03: Why on earth would a profitable monopoly concern itself with Customers?


John: So good afternoon, I’m here with Judy Bailey who’s the Executive Manager Retail Services of the monopoly provider of water and sewerage services on the Sunshine Coast and it might seem remarkable to be having a conversation about customers with people for whom monopolies are famous for disregarding. There’s an extremely interesting cultural change afoot at Unitywater, it is headquartered in stunning Maroochydore on the Sunshine Coast in south east Queensland and that’s the population growth corridor of Australia. I’m going to ask Judy a bit about what’s happening here at Unitywater to the culture and the organisation and why, but before we do that, I thought I’d ask Judy, could you tell me a little bit about yourself, where you were educated, where you grew up and I guess the path that leads you to be here today?

Judy: Yep, sure, so I was born in Nelson, New Zealand, lived most of my life in Hastings, as a young mum and wife with two children moved to Canberra of all places and it was a good time and in Canberra I did my post grad studies at The University of Canberra. Okay, so I started off in Canberra in CSIRO and actually started in the typing pool, then progressed into HR, my studies there and so I had a little kid so studied while the kids were little and then moved into the Health Insurance Commission, so quite a different world, that was in the days of Medicare Medibank Private, then I moved into the Australian Geological Survey where I used to go and do a lot of work with their different teams out at sea, so they did a 24 hour, they were basically tracking the law of the sea, looking for oil of course as well because the science world needs to find its own funding as well as doing its serendipity and to research. So a very interesting world, I then moved in, so that’s scientists and health industry, then I moved into the Quarantine Inspection Service and I had many roles there starting from an HR area, I went to Canberra staff in Brisbane, set up an HR national operation, then I did a really interesting project with the CEO where we brought all the state quarantine businesses into the national quarantine and set up the enterprise bargaining agreement for that, then I got the opportunity to run the regional NEAT part of quarantine up in Queensland as the Queensland Manager for a number of months and then I moved to Family Issues and Community Care, I went from Federal Government to State and found that very interesting, it was at the time when disability and it was also with families, State Government and then I moved to Local Government, that was a bit of a shock and surprise and again went back into HR and it was all change and learning, but through there got the opportunity to run the Infrastructure Services area, so I wasn’t an engineer and I was running all of the businesses, I had a big roads programme running, a big project in Maroochy interchange that you come across to get into Maroochydore on behalf of Main Roads which was a very big project and then I had Parks, Roads, Caravan Parks, Cemeteries, you name it, so again, nothing that I was qualified for other than as a leader [laugh] and then I, from there they asked when the Councils were going through amalgamation, I was asked to take, I had Water under the Infrastructure Services division, so I was asked to bring the three water businesses together ready for the amalgamation into what is now Unitywater.

John: Fantastic, now your current position, can you describe that to me and I guess more practically, explain what you do and what you have responsibility for.

Judy: Yeah, so I’m responsible for what we call the Retail Services Division, it’s broken into several parts but the first part is we do all the reading of the meters, get the accounts out, bring the money in, so 450 million in revenue, chase up the bad debt which we’ve got very nicely under control and under 1%, so we’re very proud of that and then manage all the things like debts and and other administrative tasks and I have Comms and Marketing that do all the marketing, all the comms, stakeholder management and communities, so a really important role in the community where we look to be part of the community and doing community good, I have all the customer contact channels, so whether it’s account management contact centre, complaints ombudsman and then the area that’s really important which is customer insights and business solutions which is really about where we connect with you and making a real difference in the business and making sure we’re delivering value for the customer.

John: ‘Cause most residents of the Sunshine Coast, pretty much most residents probably anywhere in the world, wouldn’t give a lot of thought to how they come to have water and sewerage services, but it’s pretty essential service really isn’t it?

