Archive, Innovation

Innovation in Three Easy Steps – Part II

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Last week I kicked off a trilogy of posts with a discussion of why innovation is both so difficult and yet so necessary (Innovation in Three Easy Steps – Part I). Today, I’d like to share some thoughts – based on my own practical experience here at DC Water – on how to make it happen, even in the face of challenges and resistance to change.

Part 2: How to Innovate
Although there are clear impediments to innovation, my experience is that most leaders in our industry understand the need.  Yet the next question is perhaps the most difficult: how do we structure and manage our enterprise to spur innovation – change for the better – when we know the natural motivations that will rise up to challenge change?
We must start with a sense of where we would like to innovate.  My answer is everywhere and on everything!  Here are some topics suitable for innovation, and I promise to provide actual examples of successful innovations from DC Water in every category in the third part of this string of blogs.

Innovation on how we communicate with our customers.
Innovation on how we finance our work.
Innovation on how we deploy Information Technology to keep our customers informed and engaged.
Innovation on how we upgrade water and sewer mains and laterals.
Innovation on how we monitor the status and condition of our assets, and deploy preventative maintenance.
Innovation on how we turn wastewater plants to resource recovery facilities to realize value from what has been discarded by others.
Innovation on how we cleanse wastewater to save costs – to electricity, to chemicals, to maintenance,
Innovation on how we partner with private firms to benchmark to world-class standards and improve performance and efficiency.
Innovation on how we communicate with the public when we are working in the field.
Innovation on how we enhance benefits – particularly including local hiring – to the people who are paying for the work, and the communities where the work is done.

That leads to the obvious question – how should innovation be done, particularly in the water industry.  Our approach at DC Water:

Lead.  Everyone in the enterprise needs to know that innovation is a desirable characteristic coming from the top.  That starts at the level of the top executive, who must be seen to support and drive change.  Demonstrating that commitment must then follow by identifying key leaders who can drive innovation on a daily basis.  At DC Water we have promoted a high-profile research scientist as the “Innovation Chief” in the General Manager’s office.  He has the visibility, access and experience to identify opportunities and challenges to innovation and ensure they receive focus from top management.  At DC Water, innovation is a priority – and that priority starts visibly at the top.

Engage.  My experience is that there are hosts of good ideas of how to do things better that are pent up in the staff that does the work.  Ask staff for their ideas on how to improve on our work and highlight and even reward good ideas.  Engage staff-driven ideas first, particularly some visible wins early on, and emphasize that this is about our work and our skills first and not foreign ideas imposed on us.  Engaging staff will yield essential buy-in from the folks who actually must change the way they do their work – and can also help overcome one of the most challenging obstacles to innovative ideas.   Innovation must first be owned by the folks doing the work.

Structure.  Founded on executive leadership and engagement of staff, the next question is how to structure the enterprise to support innovation.  Two models are typically considered.  One is to create a program on research and innovation where expertise is identified and built in a stand-alone office.  Many private firms have formal R&D offices with their own management and goals. A second model is to have a matrix structure – where innovation leads are identified within each of the existing structures (treatment facilities, water distribution, sewer systems, maintenance, finance, procurement, etc.) and coordinated and led by a chief typically not in any of the specific offices.  DC Water favors the second model – so that the folks leading both the ideas and response to innovation are embedded in the operations and understand needs and implementation realities.  The matrix model yields a system where innovation is often harder to start, because it must be integrated from the beginning in the operations of a department.  But this initial challenge pays dividends later on, when innovations are owned by operational units and already have internal champions.

Research.  Even if staff may not know all the answers, they will know most of the questions that need to be answered to improve performance.  Develop a log of pertinent questions and start formulating a research strategy to develop answers over time.  DC Water has a fantastically successful and relatively cheap research strategy based on collaboration.  The brainchild of our Assistant General Manager Walt Bailey and our Innovations Chief Sudhir Murthy, we collaborate with local universities and businesses to drive dozens of PhD level research projects on issues that are relevant to us.  The universities and their students get relevant research projects to advance their careers and programs.  Private companies join to get in on the ground floor with new technologies and services.  DC Water gains the benefit of new solutions to old problems.  Our largest innovative project – a $460 million dollar investment in a first-of-its-kind biosolid digestion program – was developed after knowledge gained from 40 published papers, secured at low cost in collaborative efforts with three regional universities and several private engineering firms.  Successful research yielding improved performance creates a positive feedback loop that generates the next round of projects.

Products.  Once the research begins and ideas begin to germinate, we need to develop practices that are standard in the private sector:

Patents: protect the intellectual property that is created with the support of ratepayer money;
Non-Disclosure: protect the confidential nature of special programs and approaches that may become commercialized;
Compensation: determine how to distribute revenue beyond cost recovery for the inventors of the idea – to create a financial incentive for change; and
Consulting: determine if your own employees may become consultants for others seeking to emulate a new idea – again driving the potential for additional revenue for the enterprise and the employee.

The bottom-line, in more ways than one, is to view innovations not only as an approach to improve productivity, but also to gain revenue by commercializing ideas in the marketplace.  Our ratepayers deserve a financial return for what they have invested in up-front, and these returns can also fund the next round of innovations and help create a financial incentive for employees to participate.

Business of Water.  Much of the innovation that is relevant to our organizations pertains not just to our unique technical needs, but the business processes that are common to any customer-service enterprise.  We need to be as lean and innovative in reviewing permits, responding to customer calls, and planning and implementing preventative maintenance to critical facilities.  Spurring innovation needs to cover the costs and work associated with our business procedures as much as it covers how we manage the streams of water.  DC Water is now expanding our successful innovations and research program that focused initially mostly on our technical processes, and specifically focusing on the business of water.

Social Media.  Engagement of employees in the first instance, and then the public in the second, is the best way to capture the imagination of those we need to support our work.  Social media – or a fun, interactive web page that allows anyone to suggest a new idea is tailor-made for this objective.  Imagine a virtual suggestion box that can provide an instant forum for ideas, perhaps with fun bells and whistles – like the capability for others to vote thumbs up or down.  DC Water plans to launch an innovations website forum to gather ideas.  From those ideas we will select a few each year to be developed into business plans, and a smaller number funded for serious pilots and collaborative research.  Once we have the system functioning for encouraging internal ideas – and making it fun – we will expand the system to enable any of our customers, or any member of the public for that matter, to suggest how we could do our work better.  The sky is the limit, and we are willing to consider a good new idea from anywhere or anyone.

Governance.  Innovation, probably defined into particular business areas familiar to the Board, should become a strategic priority for the Board to drive and review, not just become informed as it comes to fruition.  For DC Water, we looped an innovation strategy into our Board-driven strategic plan – called Blue Horizon 2020.  The areas of innovation that are already on our horizon are integrated into the Board’s strategic plan – and is now a principal way in which our performance is measured.  This is perhaps the holy grail of innovation – when it becomes integral to the fundamental performance up to our governing body.  For DC Water, innovation and Blue Horizon 2020 is now one and the same.

Ultimately, the combination of these steps is designed to capture the imagination!  Capture the imagination of our staff, propel a cascade of innovation ideas that keep coming over time; capture the imagination of our governing bodies and rate agencies that govern our future; capture the imagination of our customers who ultimately must fund our work; and capture the imagination of our political leaders who hold such sway over the entire picture.

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