Managing Water Supply Systems Using Lateral Thinking Techniques: Practical
Applications in East Africa
Dr. Silver Mugisha
Abstract
Water utility reforms aimed at enhancing operational performance of utilities are
vigorously being pursued in Africa Water Utilities. In this paper, we use case examples in
East African cities of Kampala, Nairobi and Dar es Salaam to highlight the role of
creativity in supporting reforms. We find that utility managers need to be creative,
ambitious and daring in implementing reforms. Specifically we note that incentives
should be adequately targeted, addressing a certain focus performance area. We also
find that creativity requires pro-active benchmarking to cross-fertilize managerial
thought with best practice and building desire for peer excellence. The discussions also
suggest that effective water operations management requires inculcating meaningful
rivalry among operating teams. Further, there is need for organic structure to cope with
the uncertainty nature of water distribution operations in African Water Utilities.
Likewise, operational plans in such environments should, target achievement of outputs
and performance trends through flexible implementation of practical strategies.
KEY WORDS: Reforms; Lateral Thinking; Creativity; Water Systems; Public
Organisations
1
Introduction
Safe and sufficient drinking water is still not a matter to be taken for-granted all over the
world. In developing countries, the provision of safe drinking water still remains a daunting task.
And yet, the approach to solving water supply problems is not rocket science! According to Jan
(1995) there are not many variations in water supply systems: the raw water must be abstracted,
treated if necessary, distributed and the system must be financed. Despite this apparent
organisational simplicity, many water systems, worldwide have shown inconsistent performance
trends and have had to undergo reforms. For example, according to Brown (2007), after an
abysmal performance in the 80s and 90s, the last 10 years have seen major utility reforms in
many countries in Africa. There have been concessions in North Africa (Morocco and Egypt);
private sector participation (PSPs) in West Africa (Senegal, Ghana and Burkina Faso); renewed
vigor in public utility management in Eastern and Southern Africa (Uganda, Tanzania, Zambia,
Ethiopia, Lesotho, Botswana and South Africa). In this respect, home grown solutions are
emerging every year and the body of knowledge is growing but there are many more reforms
going on that sector practitioners are not aware of (ibid.).
Reform Triggers: In most cases reforms were triggered by bizarre performance. In Dar es
Salaam (Tanzania), according to Kaaya (2007), as of 2005, the operating company DAWASCO
was bug-ridden with overstaffing at a level of 1350 staff; lack of teamwork and mistrust;
uncontrolled customer bill adjustment and collusion between staff and customers; water leaks
everywhere resulting into high non revenue water of over 50%. In addition, the revenues were
very low at about USD 1M with attendant low collection ratio of about 40%. The billing system
was confused and water reliability in most parts of the city was about 2-8 hours per day. On the
hand, according to Mugisha (2008a), prior to 1998, the National Water and Sewerage
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Corporation (NWSC) of Uganda, with support from donor partners carried out heavy
investments in infrastructure with the main objective of rehabilitating the existing system.
Unfortunately these investments were not matched with the necessary efficient commercial and
financial management systems that were necessary to ensure the delivery of sustainable services
in the medium to long-term. The corporation continued facing numerous challenges that
compromised its ability to effectively deliver efficient services to its esteemed customers. Most
of the problems faced where mainly as a result of low operational efficiencies that existed. The
total number of customer connections was only 50,000 and only 48% of the population (1.2
million people) had access to piped water supply. Plant capacity utilization was only 55%, with
60% of the produced water lost as UFW. With this level of performance, the corporation could
barely sustain the daily operation of the system. There were rampant water leakages and poor
response rate to the few leakages that were reported. The uncontrollable and widespread
vandalism of meters and other components of the water system not only increased the level of
water losses but also increased the cost of delivering the services. Most of the existing customer
and bulk meters were defective and registering inaccurate readings due to the poor maintenance
culture and lack of a clear meter replacement policy. A big percentage of the customers were
consuming water illegally and there was no clear mechanism of tracking such culprits leave
alone measures to curb such practices. The distribution network did not have delineated
hydraulic zones which made it difficult to balance the network and ensure effective management
of water losses in the system. Due to the high losses in the system and poor operational practices,
most of the towns experienced intermitted services ranging from 15-21 hours. In Nairobi City,
water operations were under direct management of the City Council and revenues were mixed up
with other city revenues. As such, water revenues were often diverted leaving no funds for water
3
infrastructure investments. There was an overstaffing and low productivity level, being a typical
of civil service orientation characterised by laziness and patronage. The service levels were
extremely poor, with a service reliability of less than 10 hours in most parts of the City. There
was a lot of collusion between water staff and customers and revenues were being collected at
source.
