When everyone is busy being objectively similar, try cultivating your subjective difference…

15th April 2020 09:14

By Alex McCluckie, Associate Director. Email Alex

The Covid-19 backdrop against which I am writing is, of course, impossible to ignore and its exact ramifications, impossible to predict. Despite this, I was struck by Suzanne Heneghan’s article in Utility Week rallying the sector to not lose sight of its future goals in the current turmoil and thought, maybe some less pandemic-focused views may be welcomed. So, it is with an eye to the future that I would like to pose an evolutionary step in how we cultivate value for consumers, beginning with a rather bold statement;

The water industry has become fixated on certain metrics, largely due to legacy, and as a result has become blinded to novel (yet equally important) areas that could act as a proverbial rocket to the industry’s proverbial backside.

With a metaphor as colourful as that, it’s best I explain…

As someone who has carried out many tracking studies for water companies and consumer bodies alike, I have seen time and again the value that such exercises can hold. Providing a continuous, diagnostic tool that stakeholders can use to benchmark, monitor and identify issues, whilst simultaneously observing the fruits of their hard work starting to bear over time, really is a useful and rewarding process.

That being said, as more and more customer satisfaction and perception pieces have come and gone from my desk over the last decade, I have been left wondering whether the rate of evolution in the types of questions that we ask has been commensurate with the amount of time that has passed.

Monopolised by mundane metrics?

Over the last few years, the water industry – for all its naysayers – has been providing a service that in a number of areas at least, has been performing pretty well. To illustrate the point, let’s take a look at some data from CCW’s Water Matters report. Looking at the below chart it is pretty clear that at an industry-wide level, public perceptions of certain areas of service such as the reliability of supply or around the colour and appearance of tap water have made for some rather pleasant reading.  

What’s more, when viewed at an individual company level, there are similarly a number of areas and companies that illustrate a large degree of (high performance) clustering at the top:

The point here is that whilst it is absolutely key to track perceptions in these areas, I believe that our time has become monopolised by them. Now, I have had conversations with many of my client-side industry peers and all have made clear the opinion that such a traditional focus is something to be commended because it provides a basis on which a comprehensive overview can be gained; an overview which is still unquestionably useful to various industry stakeholders (and one which, to be clear, I am in complete agreement with). Indeed, when I have been pushing this point, my goal hasn’t ever been to promote the need to ‘uber-ise’ the metrics so frequently reached for, but to offer a means of supplementing them.

It is my view that one often overlooked problem with our current arsenal of oft-deployed metrics, is that they actively discourage variety and they do so by forcing companies to chase the same goal in the same way(s). If the industry is to evolve in this post-PR19 era, one which itself saw an unprecedented step-change in customer engagement, then I believe we need to embrace other areas that are capable of broadeningthe industry’s understanding of what is feeding into consumers’ perceptions of “value”.

To lay down my current view on this and to demonstrate why there is plenty more to explore in our conception of value, it’s best we take a trip to Central Europe – Austria to be precise…

Expanding our horizons…

There is a school of thought, which emanated from the Austrian School of economics, that posits that value at its heart is fundamentally subjective [1]. That sentence bears a second reading because when conceptualised in this manner, the value that a water company can bring can be as different to Mr Smith at number 19 as it is to Mrs Doe next door. What this means is that traditionally held notions of consumer value have by and large been calculated after consumers have been placed into the ‘shackles’ of numerous PR19-surveys that were, until recently, a key fixture of the industry’s customer engagement activities; surveys that have, at their core, been preoccupied with the more objectively defined attributes we examined earlier in the article. Think of it like this…

Imagine you are dining at a 5-star restaurant. The food is the best in the land! Mouth-watering dishes served with a smile. It is the definition of culinary perfection.
 
…Only one problem – the floor is covered in human excrement!
 
How would you increase the value that this restaurant is able to give its customers?
 
Now, if value is subjective then it follows that there is no healthy distinction to be made between the value you create by creating the Michelin starred food and the value you create by cleaning the floor. One of them creates that which we think we're paying for (the delicious food, in this case) whilst the other creates the setting in which the product can actually be enjoyed. The implication being that neither one should be granted priority status over the other [2].

 

Think about that for a second. If value is conceptualised as subjective then the value that companies are creating by providing fresh, clean drinking water and a reliable supply etc, in other words the traditionally held aspects making up “core service”, are only part of the equation – and they are by far not the only things that do (or I believe, should!) count.

Imagine the world of possibilities that adopting this conception not only opens up, but actively encourages in the name of value creating entrepreneurialism! The Social Contract agenda recently espoused by Ofwat (see here for a brief overview) certainly chimes well with such a conception. Seen in this light, companies could really look to capitalise and differentiate themselves all whilst boosting the industry’s net benefits to society which (according to Ofwat at least) are currently not anywhere near as good as they could be, or where they need to be.  

It is a more subjective conception of value then, that provides the sector with an opportunity to experiment and evolve. Experiment that is, with activities, initiatives and engagement strategies that may be totally out of their norm and deliver unforgettable experiences that create even greater levels of perceived value and in the C-MeX era, sharpen their competitive edge. Failure to at least heed this warning will likely lead to a relationship with the regulator that wouldn’t be welcomed in any boardroom and even worse, a relationship with consumers that is, through a wanton lack of action, arguably negligent.

References:

[1] See Shotton, R. (2018). The Choice Factory

[2] Thanks to R. Sutherland for the (rather colourful) example

 

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