Dale Evans must be a really nice guy.
For more than 12 years he has led a supply chain which has collaboratively built and managed infrastructure and assets for Anglian Water, and everyone is really pleased with the results. The @one Alliance has halved its carbon emissions, made time efficiencies of 40% and outperformed in terms of levels of service. Now suppliers have all signed up for another 15 years.
Improving infrastructure round table
Well, he is a really nice guy, coming across as a sort of gentle giant. But that is not how he has achieved this level of collaboration.
When you ask him to drill down into how the @one Alliance has become a frontrunner in collaborative working, it is actually down to the design and implementation of a pretty tough commercial model.
Everyone is familiar with the standard procurement model. A scope is developed, a tender goes out to market, the market comes back with a proposal and a price, and a decision is made with the market’s determination of the project’s lowest reasonable cost.
Here is how it is different with @one Alliance. The starting point for measuring value is the current baseline cost for delivering the required output. This is based on knowledge from previous projects and the wider industry. Anglian Water uses baseline performance to set targets for whole-life cost, capital cost, carbon and time. Targets for the alliance are set back to back with these baselines. As projects are delivered, the partners recover their direct costs, but can only generate a return by delivering solutions for less than the baseline.
It is the next phase in the commercial model that drives collaboration. As each partner delivers work any outperformance generated by solutions delivered below target, or equally any overspends, flow through to a communal programme pool. The amount in the programme pool at any time is the aggregate of performance across all the projects delivered by the alliance.
The programme pool is periodically distributed to the partners, including Anglian Water. The return the partners generate from the alliance is therefore dependent on the aggregate of everyone’s performance, not on the individual performance of one firm. So in the alliance model, all parts of the supply chain generate a return only by collectively and continuously out-performing the baseline. This means everyone is in it together, with success only coming from collective performance. This is what creates real and powerful collaboration – partners are mutually dependent on each other to deliver work below baseline to make a profit.
“At the moment there are too many examples of organisations asking people to collaborate, but then dropping them into a business model or environment that is the same [traditional procurement model]. You can’t just ask people to collaborate, you must create a business model or approach where people can get better results,” says Evans.
For Anglian, Evans says the impetus for change came out of an “extended period of average performance”. He says: “It was that realisation that if we really did want to move forward, there was a first step which was about a different approach and a different way of working. As an industry, one of the things we should be frustrated about is that we’ve had quite an extensive period of poor performance and we keep doing the same things, using the same models and get the same results.”
Lessons from elsewhere
Anglian started by looking at other industries including the automotive and manufacturing sectors and considering how they do things well. It was not looking to reinvent the wheel, just adopt best practice.
This means when @one Alliance partners are being selected, the Alliance spends time with them, on their projects, with their existing clients, getting to know the people involved.
The process includes behavioural assessments, which Evans values.
“There are some clients saying: ‘we’re not going to do behavioural assessments because the partners will have been coached’. They can tell from assessment that won’t be what they get. That’s not the case. If you do it right you can very quickly establish what the culture and capability is. That’s been borne out: what we have seen from those organisations is in line with what we have identified in the assessment process.”
Assessing the leaders
The process is also about assessing the leaders of the Alliance. After all, within the @oneAlliance, Anglian is just one partner. This means in-depth interviews of the leaders of partnering firms and organisations.
So what does the @one Alliance look for in a partner? Key behaviours are a strong customer ethos; a commitment to continuous improvement; and how they respond to challenges.
“You are looking for those things but also recognising that you create those things,” says Evans. “Things we are looking to put in place to create collaboration are common goals, but then a mutual dependency.
And then when the partners are chosen, they work together from day one. The whole supply chain feeds in where they can offer value.
Long term relationships
Another aspect of the @one approach is the longevity of the relationships. The partners have recently signed up for another 15 years and 80% of what it spends is through the framework partners. The aim being that the partners have the time and incentives to invest in innovation as part of the continuous improvement.
“If we can start to recognise that most of the innovation comes from those networks, that our supply chain plays a really important role in terms of innovation and improvement, then the traditional procurement model is totally unfit for purpose,” says Evans.
“We get commitment, get a great opportunity for investment and it is a real enabler for continuous improvement.”
The long term partnerships have driven the alliance’s strategy for product development, standard products and standard processes, which it uses repeatedly and in which it drives improvement. It moves away from the “every project is unique” mantra which Evans says is embedded in the industry.
Evans cites the Cambridge water recycling centre which had to cater for a 100,000 population increase. In less than 12 months the system became 35% more efficient and produced 60% less carbon.
Does it ever go wrong? Simply put, if an alliance member is failing to deliver it is replaced. But using a focus on culture, brought in at early stages during the recruitment of partners, provides a protection against such mishaps.
So what is there to learn about collaboration? Well mainly it is not just about being nice.
“As an industry, we can think if everybody is nice to each other and we’ve got some positive relationships in place then everything will be alright, but that’s not what collaboration is,” says Evans. “Collaborative models are quite challenging and demanding. Good collaboration is a great, amazing performance, particularly in this sort of enterprise model,” he says. “A really high expectation on good continued performance is not contradictory to a collaborative model.”