Reform Processes: Brown (2007) admits that utility reforms have not been easy. He enumerates
reform cases in the capital cities of East African countries, pointing out that reform programmes
should be realistic, inclusive, daring and creative. According to Brown (ibid.) Nairobi City
(Kenya) water system is currently operated by Nairobi Water and Sewerage Company Ltd which
has, in the last 3 years implemented a number of incremental reforms. The first step was to create
an autonomous public limited company (PLC), governed by public law where assets remain in
public hands. The second step was mobilisation of efficiency gains through decentralization of
operation-business centres; out-sourcing services and operations to private companies;
delegation of non-core functions (security services, maintenance and cleaning services,
connections, etc). In this step a number of incentive plans have been put in place to strengthen
organizational behaviour and productivity. The third step relates to medium term options, which
entail mobilization of investments (market). In this regard, the possibilities available include
potential for invitation to strategic partner(s)/joint ventures and local capital market–potential
listing on National Securities Exchange (NSE).
On the other hand, in Dar es Salaam City (Tanzania), according to Kaaya (2007) the period
1998-2002 was characterized by rigorous transactions aimed at acquiring a private operator.
Specifically in 2002, the assets were separated from operations management through the creation
of an asset holding authority – Dar es Salaam Water and Sewerage Authority (DAWASA). In
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2003, the operations management was sub-contracted to a joint stock private company – City
Water Services Ltd. In 2005, the contract with City Water Services Ltd was terminated and
replaced with a public company – Dar es Salaam Water and Sewerage Corporation
(DAWASCO). Both DAWASA and DAWASCO are regulated by a regulator – EWURA.
According to Kaaya (ibid.), DAWASCO has since 2005 implemented a series of performance
recovery programs. These include the first 3-month initiative, code-named operational rescue
plan (July-September, 2005). This was followed by a one year annual plan called ‘win-win’
program (October 2005-June 2006). A successor annual plan code-named ‘turning point’
program then followed (July 2006-June 2007). The recent annual plan is code-named ‘take-off’
program and is meant to make quality service visible on a sustainable basis. On the other hand,
in Kampala City (Uganda), Mugisha et al. (2008b) outlines a number of performance
improvement initiatives that have been implemented. In 1998-2001 the services were operated
by Kampala Revenue Improvement Project (KRIP) - Management Contract with J. P. Gauff.
During the period 2001-2004 there was significant outsourcing of non-core activities e.g. guard
services, grass cutting and land-scaping. At the same time the KRIP contract was terminated and
operations transferred to Kampala Water Supply and Sewerage Area Management Contract: ONDEO Services. From 2004-2008 the operational activities are managed under Internal
Delegated Area Management Contracts (IDAMCs) with area management teams. According to
Brown (2007) the service quality is visible.
Observations and Achievements: Based on case studies of utility reforms in East African
Cities, Brown (2007) suggests that private sector participation (PSP) can lay the foundation, e.g.
two rounds of PSPs in Uganda and failed PSP in Tanzania have been strong recipes for
subsequent commercialization initiatives. In addition, there are mixed results from PSP
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engagements so far but it is not dead. Indeed, PSP is still one of the permanent barriers to “bad”
public policies that have brought African utilities where they are now. Moreover, PSP does not
also imply international PSP; however, new models are needed and are emerging to fit the
African utility market. Overall, the use of PSP mentalities has resulted into significant
performance gains in all the three East African Cities. For example in Nairobi City, revenue
collections has increased from about Kshs 100M to over Kshs 250M in three years of reforms.
On the operational side, non-revenue water has reduced from over 50 % to less than 40%.
