By Anne Farquhar
Every week, as General Manager for People and Culture at Yarra Valley Water in Melbourne, Australia, I’m asked for advice about how we transformed the culture of our publicly-owned water corporation. The requests come from near and far — peer utilities, businesses in other sectors, and government agencies. They’d like the recipe for what we’ve accomplished — the steps from A-Z. But it’s not as simple as that. It’s been a true journey with twists and turns that weren’t always pretty, and we gave life to it as we grew. In this article I’d like to share insights that might make this kind of transformation accessible to other organizations.
Why People Want To Know Our Story
Providing water services to 2 million people and over 50,000 businesses on the world’s driest inhabited continent, in a city set to double in population by 2050, is a significant responsibility. Over a decade ago our leadership team realized that meeting the challenges of the future required a high-performance culture — innovative, achievement-oriented, and resilient in the face of change.
In the past five years alone, Yarra Valley Water has set new Australian benchmark culture results, as measured by the world’s most widely-used organizational culture measurement tools. We have also developed outstanding levels of staff engagement — more than three times the Australian average. In addition, during the same timeframe, we increased customer satisfaction, markedly decreased supply interruptions, ensured higher water quality levels, significantly improved safety results, and substantially enhanced our financial performance, reducing operating expenditures by 20 percent.
Our people have unleashed innovations we could never have imagined. We’ve implemented an award-winning hardship program for customers in need, we’ve introduced new water recycling methods to drought-proof 100,000 properties, and we’re launching Australia’s first stand-alone, profitable waste-to-energy facility. These outcomes and more were achieved through creating an environment where new ways of thinking flourish, redefining the contribution a water utility can make to enhance livability and create sustainable, thriving communities. In recognition of our achievements, we were included in the prestigious Australian Business Review Weekly’s “Most Innovative Companies” list — a first for a utility in Australia.
Our organization has gone from being a victim of circumstance to a champion for our industry; from good enough to world-class; from a staff with entrenched questioning of management to an organization of people who are all on board. Moreover, our strategic ambition is now on an inspired trajectory. Our overall objective has changed from being; “Let’s be a great water utility with happy and capable people and satisfied customers” to “let’s transform the water industry for our community and beyond.”
It Started With A Real Problem To Fix
Our recent accomplishments take on more meaning in the context of our journey. When I was hired to head up HR at Yarra Valley Water in 2001, the Managing Director gave me a clear mandate: Create a culture capable of high performance and innovation. After a disaggregation of the water industry in 1995, plans to privatize had suddenly been scrapped by government. The decision left the organization with a pervasive lack of purpose and direction.
We knew the desired culture change would take time and persistence. We used a renowned culture inventory tool to better understand our actual culture and our preferred culture, and employed a diagnostic tool to give all managers direct feedback on their leadership styles and impact on culture. The results were a shock for some, especially managers who came to understand they were the source of their own pain. For example, we had instances of two teams with the same demographics, same conditions, same role — and the only difference between one team’s terrific result and the other’s terrible result was their leader.
We grew from hard lessons early on to an understanding across the organization of culture. Through a combination of internal programs and changes to policy and practice, over the course of the next several years, we made demonstrable progress. First we had what I call an era of awakening when the reality set in, then an era of discovery where we explored opportunities for change and improvement. There were some promising business results and a new and measurable level of commitment amongst our people, who gained a clearer view about who we were as an organization, and their respective roles in delivering on our strategy.
Following a comfortable time of ongoing improvements, we entered an era of challenge. Our very existence was threatened by a review of the structure of the industry and we were in an unprecedented period of drought which affected service, increased costs, and reduced revenues. We were distracted by external events and our focus on culture wavered. In 2008, our culture measure showed some decline.
Determined to continue the journey, we refreshed our strategy and created an all-staff program to re-invigorate our culture commitment, resulting in the creation of “Our Way,” a declaration of the behaviors we valued and those we would not tolerate. This was a stand taken by all staff and set new levels of alignment across the organization. We created and ran a 12-month program Unlocking Potential (UP!) to enroll all staff in creating goals that would make a difference, and then achieving those goals. In 2011, our culture results reached new heights.
We Could Have Stopped There…
But we didn’t. We were starting to really understand that creating a highly constructive culture was not the end result: it was an enabler for extraordinary performance. So we turned to a new leadership development partner for help. It wasn’t because we needed a complete turnaround. Then again, there was still tremendous room for growth. We had established a strong sense of culture, but needed to translate it into extraordinary business results. We saw the potential for a real breakthrough.
There were too many opportunities to ignore — such as providing reliable water supplies and enhancing the community’s livability in the face of a drying climate, improving productivity in the face of rising costs, embracing technological change, and building a collaborative water sector. A five-year strategy was nearing completion and we lacked a sense of vision and passion about where we were headed. It was time for an era of transformation.
Our lead consulting partner, Conrad Amos of JMW Consultants, recounts it this way: “It was one of those rare instances where you’re working with an already successful organization who on the one hand doesn’t really need to change, yet is firmly committed to changing.”
Although we were already pretty good, we were determined to elevate performance. Our biggest problem at that point: having managed through the drought and water industry reviews, we no longer had a burning platform. We had great opportunity, but it had to be framed in a way that would get people out of the ‘drift’ of everyday work and motivate them to take us beyond what they thought was possible.
