Paul Gagliardo, American Water - Speaker at the marcus evans Water & Wastewater Management Summit 2012, held in Summerlin, NV, May 3-4, 2012 delivered his presentation entitled Innovation and Change in the Historically Conservative Water Utility Industry

1. Innovation and Change in the Historically
Conservative Water Utility Industry
Paul Gagliardo
Manager Innovation Development
Water & Wastewater Management Summit
May 3-4, 2012
Las Vegas Nevada
Vegas,

2. What is Innovation ?
• Innovation is the creation and use of more effective ideas or
methods.
• Inventions refer to the creation of the idea or method itself.
• Referring to the time dimension of innovation the focus is on
new processes rather than new objects
objects.
• Innovation is transformation which results in change.
• So, how does change occur ?

3. Creative Destruction
• Joseph Schumpeter theorized that industries must
incessantly revolutionize their economic structure from
within.
• Innovative entry by entrepreneurs is the disruptive force that
sustains economic growth.
• Creative Destruction is the process by which the old ways of
doing things are organically destroyed and replaced by new
ways.
• Evolutionary Economics proposes that the usual
macroeconomic equilibrium is being perpetually destroyed by
entrepreneurs who try to introduce new innovations. The
successful innovations disturbs the normal flow and causes
existing technologies to lose market position.

4. Diffusion
• Innovations are spread from
the entrepreneur to other
groups.
• The Innovation life cycle
can be described using a
Diffusion curve.
• Successive S-Curves will
replace older ones to
continue to drive growth
upwards.

5. Why Should Utilities Innovate ?
• American Water Vision Statement:
“Our Vision is to be the trusted
steward of your precious resource – water”
• Stewardship is an ethic that embodies responsible planning
and management of resources.
• It refers to the responsibility to take care of something
belonging to someone else.

6. Who We Are
We
W are the largest publically traded water and wastewater service
th l t bli ll t d d t d t t i
provider in the United States.
• We serve a broad national footprint and a strong local presence
• We provide services to approximately 15 million people in more than 1,600
communities in more than 30 states and parts of Canada
• We employ approximately 7,000 dedicated and active employees and
support ongoing community support and corporate responsibility
• We treat and deliver more than one billion gallons of water daily
6

7. Where We Are
We manage more than 370 indi id al water systems across the
individual ater s stems
country
Every day we operate and manage:
• 49,000 miles of distribution and
collection mains
And more than:
• 80 surface water treatment plants
• 600 groundwater treatment plants
• 1,000 groundwater wells
• 60 wastewater treatment plants
7

8. Innovation in a 126 Year old Water Utility Company
• Genesis of the Innovation Program
Acknowledgement of Value by Company
Allocation of Resources
Executive Team Support
• Why Innovate:
Operational Efficiency
Compliance with N
C li ith New R
Regulations
l ti
Strategic Business Opportunities
Adding Value to Shareholders

9. Organizational Model to Institutionalize Innovation
• Organizations are non-linear systems where minor events can
have significant consequences.
• Chaos Theory – Butterfly Effect
• Minimize overall impact on day to day core business
p y y
activities.
• Small group whose function is to seek out new ideas.

10. Innovation as Controlled Chaos
• Organizational Structures
• Vertical Functional Hierarchies
• Cross-Functional Interaction
• Order versus Control
• Self-Organizing Systems

11. Innovation Development Program
• Stage Gate Process
Protocol for introducing and implementing new ideas
• Innovation Manager
Idea Screener
Ombudsman
Entrepreneur Liaison
Change M
Ch Management Ch t Champion
i

12. Evolution of the Innovation Program
• Develop internal and external connections and contacts.
• Create a pipeline of ideas to screen and analyze.
• Importance of first project to move through the Stage Gate
Process.
• Engender credibility and trust within the organization.
• Document Value to the Organization.
• Create a Culture of Innovation throughout the company

13. Projects
• Enbala – Regulation Services Program
Opportunistic
• NPX – Anaerobic MBR
Serendipity
• Smart Earth Technology – Universal Data Transceiver
Calculated