Similarly, in Dar es Salaam, revenue collection has increased from about Tshs 950M in 2005 to
over Tshs 1,700M in 2008 while non-revenue water has slightly reduced from about 45% in
2005 to 42% in 2008. During the same period, in Kampala City operations, collections have
increased from Ushs 2,500M in 2005 to Ushs 5,000M in 2008. Non-revenue water has reduced
from about 43% in 2005 to 38% in 2008.
Need for the Paper: We pointed out the need for creativity to achieve effective utility reforms.
In this paper we pin-point the distribution and sales part of the water supply chain and explore
different ways of incorporating operational creativity to support reforms. We choose the
distribution and water sales part of the chain because of its complex nature, pausing greatest
challenges to utility managers. It is for this reason that most utilities chose this portion of the
water supply chain as the first point of outsourcing due to complex managerial challenges
involved therein. We have chosen the managerial dimension of creativity since it is the entry
point for managerial innovation that has become the centre of most utility reforms in developing
countries. The paper tests-out one of the concepts of creativity techniques called ‘lateral
thinking’ and how this can be incorporated in utility operations to enhance performance. The
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discussion enhances our understanding of creativity in water utility operations management and
how it can be used to support utility reforms.
Conceptual Framework
In tackling difficult operational issues requiring new direction in thinking, it is often necessary to
break out of our normal thinking patterns, i.e., to break away from the safe cocoon that we have
built for ourselves (Tanner, 1997). In this paper we explore a broad application of creative
problem solving, i.e. of an issue that needs new direction in thinking. We look at three steps
(ibid.): problem definition (focus area); idea generation (creative thinking) and action planning
(implementation). In applying creativity to utility operations it might be a good idea to utilize
Schwartz (1997:122-123) suggestion that ‘belief releases creative powers. Disbelief puts the
breaks on. Believe, and you will start thinking----constructively’. In most cases operational
problems might seem that they do not have solutions especially for managers that are averse to
change. According to Tanner (1997), creativity techniques can be categorized in many ways.
These include pattern-breaking tools; idea-collection processes; and focused thinking
frameworks. In this paper, we explore the application of one of pattern breaking tools by Dr.
Edward de Bono called ‘Lateral Thinking’ (Edward, 1990). Lateral thinking, according to
Oxford English Dictionary is defined as ‘seeking ways to solve problems by apparently illogical
means’. According to Tanner (1997) the lateral thinking process follows three steps: selection of
a focus area requiring creative new ideas; development of provocations relating to the focus area
using lateral thinking techniques; generation of sensible ideas dealing with the problem,
stimulated by the provocations. Therefore, in this paper we discuss cases in water distribution
and sales operations that have been tackled through lateral thinking path-line: focus area
identification---identifying suitable provocation---generating implementable idea.
7
Case Illustrations
Information Collection Methods: Data for compilation of the case studies below was collected
through stories and semi-structured discussions/queries with key reform champions in East
African City water utilities. Specifically, for Kampala Water the author is a contracts manager
and is privy to most of the operational strategies of the management team. In Dar es Salaam and
Nairobi, the author has been part of the NWSC-Uganda’s team since 2005, carrying out
external/consultancy services as part of support to reforms. It has, therefore, been relatively easy
to gather the goings-on during the performance turn-around processes in the three cities.
Case 1: Under the internally delegated Area Management Contracts (IDAMC) in Kampala, in
July 2007, the management team had to deal with the focus area: how can we convince our
supervisors at Head quarters to pre-finance a performance improvement program (PIP)
workshop in a luxurious hotel, offering excellent working conditions for participants? The
discussion was spearheaded by the team’s General Manager. The technique that paid off in this
case was performance-based pre-financing, which led to the following provocation: The workers
performance-based incentive shall act as our guarantee! This provocation generated the idea
that the PIP would result into improved operational performance, which would eventually
increase the capacity of the staff to earn more incentives. The Headquarters (employer) was
presented with this idea, signed by all top management members of Kampala, including the
union representative. Eventually the workshop was pre-financed (about USD 50,000) with the
understanding that the operator will pay back 70% of the funds in six equal instalments
deductable from earned monthly incentives. The headquarters had to finance 30% of the budget
because increased performance would mean increased cash operating margins to finance
investments. With the implementation of the PIP code-named ‘Staff Empowerment Program’
8
(STEP), Kampala Water cash collections have increased by about 10% per month, resulting into
significant pay-offs. Consequently, the monthly deductions from the incentives earned are being
effected.