We developed a four-part approach:
- Articulating a strong, clear strategy
- Have leadership take an unwavering stand for that strategy
- Evoke an embrace of the strategy throughout the organization
- Develop leadership capability to ensure we delivered the all-important business results
It was a real turning point for us — not being complacent with the progress we’d already made over the past decade. We pulled together 40 key leaders, including executives, divisional managers and team leaders. In parallel, the focus was on both establishing a “2020 Strategy” and developing the leadership required to champion the change.
The Eras of Our Evolution
Evolution Through Revelation
In those early interactions, there was some real uncertainty; we wanted to run yet felt we were crawling. But eventually we became clearer and clearer about what was of fundamental importance to us as an organization — and the culture and leadership that would be required. To be honest, there were times during our sessions with JMW that we were looking at each other and wondering what in the world we should do next.
I say that because I think it’s very important for organizations: to be willing to grapple with things for a while, and to have uncertainty. The great challenge in the strategy work, reflects Conrad, “proved to be a perfect storm for breakthrough." So it was a "storm" in the best of ways. "We were able to bring together, all at the same time, the forces of a clear strategy, an unwavering leadership stand, the empowerment of people at all levels, and the development of capability," he explains. "The level of intensity in each of these elements caused the breakthrough result. At times it was clunky and didn’t roll out perfectly, but what we witnessed was a shift from a conceptual understanding of how we could use our culture to enable performance, to individuals at all levels across the organization stepping up and achieving extraordinary results in their work and experiencing new levels of personal satisfaction.”
The centerpiece of this heightened engagement and level of performance was the new ‘2020 Strategy’ — a galvanizing call to action that articulated a focus on exemplary services for current customers, but also future generations. It established six no-nonsense future based commitments, from “being safe” and “making every cent count” to “working in harmony with the environment” and “taking a stand for an exceptional water industry.”
With our strategy agreed, we continued with additional work towards transformation, from executive coaching to development sessions customized to address business and infrastructure needs as they arose. Sessions with senior executives resulted in a strategy with a bold landscape of goals, including a commitment to “smash productivity targets.” Our efforts also focused on specific business initiatives such as a major IT implementation requiring across-the-board buy-in, as well as development and coaching for all people managers.
The work with managers became especially important as our executive team made a key decision in 2014 to loosen the reigns, delegating operational execution of the strategy to divisional managers so that our senior team could focus on the next horizon for the organization. With JMW, we co-designed and co-facilitated training in breakthrough thinking and “difference-making conversations” to further equip our managers in their more autonomous roles. Off the back of this training, divisional managers recommended — and received executive endorsement for — even more ambitious targets than in the original strategy.
No Roadmap — Just A Clear Destination
Very little on the road to this point was — or is to this day — predictable. As we produced increasingly impressive business results, it was clear that everyone knew where they were going, and why — and importantly, what their contribution was. It was magic. Operationalizing our new 2020 Strategy was delivering business performance no one could have ever predicted. And as that happened, ideas and inventions flourished.
“As you develop a stronger culture of responsibility, innovation is a classic example of where organizations can take huge leaps forward,” notes Conrad. “Things get to a point where people decide, ‘circumstances just don’t get in our way.’”
People from other organizations ask if the development “took us away” from the business — but in fact, it’s been the reverse. We never stopped focusing intensely on the high performance required, which in turn delivered not only unprecedented business results, but also a culture capable of engendering high performance consistently. We learned that when staff focus on what’s of fundamental importance to the organization, their aspirations align with its strategy — and everyone does what it takes to move beyond any barriers to greater success.
By the numbers, our most recent leaps in performance between 2011 and 2015 include:
- Water quality complaints — Down 30 percent
- Sewer supply interruptions — Down 36 percent
- Hardship customers assisted — Up 36 percent
- Serious injury frequency rate — Down over 80 percent
- Operating expenditure — Down 20 percent
- IT insourcing cost savings — $2 million annually
- Energy and Water Ombudsman Victoria complaints: Down 36 percent
So we can absolutely prove that our business results have improved. But for me, it’s really about individuals being freed up to see possibilities; to think and operate in new ways that positively affect their lives — at work, at home, and in the community.
Our transformational work defied anything formulaic, and still does as we enter what I believe is our era of breakthrough. As we do, I share the following insights.
- Partner. We don’t outsource — we partner. As Conrad observes: “One of the things Yarra Valley Water is really good at is selecting partners — and not just JMW — but always maintaining ownership. It’s always their lens, their context, their story.”
- Capability doesn’t cost as much as you may think. A recent local water industry audit indicated we have the lowest per-employee learning and development (L&D) spend — yet we’ve achieved incredible capability improvements, with other organizations seeking out our programs. The old saying comes to mind “What if you invest in development and they leave? But — what if you don’t invest, and they stay?”
- Planning only gets you so far. Our journey was planned but it was very adaptable, very flexible. We felt empowered to change as we progressed and learned — and we did.
- You can fail fabulously. You have to feel able and willing to get it wrong sometimes. I personally failed fabulously a couple of times. And if it’s not worth that risk to you, you’re never going to take the leaps you have to take.
- Trust. There’s a lot of trust required if you’re partnering with anybody on your future. That really bore out in the clumsy moments when we were all just looking at each other, wondering where we were going, but that was our process. To keep going in the face of that says a lot about the strength of a partnership.
- You need that light on the hill. There’s no doubt that our managing director has grown significantly as a leader over the past few years, and that’s made a tremendous difference. The top leader’s role is to keep that long-term vision alive, and to ensure through managers and staff that the light on the hill is always visible to everyone.
- It’s long-haul magic. While I say conversationally it was “magic” as it all came together: It was, in fact, a very long haul. It’s about being brave, being committed, and progressing towards that light on the hill no matter what.