas Gather a critical mass of leaders and influencers Build idea infrastructure Benchmark your environment Draft an innovation strategy Refresh your partnerships

Launching innovation as a business practice Ideas Immediate Near-Term Long-Term Focus on quick wins Take credit and repeat Its about quantity Establish governance & communication plan Kick the tires and possibly change a few Expand the Pipeline Build critical Mass Scale to broader organization Open the Invitation Process Engagement

Launching innovation as a business practice Sustainability Operational Efficiency Energy neutrality with heat exchangers, solar panels and investigating biomass reuse. Utility Innovation Workforce Development Collaborates regionally to address labor needs in mission critical jobs. Upskills current workforce. Cost Savings Reduced annual OpEx and achieved a payback time of 2 years with new algae control technology. Brought nutrient removal technology to US led to 20% energy reduction with a projected savings of 400,000/yr. Workforce Engagement Fosters broad collaboration, engagement and communication (over 40-60% of staff engaged). External Recognition Named Business Review Weekly’s Top 10 Most Innovative Companies.

WRF 4642 – Fostering Innovation within Water and Wastewater Utilities WRF 4907 – Leading Water Utility Innovation Jason T Carter, PE Vice President Water Strategy & Innovation Lead (c) 205.253.2276 (e) [email protected]