Case 2: Following the two months after the launch of STEP, Kampala Water management was
faced with the question: how do we raise a specific pre-financing of about USD 20,000 to
support a critical revenue enhancement activity? The provocation that bailed them out was a
promise to Headquarters that: give us the money and we collect Ushs 5,300M up from Ushs
4,600M. Again, this provocation was reached through a top management meeting, including a
workers representative. The provocation meant that headquarters spends about Ushs 30M to
generate additional Ushs 700M. The benefit to Kampala Water team was increased group-wide
incentive that significantly depends on revenue growth. On the other hand, headquarters would
benefit through increased cash operating margins. Again the guarantee was the staff incentives.
This time, the pre-financing was provided but revenues only increased to Ushs 4,800M --- and
increase of Ushs 200M. However, because of inadequate performance on other parameters
determining incentive computations, the team did not increase the incentive. Consequently, it
was agreed to stay the repayment since only headquarters had gained through increased cash
operating margin.
Case 3: In dealing ensuring equitable supply of water in the distribution system, Kampala Water
Management was faced with the focus area: how do we eliminate no pressure (dry) zones in the
network? This session was led by the team’s General Manager. Here the technique that was
suggested was no storage, which led to the provocation: Reduce no-pressure zones by avoiding
water storage reservoirs. The background to this provocation was premised on the fact that there
were many pockets of no-pressure areas, especially on hilly parts of Kampala. Therefore, going
9
for reservoir options would require expensive land acquisitions and subsequent civil works. The
team wondered how developed countries were copping without numerous reservoirs in the
distribution system. That is when the team came up with the idea of variable speed pumps that
can work at varying water flows and pressures. This technology can work without a reservoir
option. The headquarters was approached with this innovation and gave a no objection, to start
on priority basis.
Case 4: In an effort to improve working environment and customer care in Kampala Water
management was faced with the focus area: how do we modify existing office facilities to
improve ambiance? This initiative was led by the Managing Director. Here the technique that
was suggested was no opaque office partitioning, which led to the provocation: Demolish all
inside brick/concrete walls. This idea was floated to ensure that Kampala Water customer service
centres get transparent offices where everybody could check and follow customer care processes.
The dilemma here was how the structural integrity of the office buildings would be guaranteed.
Given the fact that no one can accurately predict the technical strength of engineering structures,
the team agreed that let us demolish obvious curtain walls and handle emerging structural
problems. A conventional civil engineer would have wanted to be careful and take time
analyzing after-effects. But the decision to take risks and provide remedial measures along the
process quickened the modification activity. Using the same approach, all Kampala Water
offices are nicely refurbished and are sparklingly clean and transparent. While the activity
appears to be purely engineering, the approach was purely an act of managerial creativity.
Case 5: In Nairobi City Water, a rigorous revenue collection strategy compelled management to
look at the following focus area: how can we tap money from customers, apart from the
conventional means of cash offices and banks? The thinking process was led by the chief
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commercial officer who guided his team to come up with the following provocation: let us
encourage payment of water through supermarkets like any other good. The rationale behind this
provocation was the common observation that people pay at supermarket counters on provision
of an invoice and goods. At the same time it was observed that water bills are not necessarily
high, for domestic purposes, and the utility needs to make it easy for a customer to clear it while
in a payment mood. Consequently, this payment system was introduced in Nairobi City Water
and has increased the number of convenient payment options for customers.
Case 6: While making priorities, the Nairobi City Water management organized a brainstorming
session with NWSC-Uganda team as they were on external services assignment. The focus area
was: given the problems the young company was facing, is hydraulic modelling of the network an
issue right away? The discussion was led by the Chief Executive Officer and the team came up
the provocation: let us take note that no African Water Utility has implemented a successful
hydraulic modelling activity except some from South Africa. Of course the correctness of this
provocation was not the issue at that time but the implication to Nairobi City Water operations.
