Utility of the Future Taking water and sanitation utilities beyond the next level 4.0 FEDERICO PEREZ PENALOSA CAMILO LOMBANA GUSTAVO SALTIEL A methodology to ignite transformation in water and sanitation utilities About the Water Global Practice Launched in 2014, the World Bank Group’s Water Global Practice brings together financing, knowledge, and implementation in one platform. By combining the Bank’s global knowledge with country investments, the practice generates more firepower for transformational solutions to help countries grow sustainably. Please visit us at www.worldbank.org/water or follow us on X: @WorldBankWater. About GWSP This publication received the support of the Global Water Security & Sanitation Partnership (GWSP). GWSP is a multidonor trust fund administered by the World Bank’s Water Global Practice and supported by Australia’s Department of Foreign Affairs and Trade, Austria’s Federal Ministry of Finance, the Bill & Melinda Gates Foundation, Denmark’s Ministry of Foreign Affairs, the Netherlands’ Ministry of Foreign Affairs, Spain’s Ministry of Economic Affairs and Digital Transformation, the Swedish International Devel­ opment Cooperation Agency, Switzerland’s State Secretariat for Economic Affairs, the Swiss Agency for Development and Cooperation, U.K. International Development, and the U.S. Agency for International Development. Please visit us at www.worldbank.org/gwsp or follow us on X: @TheGwsp. About Utility of the Future Center of Excellence This publication received the support of the Utility of the Future Center of Excellence (UoF-CoE). The World Bank, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), has established the Utility of the Future Center of Excellence. The UoF-CoE unlocks the full potential of water utilities and empowers them to become the driving force to accelerate universal access to water and sanitation services. Please visit us at www.worldbank.org/uof. Utility of the Future Taking water and sanitation utilities beyond the next level 4.0 FEDERICO PEREZ PENALOSA CAMILO LOMBANA GUSTAVO SALTIEL A methodology to ignite transformation in water and sanitation utilities © 2024 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpre­ tations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the infor­ mation or any liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes, and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others does not mean the World Bank endorses the views expressed by those authors or the content of their works. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Please cite the work as follows: Lombana Cordoba Camilo, Gustavo Saltiel, and Perez Penalosa Federico. 2024. “Utility of the Future, Taking Water and Sanitation Utilities Beyond the Next Level. A Methodology to Ignite Transformation in Water and Sanitation Utilities.” World Bank, Washington, DC. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522- 2625; e-mail: pubrights@worldbank.org Cover design: Circle Graphics, Inc. and Federico Perez Penalosa Page design: Circle Graphics, Inc. Contents Acknowledgments ____________________________ vii Executive Summary___________________________ ix Abbreviations_______________________________ xiii CHAPTER 1 Introduction_________________________________ 1 CHAPTER 2 The Utility of the Future Framework________________ 3 2.1  Utility of the Future Concept 4 2.2  The UoF Success Pyramid 8 2.3  Knowledge Integration 10 CHAPTER 3 Become a Utility of the Future___________________ 13 iii UTILITY OF THE FUTURE CHAPTER ​ 4 Utility of the Future Implementation Process_________ 19 4.1  UoF Standard 19 1 Ignition | 360-degree Analysis and Identification of Key Opportunities for Improvement 22 2 Action | 100-Day Action Plan 33 3 Vision | Strategic Architecture 38 4.2  UoF Advanced 43 4 Planning | Business and Investment Plan 44 5 Acceleration | One-Year Deep Change Program 51 CHAPTER 5 Conclusions________________________________ 57 References________________________________ 59 Appendices________________________________ 61 Appendix A.  