14. Enbala
• Genesis Story
• Invention
• Innovation
• Value Proposition
• Validation/Implementation Process
• Creative Destruction Consequences

15. ENBALA
• Electricity System Regulation is a service purchased by the
local Independent Electricity System Operator (ISO) to provide
l lI d d El i i S O id
a continuous balance between electricity supply and market
demand. Traditionally, System Regulation responds to second
to second fluctuations in market demand by matching the real
time adjustment of supply in the form of fast responding
generation, such as hydroelectric or gas turbine generators.
• New sources of intermittent, renewable, generation, such as
solar and wind power have increased the requirement for
Regulation Services to balance the electricity system across
North America. It is predicted that the demand for Regulation
America
Services will double in the next few years. To meet this
expected growth ISO’s across North America have been
seeking new ways to supply System Regulation.
g y y y g

16. Water Utility Regulation Services
• Water/Energy Nexus
• Smart Grid Application
• Use Inherent Flexibility of Water Systems
• No Capital
• No Impact on Operations

17. Regulation Services Concept

18. NPX
• Genesis Story
• Invention
• Innovation
• Value Proposition
• Validation/Implementation Process
• Creative Destruction Consequences

19. NPX
• Anaerobic MBR
• Cost Efficient Nutrient Removal
• Patent Filed
• Energy and Carbon Efficient
• 35-40%
35 40% reduction in energy
required
• Combined with CEPT – Up to
100%
• Carbon for Denitrification
Utilization Reduction – Up to
100%
• Green House Gas, GHG,
Gas GHG
emissions reduction
• Incidental Phosphorus
Removal

20. Nitrate Shunt without Anammox

21. Demonstration Project
Energy Use Mapleton WWTP
90,000 37% reduction
in usage
onth)
80,000
Energy Use (kWh/Mo
70,000
60,000
50,000
U
40,000
40 000
30,000
20,000
Oct-06 Apr-07
p Nov-07 Jun-08 Dec-08 Jul-09 Jan-10

22. Smart Earth Technology
• Genesis Story
• Invention
• Innovation
• Value Proposition
• Validation/Implementation Process
• Creative Destruction Consequences

23. Information Technology and Interoperability
• Smart Earth Technologies
Universal Data Transceiver
Single Device reads all meter vendor offerings, allows for the
commoditization of meters
Automated route loading and billing info downloading
Ability to incorporate legacy equipment
Ability to migrate to AMI seamlessly
Platform to collect data from all end points in the distribution
system
Meter D t M
M t Data Management t
Hosted SaaS solution

24. Standard Communications Protocol
• Water utilities around the world are faced with enormous
infrastructure challenges that will demand better strategies for
delivering the expected efficiencies that have become the
standard within other more progressive industry
environments.
i t
• One of the most transformative and recognized strategies has
been the adoption of a common communications standard
that ll
th t allows for third-party device manufacturers to build
f thi d t d i f t t b ild
solutions that are not handicapped by the limitations of a
single-purpose communications method.

25. The Meter/AMR/AMI/Acoustic
Monitoring Relationship Maze
Meters Network AMI Acoustic Monitors
Aclara
Neptune Gutermann
Neptune
Itron MLOG
Badger Itron
Hersey Itron Savesource
Actaris Metron Farnier
Metrotech
Datamatic
Elster
Badger Permalog
Sensus Elster Echologics
Hersey Sensus
KP Electronics

26. Interoperability

27. Universal Data Transmitter and Collector

28. Long Wave Economic Super Cycles
• Modulation between high and slow sector growth
• Averages 40-60 years
• Innovative companies identify and leverage the upward prosperity
section of the curve.

29. Certified Innovation Partner Program

30. Questions?
Paul Gagliardo, M.P.H., P.E.
Manager, Innovation Development
g p
American Water
1025 Laurel Oak Road
Voorhees, NJ 08043
856-727-6151 office
856-448-5206 cell
Paul.Gagliardo@amwater.com