Immediately after the team agreed on this common belief, most of the chief officers who were
non-engineers, resolved to prioritize funding for revenue enhancement initiatives, as a necessary
first step to stabilize the financial performance of the company. The agreement was that after
this, hydraulic modelling would logically follow, financed from internally generated funds, other
than carrying it out first when the company was in a financial stress condition.
Case 7: Immediately after the formation of Nairobi City Water Company Ltd and subsequent
appointment of its five (5) top managers, they were faced with the focus area: what strategies do
we put in place to turn-around operational performance? After getting information from the
World Bank staff that were directly providing development funds to support the reforms in the
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new company, and learning what was happening in the East African region, the team was
provoked and came up with a resolution: we must turn-around Nairobi City Water Company to
perform better than NWSC-Uganda in two years! The initiative was spearheaded by the chief
commercial officer who has been the champion of commercial and financial turn-around
initiatives. To fulfil this mission the company organized a series of benchmarking visits of
different levels of management to study the production processes and technologies that NWSCUganda was using to enhance performance. While in Uganda, the teams could not hide this
provocation from their NWSC peers. Indeed the company has since hired NWSC experts in the
areas of billing/customer systems and incentive design to ensure technology transfer and capacity
building. This has helped the company to turnaround performance in three years.
Case 8: In Dar es Salaam Water and Sewerage Corporation (DAWASCO) significant creative
thinking had to be invoked to come up with innovative strategies to improve revenue generation.
Under the championship of the chief commercial officer, the management team, in December
2007, was confronted with the focus area: how do we break stagnation in revenue collection (at
Tshs 1.5-1.7 Billion)? In order to address the area, the DAWASCO team had to scratch the
heads given that they were being faced with serious financial problems. The team unanimously
came up with a provocation: let us disconnect all non-paying rich people in all affluent suburbs
of the city including top government civil servants and politicians. The rationale for this line of
thinking was that the company ought to show the city citizens that water services had to be paid
for without discrimination. Disconnection of this customer segment would send strong signals to
the rest of the customers that water was not a free good. The team designed strategies, including
public relations campaigns, key stakeholder mapping and warnings and eventually delivered on
their promise where some ministers were also disconnected. The exercise was originally
12
unpopular among the so called ‘big people’ who were affected but with vigorous explanations
and public relations campaigns from the DAWASCO’s top leadership the exercise gained
credence. During the first month of implementation, revenue collection rose to about Tshs 2.1
billion up from Tshs 1.6 billion in the previous month --- a performance that had never been
realized by the company before.
Case 9: While trying to tackle the low staff productivity, Kaaya (2007) points out that
DAWASCO had to focus on: how do we leverage funds from unproductive labor establishment?
Led by the Chief Executive Officer, the management team and the Board of Directors came up
with the following provocation: get rid of old unproductive staff through a bright-sizing exercise
(replacing old and less educated staff with young and more educated ones). This exercise,
according to Kaaya (2007) involved a lot of creative thinking because it significantly verged on
trade union agreements and other sorts of patronage relationships with key stakeholders in
government and other institutions. The first technique was to make the exercise transparent,
coming up with a lucrative retirement package agreed with union representatives and
government. The next step was to engage an independent consultant to come up with the
organizational structure and participate in the recruitment activity to replace the retrenched staff.
The challenge during this exercise was how to create a case to replace an old age staff with a
young one. However, the exercise went on smoothly, without any staff unrest, and the numbers
of staff were reduced from 1225 to 851. The entire middle management team was replaced with
young and competent one. As a result, the gross monthly salary bill reduced from Tshs 460M to
Tshs 365M after the exercise, thereby enhancing the company’s cash flow situation.
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Other Consideration for Creative Reforms
Creating Strategic Rivalry among Operating Teams: This might seem like a provocative
approach to management but in most cases it works in enhancing operating efficiency. The
underlying performance driver here is competition. For example, by sending an invisible signal
from the supervisor, telling water distribution teams, secretly, that the other team is better
organized and therefore performing better, creates a sense of competition. In this case,
supervisors have had to be careful not to encourage proof through quantitative performance
analysis, initially. The idea is to create anxiety and envy among teams so that they can streamline
and improve their production technologies. Of course the final verdict must be delivered through
a transparent evaluation activity showing the teams’ performance trends and target achievements.