Judy: Yeah, it is an essential service and we talk about, our role is about community health, I think I did a paper to the Board which was about all the countries in the world, the state of world’s water and that’s pretty levelling for you when you read a report like that to realise that a massive percentage of the world does not have access to safe drinking water, it’s something like 2 billion that don’t have sewerage services and yet we take for granted every day that we turn the tap on and we push the button in the, you know, we treat approximately 60 Olympic size pools of sewerage a day and it just goes away from your house doesn’t it, you have no idea that that’s, you know, it’s happening and people think about their water bill but it’s actually water and sewerage and across Australia there’s about 40% acknowledgement of sewerage being part of the water and sewerage business. Q Your boss, George Theo, the CEO, he was telling me it’s also not that long really in history that we’ve had this remarkable service available to us.

John: It’s relatively recent?

Judy: Yeah and I think, well I think even things like the water group that we now have, you know, you don’t think about us running out of water but there are parts of Australia that are really struggling with water, water quality and also that we have a safe and secure water supply, you know, the dams look big, but often the yields are small.

John: Can you tell us a bit about Unitywater itself, you know, what is the organisation, how did it come into being and I guess you know, how its staff, its revenue and we’ve touched a bit on you know, what’s the scale of the capital under management, the capital works.

Judy: Okay, so the organisation came about as part of six councils bought into two water businesses and back to one water business as a result of the Queensland Government water reform. For Unitywater that meant it was the Moreton Bay and Sunshine Coast regions which covers from Ferny Hills in the south to Noosa in the north, so about 750,000 residents and around about 300,000 properties, capital works varies so we’ve worked really hard on efficiency, so we’re looking at between 80 and 100 million a year, but when there’s a sewerage treatment plant upgrade, then obviously there’s peaks and troughs in that so that’s kind of almost an averaging out, about 720 staff in the business and we’ve got about 3 billion in assets.

John: So it’s no small mean feat is it, running something like this? And tell me, the region here, in the opening I described it as a growth corridor … can you tell me what’s happening in this region and what it’s going to mean?

Judy: Yep, so it is a massive growth region and then that’s probably on three fronts with Federal, State and Local activity, so for me, the biggest thing is you’ve got, if you’re looking at commercial, there’s the upgrade of the Sunshine Coast Airport, there’s the Moreton Bay rail link, there’s …

John: SunCentral I guess . . .

Judy: SunCentral, I’ve got that down under a bit of residential, the Sunshine Coast Public and University Hospital is going to be the biggest health precinct in Queensland, there’s an NBN undersea cable that we’re looking to bring in and then there’s on a commercial or shopping if you like basis, and I’ve got some figures here, there’s like $140 million expansion of North Lakes Shopping Centre, there’s 350 million being spent at the Sunshine Plaza, the Maroochy Centre SunCentral where there’s going to be 2,000 apartments and then you’re talking about all the commercial activity that’ll be in there as well, so that’s all going to make a significant difference for us in the years ahead and obviously with the growth that comes with that, mind you, the region needs that because we’ve got a good number of people but not a lot of industry to support jobs for kids, so you see a lot of families moving currently or children having to go and work outside of the area, there’s just not the industrial support if you like or availability.

John: So the scale of the growth you’ve described … I presume that’s going to have an impact on the population if the region as well … what’s projected to happen with the number of people in this glorious part of the world I’ve got to say . . .

Judy: Yeah, so there’s huge housing growth, so as you come up the highway you’d see that there’s what we used to call Caloundra South, it’s now called Aura City of Colour, there will be an additional 20,000 homes there, Caboolture West and Palmview have both got extensions that are about the size of Gladstone, so when you’re looking at that, that’s massive population growth in the next say 20 years, so the place will not be like it is today.

John: So now I want to turn to Unitywater itself and can you tell me about the changes you and your team have been leading and as I sort of foreshadowed in my introduction, why on earth a monopoly business would even bother starting to think about customers, I mean after all, they’re stuck with you no matter what?

Judy: Yep, yep, I think that there’s a few things that are driving it, so we’ve got a strategic vision of being an operationally excellent organisation and that is about low total cost to serve and about finding non-regulated revenue and we’ve got a responsibility to make sure that we’re commercial, that we’re competitive, that from a regulator and our customers’ perspective, we’re both affordable and we’re doing the right things and that what we offer is value for money. So yes, we’re a monopoly but I don’t think that we can ever guarantee that
we’ll remain a monopoly forever and so we’re very focussed on being contemporary, customer-centric, I think really the bottom line is about the value for money.

