Last year around this time, I focused on digital technology solutions for water with this essay, “2019: The Year Analog Solutions Died.” I stand by this perspective, as the COVID-19 pandemic has accelerated interest and adoption of digital technologies across the water value chain.
However, I wanted to share six new learnings from this pandemic year related to digital transformation along with other observations about the topic of water.
1. Digital transformation is about people: The digital transformation of water was well underway pre-pandemic and accelerated quickly during the past nine months. What was once anticipated to be a multiyear transformation occurred rapidly, with both the utility and industrial sectors scrambling to identify digital technologies and integrate them into their operations to adjust to remote workforces.
Two aspects of the digital transformation took on more prominence: the critical importance of the workforce and the role of earth observation science (EOS) technologies.
- First, the critical importance of people in digital transformation cannot be underestimated. Transformation will stall or fail if there is no alignment between business strategy and culture, and there is a lack of investment in the workforce. The insights on digital transformation from 2019 papers and research came to the forefront (“IWA Digital Transformation” and “The Technology Fallacy“). The key takeaways are that successful investments in digital water technologies require a strategy, commitment by leadership, investment in the workforce and establishing and nurturing a culture of learning. The most important from my perspective is creating a culture of learning — it will contribute to attracting and retaining talent.
- We also witnessed the emergence of EOS technologies to provide real-time water quality, ecosystem health and flood prediction analytics from satellite data acquisition and analytics companies (such as Gybe, 52 Impact and Cloud to Street). Digital technologies are connecting across the value chain of utilities and industries for a more real-time view of water quality, quantitative evaluations of ecosystems and flood prediction.
2. We need a “skunkworks” strategy for innovation: Innovation in water technology and business models is slow for several reasons. The competition is the status quo (the installed base). In general, organizations “try” to innovate from within, and water is a public health issue, so utilities can’t take risks. We don’t have the luxury of time to wait for innovative technologies and business models to scale. At this rate, we won’t achieve United Nations Sustainable Development Goal 6, which sets the goal of clean water and sanitation for all.
What we need is a skunkworks mindset and strategy. If other industry sectors such as the aircraft and aerospace sectors can innovate quickly and at scale, so can the water sector. For those unfamiliar with the term, the relevant characteristics of a skunkworks project are outlined as a concentration of a few good people solving problems far in advance, at a fraction of the cost of other groups by applying the simple, most straightforward methods possible to develop new projects (paraphrased from Kelly Johnson).
3. Water is not (just) the water industry: The issues and opportunities related to water are not just about the water industry. We need a more expansive view of the role of water in society and our environment. For example, water has economic, business, social and spiritual dimensions. The water industry sector mostly focuses on economic and business dimensions and rarely, if at all, on the social and spiritual dimensions. I would reframe the narrative to focus on humanity’s relationship with water (especially health and wellness, and natural ecosystems). Water doesn’t come from the tap or bottled water, so let’s protect watersheds and ecosystems. This message needs to be communicated simply and clearly to those outside the water sector.
4. Diversity is critical to solving wicked water problems: Society would benefit from greater diversity in solving water challenges as it is doubtful solutions exclusively will come from the usual suspects (myself included). We need vastly more diversity in age, gender, race, geography and from industry outsiders. Increasing diversity will not happen organically; we need to be proactive and work at it or we are destined to bring the same ideas to the party. As Ben Dukes, a friend and colleague, often says, “What got you here won’t get you there.”
5. Innovation in investing in water remains a challenge: Water technology entrepreneurs and startups continue to be challenged by traditional venture capital and private equity investment models. Water is not cleantech and requires more patient capital, which is in short supply. However, there are encouraging signs as initiatives such as Anheuser-Busch InBev’s 100+ Accelerator and Microsoft’s $1 billion Climate Innovation Fund invest in innovative water and sustainability solutions. The increased interest during 2020 in environmental, social and governance (ESG) performance has also focused more on innovative water solutions.
6. Water is not climate: The statement “If climate is the shark, water is the teeth” is misleading and not helpful. This year, climate change continued to gain traction within the private sector in the form of new commitments and investments from companies such as Amazon, Google and Nestle, among many others. This is certainly to be applauded. However, a cautionary word: Solving climate change will not solve the fundamental issues with water scarcity, poor quality and lack of access to safe drinking water, sanitation and hygiene. The potential and likely failure to achieve SDG 6 can be attributed to public policy failures sch as pricing, allocations and lack of funding. We can solve climate change and water and need to focus on both.
There is no shortage of lessons learned from 2020. While it was a profoundly challenging year, we do have an opportunity to do better by critically examining what needs to change in the years ahead.
This past year has framed my view of what the future may hold for 2021 as we build back better. I will share my thoughts on 2021 in my next Liquid Assets column.