One caution that has to be borne in mind is that the teams must not take the supervisor’s
criticisms as ‘business as usual’. The criticisms must appear like they have been well researched
and should roughly predict true trends after a transparent compilation of empirical evidence. This
calls for effective use of key invisible and genuine informants by the supervisor. This approach,
however, requires significant situational management and readjustments to avoid demolishing
teams other than gearing them. This approach has worked well, improving water leakage
management in both Kampala and Dar es Salaam water network systems.
Flexibility in Restructuring Operating Teams: According to Chandan (1987), each
organizational structure must suit the situation and be optimally useful in meeting organizational
objectives. Good organizational design is a function of factors including the environment,
technology, size of the company and philosophy of the central management (ibid.). Furthermore,
Bennis (1956: quoted in Chandan, 1987), contrasts an organic structure with a bureaucratic
14
structure, pointing out that the latter is more suitable under fairly stable conditions while the
organic structure is more desirable in times of dynamic and rapid technological changes. In this
regard, an organic structure is more informal in nature, de-emphasizes authority and concentrates
on problem solving. In the water network systems management, indeed the organic model is
preferred due two reasons: Firstly, technical problems, especially in African water utilities, are
complex and uncertain, requiring flexibility in structuring of management teams. Secondly, there
is significant variability and transient character in the qualities and commitment of operating
staff due to inadequate remuneration systems and subsequent copping arrangements. Such
organizational flexibility has been tried in water reforms in the three East African cities and has
proved profoundly helpful.
Flexibility in Executing Operating Plans: In situations of uncertainty and complexity,
operational planning must be based on very short durations of implementation. This is typical of
the operating environments in the three East African cities. The age of the network is not
accurately documented, the water flow pressures are uncertain and facilities vandalism by some
unscrupulous elements of the community is unpredictable. In addition the payment behaviour of
customer is erratic and systems maintenance is inconsistent. As such, no one can prepare
‘straight jacket’ oriented operational plans that stand a test of long time. Experience in the design
and implementation of performance improvement plans in the three East African cities suggest
that strategies in such plans constitute less than 40% of the practical strategies that are
subsequently implemented. Consequently, the prime objective of most operational performance
improvement plans in water distribution systems is to realign staff attitudes and values to work
towards achieving planned targets, through flexible implementation of practical strategies.
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Concluding Remarks
From the case studies and other elements of the discussions in this paper we make a number
of conclusions. Schwartz (1997:282) suggests that ‘the difference between success and failure is
found in one’s attitudes toward setbacks, handicaps, discouragements, and other disappointing
situations’. In this paper we have demonstrated that through creativity, teams can come up with,
seemingly illogical ideas geared towards significant inroads into operational performance
enhancement. Specifically, the highlighted case studies suggest that there is always need for key
lead champions to fabricate provocative thoughts that impel teams towards implementable
initiatives. According to Steers et al (1996:513), ‘incentives, a version of what psychologists call
extrinsic motivators, do not alter the attitudes that underlie our behaviours. They do not create an
enduring commitment to any value or action. Rather, incentives merely – and temporarily –
change what we do’. In this respect, some of the case studies suggest that incentives should be
tagged to an emerging business strategy and should be short-lived, addressing a certain focus
performance area. In tandem, some case examples incorporate a risk mechanism that guarantees
a win-win situation between the operator and the supervisor (client representative). In short, most
of the case studies suggest that managerial reforms must be creative, ambitious and daring;
exploring new ways of doing things. We also find that creativity requires pro-active
benchmarking to cross-fertilize managerial thought with best practice and building desire for
peer excellence. The discussions also suggest that effective water operations management
requires inculcating meaningful rivalry among operating teams. Further, we have also seen that
there is need for organic model of organizational structuring to cope with the uncertain and
complex nature of water distribution operations in African water utilities. Likewise, operational
16
plans in such environments should, primarily, target achievement of targets and performance
trends through flexible implementation of practical strategies.
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