John: So where did this sort of customer-centricity start, where did it start, because a lot of businesses, let alone monopolies, really the customer’s not, they think about the world from the inside looking out, so what was the spark that made Unitywater of all things decide to think more about its customers?

Judy: I think, so we’ve done a lot of research and we know that, we knew where customer satisfaction was high and where it was low and we knew what they did and didn’t know about us and I mean I think everyone starts with that basic customer satisfaction research and then we started looking at the analytics of you know, what our customers are saying and what they’re looking for and why they’re coming into us and I guess we’ve always started with a focus on needing to be commercial, competitive and not a big fat lazy water business and with affordability coming through as you know, it’s all about price, price and price, we knew we had to do something and so we started to focus on let’s try and get $100 off the bill. We didn’t put that out to our customers, but it drove a culture of really thinking about what you’re doing and then we went well we’ve got a lot of analytics, we’ve got a lot of research, but what we’re actually not doing is taking it from the outside in, so we were doing a lot of good stuff inside out and we started to realise that some of those things we were designing were not as good as we thought they were because were still coming back to us with multiple questions or frustrations or whatever and so we decided well we needed to take a different approach and you come more holistic and really, if we’ve got that, we say we’ve got the customer at the heart of every decision, but we were actually not living that in the culture and we’re still not, we’re in the early days, we’re on very early steps, so of bringing in all of those things that’ll make a difference, so making the metrics, the insights into actions and actually really becoming something that’s much better for the customer that means they have a good experience.

John: So how have you gone about facing the customers and better understanding their needs?

Judy: Well, as I said, we were awesome at developing tools and processes from our perspective and then we brought Komosion in [laugh] and I think you know, we have learnt so much from your team in teaching us to really get into the emotional side, into what the real experience is and to what the customer perceives is value, but really that’s achieved by understanding where the pain points are, so where’s the pleasure and pain points and what are the emotions that are attached to the transactions that they’re wanting to do and what is it that they’re really looking for and we’ve made a lot of assumptions about that, so in the work that we’ve done with you, it’s provided amazing insights, you know, we might have thought it was a solicitor that was causing a problem, we found it’s a bank or we might have found that it wasn’t the Lands Office, it was something else and I think for us it’s about trying to understand what the customer value proposition really is and the only way we’re going to get that is from the outside in.

John: So what has the process taught you personally and the organisation more generally do you think?

Judy: Well you can talk about being customer-centric but you’re not unless you’re getting that customer direct feedback and getting a sense of the emotion and the need and the value, perceived value and then really doing something about it, so really making a difference, turning your organisation around to ensuring that when you say you’ve got customer at the heart, you actually have around systems process people and particularly the people, you know, like across the organisation understanding the value.

John: We talked before about the future shape of the region, how will the customer pivot that you’re currently undertaking combine with the growth that the region’s seeing to reshape the organisation in the future and what will the organisation do you think look like as a result of the combination of these things?

Judy: Look we need to, as I touched on earlier from a regulatory and our customers’ perspective, we need to be commercial, we need to know what our customers need, we need to have an eye to the future, you know, what are the disruptors and can we be a disruptor, but there’s no point in being one just for the sake of it, so how do they want to do business with us? For me really, fundamentally, if we do the right thing by the customer, there will be loyalty to us because I don’t think we can assume that we’re going to be a monopoly forever and our customer loyalty’s important to the extent that then we can add value added services, so if we really want to pursue a world of non-related revenue and keep prices low and have sustainable revenues in other ways, then we need to know that those customers think we’re a good business, a great business and a business that they want be an advocate for, loyal to and would want to do business with and that’s about our future survival really, for any business, if you are not focussed on your customers’ needs and the services that you provide and whether they meet them, then I don’t know why you’re in the business.

