Market view: Shadow play

Charles Vincent looks at the reasons behind Britain’s competitive sporting success and applies them to water companies preparing for the shadow operations of the competitive market.

With the shadow competitive non-household water market opening next month and full competition just over six months away, now seems like a good time to review where we are individually and as an industry. Everyone is working extremely hard to deliver their bit of the whole, but times of reflection are essential to ensure we are going to achieve our goals.

Part of that reflection should always look outwards to see how others achieve their goals. With the UK having such a brilliantly successful summer in terms of sport, particularly in the cycling, I have been searching for lessons there to explain how we have been so successful both at the Olympics and in Tour de France.

Lesson 1: Help the organisers

Without the Rio Olympic organising committee being effective there would have been no races and all that hard work by the athletes would have been wasted. It is therefore in everyone’s interests to make sure, when things do go wrong, that best effort is spent on making things work rather than looking to blame. That way the race can happen. As we travel through the turbulent times of Shadow Operations and market opening market, participants (the competitors) will need to work with, Defra, Ofwat and MOSL (the organisers) to ensure things go as smoothly as possible.

Lesson 2: Look outward to ensure your planning assumptions are still valid

Competition is about beating someone else. That means that understanding what those other individuals are doing is essential to ensuring you achieve your goal, particularly when that competition involves tactics (rather and being an individual test of time, distance or weight). Chris Froome and Mark Cavendish prioritised the Tour De France rather than the Olympics. This meant that their preparation was impaired and probably cost them gold medals. They did, however, win the Tour and reach 30 tour stage wins respectively. Their competitors, knowing this was their focus, avoided the Tour and won gold. We have seen the merger of the non-household retail arms of United Utilities and Severn Trent, along with various key executive appointments and other statements of intent from retailers. Factoring these into your strategic planning is essential to having the best possible chance of being successful.

Lesson 3: Remember that being 1st is not the only form of success

Chris Froome won the Tour de France, but another 197 individuals started the race and many of them would regard themselves as having a “successful race”. They just defined success in a different way. For some that was winning a stage, a points competition or just finishing. Similarly, only one company is going to have the biggest market share, but by understanding where you sit in the race (Lesson 2) you can define your own success, be that most transfers, best margins, best customer service or, like most of the 198 tour riders, that you are good enough to stay competitive and in the race.

Lesson 4: Preparation is essential

The British Olympic track cycling team spend about 1,000 hours training each year on top of countless more in working the team’s coaches, nutritionists and physios. All that for just a few minutes of racing. Without any part of that preparation working well they would not be able to win. Similarly, to be successful we need to learn from Scotland’s issues by focusing on market data, IT systems, corporate strategy, marketing proposition, customer service, recruitment and training. The focus of each of these must be aligned with Lesson 3 to make sure that if we define success as being the best at customer service, that is where preparation is focused.

Lesson 5: Remember that Shadow Operation is part of the race

The warm up and practice lap is something that every athlete does, but often it is not focused on. All winners know to take it as seriously as the race itself because many races are lost by riders hurting themselves, crashing or suffering mechanical failure at these points. Shadow operations is very much like a practice lap, in that while you cannot win during practice you can definitely lose ground or have your race ended if you crash or have mechanical/IT problems; and you can be disqualified or have other sanction applied if you break the rules.

Having issues with data, IT or operational readiness can therefore have a serious impact on your eventual success.