LIBI: The Lightweight Infrastructure-Bootstrapping Infrastructure
Closing the Capability Gap: Strategic Planning in Infrastructure Sectors Hagen Worch Jochen Markard...
11
Closing the Capability Gap: Strategic Planning in Infrastructure Sectors Hagen Worch & Jochen Markard PDW - Infrastructure Meets Business AOM 2009, August 7, Chicago
-
Upload
augusta-thornton -
Category
Documents
-
view
213 -
download
0
description
Public Utilities Challenges – Small units inadequate size to exploit economies of scale – Lack of capabilities ( strategic management) – Financial situation of municipalities – Multiple political objectives Suggested solution – Privatization, but... –... not a feasible option for many stakeholders & shareholders –... PPPs with ambiguous results CountryPopulationNo. of WWTP USA~ 300 m~ 16,000 Germany~ 80 m~ 6,000 Switzerland~ 8 m759 plus ~ 3,300 very small plants
Transcript of Closing the Capability Gap: Strategic Planning in Infrastructure Sectors Hagen Worch Jochen Markard...
Closing the Capability Gap:Strategic Planning in Infrastructure Sectors
Hagen Worch & Jochen Markard
PDW - Infrastructure Meets BusinessAOM 2009, August 7, Chicago
Infrastructure Sectors• Provide services of fundamental societal importance
High political attention high degree of regulation multiple objectives public utilities / providers
• Based on complex physical assets / networks Capital intensity natural monopoly regulation Capital durability long payback periods inertia
• Challenges– Massive investment needs
– Security and quality of supply
– Environmental impacts
– Liberalization, privatization
Public Utilities• Challenges
– Small units inadequate size to exploit economies of scale– Lack of capabilities ( strategic management)– Financial situation of municipalities– Multiple political objectives
• Suggested solution– Privatization, but ...– ... not a feasible option for many stakeholders & shareholders– ... PPPs with ambiguous results
Country Population No. of WWTP
USA ~ 300 m ~ 16,000
Germany ~ 80 m ~ 6,000
Switzerland ~ 8 m 759plus ~ 3,300
very small plants
Strategic Planning ApproachLong time horizons, system character, various regulations• Scenario analysis to address the high level of context uncertainty
Multiple objectives• Discursive and participatory approach: involving relevant stakeholders• Systematic assessment of objectives & trade-offs
– Economic Performance vs. Environmental concerns vs. Autonomy
Inertia & path-dependency• Elaborate broad spectrum of strategic options
Synthesis• Evaluation of the feasible options regarding their suitability to meet
the objectives under different scenarios
Case Study Analysis• Three WWTP cases differ regarding their objectives
• Bern– Limited company with 10 muncipalities as shareholders– Management influence on strategic planning: high– Main objective: economic
• Kloten-Opfikon– Cooperative association between 2 muncipalities– Management influence on strategic planning: medium– Main objective: environmental
• Dübendorf– Cooperative association between 3 muncipalities– Management influence on strategic planning: low– Main objective: autonomy
Dimensions of Strategic Decision Making
Vertical Integration
Optimization
New Business Fields
Geographic Growth
Treatmentplant
Treatmentplant & sewer
network
All wastewater
related services
Structure
Process Utilization
of by-products
Communal satellite plants
Non-communal
satellite plants Multi-utility services
Within the region of activity
Outside the region of activity
Case Study Results
Vertical Integration
Optimization
New Business Fields
Geographic Growth
Treatmentplant
Treatmentplant & sewer
network
All wastewater
related services
Structure
Process Utilization
of by-products
Communal satellite plants
Non-communal
satellite plants Multi-utility services
Within the region of activity
Outside the region of activity
Bern
B
B
B
B B
Case Study Results
Vertical Integration
Optimization
New Business Fields
Geographic Growth
Treatmentplant
Treatmentplant & sewer
network
All wastewater
related services
Structure
Process Utilization
of by-products
Communal satellite plants
Non-communal
satellite plants Multi-utility services
Within the region of activity
Outside the region of activity
Kloten-Opfikon
K
K K
K
K
K
Case Study Results
Vertical Integration
Optimization
New Business Fields
Geographic Growth
Treatmentplant
Treatmentplant & sewer
network
All wastewater
related services
Structure
Process Utilization
of by-products
Communal satellite plants
Non-communal
satellite plants Multi-utility services
Within the region of activity
Outside the region of activity
Dübendorf
D
D
D D
D
D
Case Study Results
Vertical Integration
Optimization
New Business Fields
Geographic Growth
BB
B
B B
Vertical Integration
Optimization
New Business Fields
Geographic Growth
Vertical Integration
Optimization
New Business Fields
Geographic Growth
DD D
D
DD
KK K
KK
K
Bern
Kloten-Opfikon
Dübendorf
Main objective:Economic
Main objective:Environmental
Main objective:Autonomy
Overall Results and ConclusionsStrategic planning in public utilities
• Dealing with high uncertainty in utility sectors
• Developing and extending strategies …
Capacity building– Extending the organizational capabilities & skills (professionalization)– Moving toward higher efficiency of service provision
• … according to the objectives of the utilities & stakeholders
Specific patterns of change emerge
- Improving Performance of Public Infrastructure Services
- Patterns of Change Contingent on Objectives