John: So really you’ve identified your customers possibly as your greatest asset and you’ve said that in the future, you made need to be an adjacent products and services but if the customers are with you, you’ll be alright?

Judy: Yep, yeah, you know and I think even the world is turning around to where they’re recognising that the customer’s important and if you have a look at what’s happening in some of the other water businesses internationally, if you cannot prove to the regulator that you have listened to your customers and you’re providing a service that they value and want, then you know, there’s massive penalties or there’s big bonuses and for us I think that that is about making sure you’ve hit the mark, you’ve got the sweet spot, you know what it is and that you bring your staff on that journey, so for me also it’s about transforming the organisation to understand the value of the customer and building its capabilities around that so that they are enjoying the journey as well, ‘cause you know the other thing is, we’re slightly tipping the edge on being all about customer and we need to also understand that we’ve got good processes inside the organisation where we’ve got an internal customer service.

John: So to contemplate all of this and go about the day to day of keeping the water running through the taps and the Olympic pools of sewerage being processed, the change of management, the cultural change, what are the things that keep you up at night?

Judy: That’s a really interesting question, I mean I think keeping me up at night would be more about whether or not we’re doing the right thing by people in the business, a lot of the time if I did worry about things, I mean I think we’re on a good path, I don’t know if we have got, we haven’t got everything ticked yet, but we’ve been really creative, we’ve done some good stuff, you know we’ve got a good digital plan and I guess now I don’t worry so much because I know we are serious about getting the customer at the heart, so we’re really listening to the customer and knowing what they want, so yeah, a lot doesn’t keep me awake, probably more the personal issues that might come up at work.

John: You’ve touched on digital there and of course we’re often described as being in the age of the customer but also in an age of digital disruption, interested to know, what is your view of digital and what are your thoughts about the role that digital plays, is it even a threat to a monopoly business that is so grounded in the physical world?

Judy: I think it is and so all of the water businesses I know are all developing digital plans, digital tools, I think what you need to do though heading back to where we go, is know what your customers want and how they want to do business with you, that 24/7 business, I think that the interesting thing with digital is that the customers of the future are the young kids today who are living their life on their phones, you know, you talk about a cashless society, all of those possibilities, but it’s hard to describe what 2025 even looks like because you know, we only have had these phones for, for how long? And everybody’s bringing out opportunities for the customers to do business in different channels and it’s seriously about targeting, I think you can get distracted by disruptors, but I think it’s also important for you to work out where you want to be a disruptor, so I don’t know if I’ve answered that question but we are looking at you know, seamlessness for the customer, effortless low value transaction, how do we make it easy to do business with us. Most of the time, interestingly enough, our customers don’t want to deal with us as a monopoly or it’s only if something goes wrong, really, they’re not coming in to us too much unless they’re building a house, wanting a connection or something’s gone wrong on their property, they can’t pay the bill.

John: So if you thought about tips for surviving in the age of the customer, in an age of disruption, what are your top three tips for anyone trying to do business and survive in this age?

Judy: First of all I think you need to engage with and intimately know your customer, I think you have to meet their needs on all levels so that’s emotional, effectiveness and value from their experience, so if you’re not doing that across the whole organisation, you’re not going to keep them, ‘cause when you’re in a competitive environment and anyone I talk to, it’s is expensive and customers like choice, and they’re only going to stay with you if what they get on an emotional level is good. So that was the first one, I thought probably a workforce transformation plan, if you’re not building capability in your organisation, most senior people but then in your processes and your systems etcetera, then if your organisation’s not keeping up, you can say and do anything, but you’ve got to have that capability, you’ve got to be focused on the future, not on today and looking at what the capability is that you’re going to need to bring in and have good succession, start not recruiting with what you’ve got now, it’s not going to cut it and I guess you’ve got to have that whole span of customer and the last one I had was look and plan for the disruptors, so have an eye to it and look at whether you want to be a disruptor yourself and if you do, seriously think about why and what it is that you want to do ‘cause if you haven’t got that eye on the horizon, you know, you’re just complacent and no-one can afford to be today.

John: That’s great, thank you so much Judy.