20/07/10
The water sector is always being beaten about the head for lack of innovation. It is time for a fresh look.
In life they say, particularly in the personal care sector, cleanliness is next to godliness. In business, the same spiritual proximity is claimed for innovation.
The point is well-made. All strong organisations anticipate change. They try to shape things rather than be kicked around by them. A great poet once put it more existentially, “the hollow horn/plays wasted words and proves to warn/that he not busy being born is busy dying” (1). A company’s response to change defines its performance for better or worse – if you always do what you always did, you always get what you always got (which won’t ever be enough when expectations are rising relentlessly).
How is the water sector doing on such an important matter?
A lot of evidence says: "Pretty well, thanks". Start here. Every month, W&WT magazine and other industry media are packed with new products and processes water companies are using to raise their game. Standards are rising and customer satisfaction is high. Companies are doing more than their share in delivering environment policy. Productivity continues to improve.
Low, sub, short….?
Yet this record is nothing to some commentators and academics whose opinion of the industry and its prospects is best summarised as ‘low’. They see it as ‘low-tech’ or ‘low risk’. They say R&D fell after privatisation; the industry’s efforts to innovate aim low (at short-term targets); its sharing of information is “sub-optimal”. Who are these people? Not butterfly-minded media types, but independent experts, sponsored by government to consult widely and bestow wisdom.
The Cave Review of Competition and Innovation in Water Services (2) was so concerned about the latter part of its brief that it recommended setting up a quango, a water research and development board. Strong stuff, but there was more. It also wanted to give Ofwat a statutory duty to promote innovation. A rumour that it toyed with proposing another Ofwat duty – to deliver universal happiness – is, I’m sure, entirely without foundation.
Neither is the Council for Science and Technology (3) convinced that the sector is on the right path. It subscribes to the above shortcomings. It says that current innovation is "fragmented" and poorly connected to universities and research organisations. It contrasts the UK sector with the Netherlands, where they "place a high value on developing, incorporating and sharing the latest technology".
Incentives
To be fair, these expert reports contain much that water companies and regulators would accept, such as the need for revised incentives (4). But, in the present difficult circumstances, their approach to the interaction between business and officialdom looks less relevant.
A comment in the CST report sheds light on its starting point and also, perhaps, how the negative opinion gained ground. It says: "To understand the overall health of the water sector, the developments needed and the progress made, better indicators of R&D activity and innovation intensity are needed. These indicators will enable policy-makers and regulators to monitor both inputs and outputs – alongside the current portfolio of economic and environmental measures – to determine how best to meet current and future challenges."(5) The strong suggestion is of top-down, micro-management which looks out of tune with current thinking.
Broader view
More recent advice to governments about how to inspire innovation takes a broader view. It starts from a society-wide perspective; its idea of innovation includes (but is not confined to) technology; it casts management in a more autonomous role.
Launching the innovation strategy of the Organisation for Economic Co-operation and Development (5) in May, Secretary-General Angel Gurria warned governments against wasting money in fostering innovation. Official efforts were best directed at education and research, simplified support, increasing demand through regulation and taxation, and creating a stable investment environment.
The OECD wants a broader understanding of innovation. It notes the value of 'knowledge networks', recognising that the products are only half the story.
All this is echoed in a new paper from the UK government-sponsored body the National Endowment for Science, Technology and the Arts (6). The authors call for policy to foster an environment across the economy that helps innovative firms flourish, improves knowledge creation, encourages open markets, and ensures access to finance.
In the water sector itself, a fresh approach is being considered that could put innovation on a more positive footing. The Water UK Innovation Hub, launched this month, will promote a fresh approach. A proposed government-backed innovation platform, with strong industry leadership in partnership with regulators, looks in the same direction. The project’s boosters believe the sector can, and should, go further with technology. But significantly they also accept that its success to date has been built on innovation throughout the business.
A version of this article, by Barrie Clarke, appeared in Water & Wastewater Treatment magazine, July 2010
Notes
1) It’s alright ma, I’m only bleeding, Bringing it all back home, Bob Dylan, 1965
2) Cave Review, Defra, April 2009
3) Improving innovation in the water industry, CST, March 2009
4) Ref: Meeting Future Challenges, Water UK, June 2010
5) Innovation Strategy, OECD, May 2010
6) Rebalancing Act, NESTA, June 2010
