Is strategy working for your water utility?

Water utilities are navigating complex, compounding challenges — from climate change and declining natural resources to population growth, shifting demographics, evolving customer expectations, ageing infrastructure, and global economic pressures.

The myriad issues facing water utilities demand more than just technical solutions — they require a clear, adaptive strategy that navigates competing priorities and can guide your organisation or program through uncertainty, while remaining flexible enough to respond to a range of external and internal factors that might change how you progress.

As a number of water utilities in Victoria begin preparing for their next pricing submission, it’s timely to consider if your business has in place the essential elements of strategy.

Does your strategy have the right elements?

Strategy includes elements such as a vision and purpose, goals, objectives and/or outcomes, and principles. These enable your teams to align decision-making and investment with outcomes and to measure benefits delivered to customers and community. But it doesn’t stop there. Strategy should include clear decisions about what your business will do, and what it will not do. Sometimes this means stopping something or moving away from current approaches to ensure that you focus effort and investment on the things that bring value to your business, customers and stakeholders.

Is your strategy tackling what matters the most, and delivering real customer value?

While there are common issues facing many water utilities, what each issue means in practical terms will differ for each utility. Your strategy process must sort through the noise to identify and understand the real strategic issues facing your business and how they affect your ability to deliver value to customers and stakeholders. Through the strategy process, your business must also make decisions about how it will respond to each issue. These decisions can be difficult and may include trade-offs. They should be reflected in the strategy through positions or pathways, providing your strategic direction, clarifying how the organisation will deliver value, and empowering staff to make strategically-aligned decisions in shorter-term planning cycles and daily activities.

An effective strategy won’t necessarily give you all the answers for every issue that arises, but it should give you a framework for making good decisions that drive you towards your long term goals.

Is your business aligned with your strategy?

Strategy sets a framework for aligning your business, business processes and staff towards a clear, shared direction. Your business strategy sets the direction for long-term investment and operating strategies and plans. Five-yearly priorities for investment and operations are reflected in your pricing submissions, which are implemented through annual or biennial implementation and operating plans. Each layer of the framework has a view to how they align with and contribute towards the long-term direction set in the business strategy.

These planning, regulatory and delivery processes also create a valuable feedback loop that sense-checks strategic direction, ensuring insights from investment, planning and operations inform ongoing refinement. This alignment supports more efficient short-term planning and ensures that activities reflect your strategic priorities and customer commitments, while the feedback loop helps keep the strategy relevant, grounded and responsive.

Do you have a clear picture of progress, achievements, and areas that need attention?

Utilities can measure and drive success by complementing your strategy with a practical and insightful performance framework. An effective performance framework with the right supporting governance arrangements will enable you to understand and demonstrate progress and success in achieving outcomes and delivering benefits. It also helps to keep your business on track, identify risks and opportunities early so that timely adjustments can be made, support adaptive management and continuous improvement, promote transparency and accountability, and support overall effective and efficient delivery of your strategy.

Make strategy work for your business

When strategy is working well for your organisation, it helps your business and people to:

·      navigate the complex and ever-changing operating environment,

·      respond to the growing pressure to do more with less,

·      deliver efficient planning and investment,

·      provide financially sustainable services, and

·      deliver and demonstrate your value to your customers, stakeholders and communities.

It takes time to time to develop effective strategy and align your business for efficient and successful implementation. It requires leaning into the hard choices facing your business, and getting widespread buy-in from staff, management and the board. It can feel messy and challenging, but don’t underestimate the value of the process and the outcomes it can deliver for your business, customers and stakeholders.

At Ricardo, we use the tools of great business strategy adapted for water utilities to get to the heart of your real strategic issues and help set a strategic direction that’s right for your business. We leverage our deep end-to-end understanding of utility operations to help you move confidently from what you could do, to what you should do, and how to get it done. If you’d like to make strategy work better for your utility, get in touch to discuss your challenges and how we can help.