Any interim manager will know just how difficult it can be turning around a company with falling revenues. Often what we first detect as 'the problem' turns out as only a symptom. Long lasting solutions (if they exist) mostly involve a multi-faceted approach, incorporating all or many of the company's departments. This week, I thought you might be interested to know about a group of companies in the UK that were suffering from falling revenues?
Ten years ago the majority of English homes had direct water supplies, meaning that the water companies ran their pipes to the houses without placing any kind of measuring device in-between. This meant that consumers could effectively use as much water as they liked, and all for a fixed fee.
This might come as a surprise to many readers but the UK (especially in the South) often suffers from droughts. Bearing this in mind, the water companies wanted to avoid waste and ensure a constant supply, even in the driest months. Very much against the wishes of their customers the water companies persuaded the UK Government and Ofwat (the independent watch dog that the government introduced to protect the consumer at the time the water companies were de-nationalized) to enforce the use of water meters.
The result of the introduction of meters was exactly what the water companies wanted, a down-turn in the use of mains water. The sale of water buts and underground tanks, dramatically increased and the English, like their southern climate European neighbors, became a nation of water re-cyclers. The net result was predictable – the water companies began to suffer from a loss of revenue.
Unlike in any ‘normal’ kind of business the water companies did not need to introduce serious cost saving initiatives, or look for creative ways of generating added value or introduce new services etc. In short, they did not need interim managers to step in to help. No, in their case, all they did was increase the price of water! Their customers were powerless and had no choice but to pay the dramatically increased prices. Where else could they purchase their drinking water? Ofwat did nothing but stand back and approve the increases.
I am a free thinking man, I like to embrace enterprise and competition but (in my opinion) the de-nationalization of the supply of drinking water, in the UK, has done nothing to enhance the lives of the consumer or businesses.
In August 2007, I gave my readers the chance to tackle a really complex business problem, with the objective of comparing their approach to that of others and possibly even winning a prize or two. I launched the ‘Solving the CEO’s dilemma’ competition, which was due to stop at the end of July but has now been extended for an additional four weeks to the 31st. of August 2008. If you want to find out more and have a go at solving a revenue issue click here: 'The CEO's Dilemma'