Bridging Gaps to Water Innovation
By William Sarni 13 January, 2014
Increasing scarcity drives the search for solutions, Will Sarni discusses existing barriers water innovation
Increased scarcity and the need to address water quality will drive innovation in partnerships and technologies. These innovations will hopefully alter the business as usual trajectory underpinning the projected water supply versus demand gap. However, there are barriers to water innovation. How do we alter this trajectory and projected gap?
Innovation in partnerships is increasingly referred to as “collective action.” Innovative collective action frameworks and programs are led by organizations such as the CEO Water Mandate Water Action Hub and WWF. These collective action programs provide platforms for online collaboration among stakeholders (the Water Action Hub) and collaboration programs by WWF.
“The industry of tinkerers has developed countless solutions that would improve water and sanitation management, but those ideas have yet to reach mainstream adoption…
…can this technology be commercialised, and, if so, how?”
Coupling innovation in partnerships with technology innovation holds promise in addressing increased demand for water. However, commercialization is perhaps water tech’s greatest challenge and, in turn, where change can have the greatest impact.
While the gravity, breadth, and variance among water problems requires a greater supply of innovation, many great ideas currently lie dormant. The industry of tinkerers has developed countless solutions that would improve water and sanitation management, but those ideas have yet to reach mainstream adoption.
The great near-term opportunity lies in taking exceptional ideas that a few customers have already adopted, on a local level or in fragmented fashion, showcasing these, and providing a pathway to broad adoption.
Early in the innovation and funding process a critical question should be asked and answered: can this technology be commercialized and, if so, how? What is the path forward, what are the resources needed (management team in particular), and how quickly can we scale the business to ensure long-term profitability and achieve the targeted financial results for investors?
“Although that may seem obvious, in an industry of tinkerers…
…far too many believe that “if we build it, customers will come.”
Although that may seem obvious, in an industry of tinkerers, many of whom invent novel improvements to the status quo of water management, far too many believe that “if we build it, customers will come.”
For an innovator working to improve water treatment, for example, who looks at the need for better water quality and understands the impact he or she can have on the world, the opportunity may seem so clear that it’s easy to overlook the buying process.
Any new technology faces challenges in the commercialization phase, but the water industry’s commercialization challenges present special obstacles. In general, the challenges are:
- Disconnect between the price and value of water. Water is essentially free and, as a result water, technologies are saddled with long payback periods (if one just evaluates payback based upon the current price of water).
- Water tech is not just about technology. Water has economic, environmental, social and cultural dimensions all of which should be concurrently managed (unlike resource issues such as energy). There are values associated with water and as a result reputational risk and brand value is important. Stakeholders care about how water is used by the public and private sectors. For example, these stakeholders can impact social license to operate for private sector companies and perceptions of water reuse and advanced metering systems for public sector water utilities.
- Lack of funding for water technologies and infrastructure in the public sector (ongoing budget cuts and pushback on government funding results in an aging and unreliable infrastructure).
- A fragmented marketplace for water and how it is managed. Numerous water supply and treatment utilities along with different “types” of water; fresh, potable, brackish, salt, gray water, etc.
- Risk adverse culture in the water industry. Risk taking is not readily embraced in part due to the need to safeguard public health in managing water supplies. This also drives the need to pilot technologies to “guarantee performance.” Customers require long testing periods with lots of proof points and pilot tests.
- The path to commercialization is not clear-cut. The sales distribution channels for water tech are difficult to understand and to penetrate.
Despite these unique barriers in commercializing innovative water technologies there are an increasing number of success stories of how innovative water technologies have been commercialized, even to municipal and utility water customers.
Success stories are crucial to greasing the wheels of water tech commercialization. Every investor wants to hear success stories and profitable exits before investing in water tech. Every innovator uses those successes as fuel to burn through difficult times in the commercialization process. Even customers need to gain comfort with early adoption of water tech, and looking at other customers who benefited from taking risks on water tech helps.
“What should the future of water look like? …desired outcomes, in 21st century water management, means more than enabling the status quo.”
What should the future of water look like?
Achieving the desired outcomes, in 21st century water management, means more than enabling the status quo. It means transforming water supply and use to a sustainable model in balance with the environment and ecosystems, providing for human use and providing access to sanitation to all. Moreover, success means achieving that vision while adapting to constant changes in the environment, politics, and economics.
Achieving the desired outcome of 21st century water management is expected to unfold over time, with capacity-building for innovation and policy, with new inventions, with accelerated purchasing of existing water tech by educated, motivated buyers. Perhaps best of all, because of the very barriers that have blocked water tech from more rapid creation and adoption, we are still early. That means each of us can make an impact.
- Big Spender: Buying Up Water A savvy investment or villain in the making? Debra Tan looks at the HK tycoons’ water shopping spree, buying up water rights, water philanthropy and venture capital in water innovations
- Enforcing China’s Planned Green Economy Can China achieve its planned RMB4.5trn energy-saving & environmental protection industry? HSBC’s Wai-Shin Chan on incentives, changes in environmental law, more regulatory muscle and what this means for water
- Singapore: Future Ready in Water EDB’s director of cleantech, Goh Chee Kiong, shares his views on SIWW, key technologies surfacing, new growth markets for industrial water and the role of government in innovation from R&D to piloting and eventually commercialisation
- Sino French Discusses Water Pricing China Water Risk talks to Steve Clark of Sino French Water, a JV between Suez Environnement and NWS Holdings Ltd on water pricing in China – how water tariff is set, sewage and sludge treatment prices, pricing trends and non-revenue water
- Chinese Desal Policies Reviewed Dr Guo You Zhi, Secretary-General of China’s Desalination Association shares with us his insights on why desalination targets have not been met and what’s in store for the future
This article is published with the kind permission from Deloitte.
About Deloitte: Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
Read more from William Sarni →