Components of a World Class Water Sector 61 Appendix B.  Customer Service 63 Appendix C.  Performance Level Assessment 67 Appendix D.  Useful Resources and Tools 70 Appendix E.  Glossary 72 iv TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL TABLES Table 4.1 Parameters of Service to Customers 23 Table 4.2 Parameters of Performance Level 25 Table 4.3 Parameters Current Maturity Level 27 Table 4.4 Gap Analysis 30 Table 4.5 Key Aspects of Change Management to Consider in Phase 1: Shake Up the Status Quo 32 Table 4.6 Key Aspects of Change Management to Consider in Phase 2: Pursue the Change 37 Table 4.7 Key Aspects of Change Management to Consider in Phase 3: Envision the Future 43 Table 4.8 Key Aspects of Change Management to Consider in Phase 4: Energize Change 49 Table 4.9 Elements of the Deep Change Program 52 Table 4.10 Key Aspects of Change Management to Consider in Phase 5: Dynamize Actions 55 FIGURES Figure 2.1 The Utility of the Future  4 Figure 2.2 Achieving Superior Customer Service 7 Figure 2.3 UoF Success Pyramid 9 Figure 3.1 UoF Implementation Methodology  14 Figure 3.2 UoF Implementation Timeline  15 Figure 3.3 Utility of the Future Worldwide 17 Figure 4.1 UoF Standard 20 Figure 4.2 Example UoF Ignition Week 22 Figure 4.3 Current Service to Customers 23 Figure 4.4 Representation of Current Performance Level 24 Figure 4.5 Example: Current Maturity Level 26 Figure 4.6 Representation of Current Maturity Level 26 Figure 4.7 Representation of Current Maturity Level vs. Performance Level 28 Figure 4.8 Example: Desired Maturity Level 29 Figure 4.9 Example: Output | 360-degree Analysis Report 31 Figure 4.10 Selection of 100-Day Actions 33 Figure 4.11 Selection of Long-term Priorities 40 Figure 4.12 Strategic Map 41 Figure 4.13 UoF Advanced 44 Figure 4.14 Business and Investment Plan Cycle 45 Figure 4.15 Deep Change Representation 51 BOXES Box 2.1 Relevant Targets of Sustainable Development Goal 6  5 Box 4.1 Rebranding and Identity 42 v UTILITY OF THE FUTURE vi Acknowledgments This document is a product of the World Bank Water Global Practice’s Utility of the Future Center of Excellence (UoF-CoE). This initiative is led by Camilo Lombana Cordoba (Senior Water Supply and Sanitation Specialist), Federico Perez Penalosa (Senior Water Supply and Sanitation Specialist), Gustavo Saltiel (Global Lead Water Supply and Sanitation Specialist), and Winston Yu (Practice Manager). The UoF methodology to ignite transformation processes of water and sanitation utilities was developed in a collaborative and participatory spirit and builds on the body of knowledge of the Water Global Practice. Special thanks go to the following Water Global Practice staff members who provided valuable comments and inputs to the first version (UoF1.0) of the methodology, published in 2021: Aileen Castro, Alex McPhail, Andreas Rohde, Antonio Rodriguez Serrano, Berta Macheve, Carolina Dominguez Torres, Chris Heymans, Christine Ochieng, Diego Rodrigues, Fadel Ndaw, Fernando Armendaris, Jemima T. Sy, Jessica Gesund Forero, Iain Menzies, Iris Marmanillo, Iyad Rammal, Jean-Martin Brault, Laura Bonzanigo, Lilian Pena, Maria Angelica Sotomayor, Maria Catalina Ramirez, Martin Gambrill, Midori Makino, Nandita Kotwal, Norhan Sadik, Patricia Lopez, Pier Mantovani, Raghava Neti, Roohi Abdullah, Sanjay Pahuja, Sanyu Lutalo, Sarah Keener, Toyoko Kodama, Xavier Henri Maitrerobert, and Yitbarek Tessema. Special thanks go to the teams at Isle Utilities and Castalia for their work on developing the first version of the methodology: Blanca Antizar, Benjamin Tam, Babi Uku, Ceris van der Vyver, David Ehrhardt, Elvira Serra, Lisa Nations, Matthew Stephenson, and Shannon Riley. For the second version of the UoF methodology (UoF2.0), special thanks for the development of three new elements of analysis (or zoom-in lenses) go to Gregory Calner Felter, Nathan L. Engle, vii UTILITY OF THE FUTURE and Sean Christopher Nelson for green management; Kristoffer Welsien, Dilip R. Limaye, Anne Shrestha, and Guillaume Fery for energy efficiency; and Kamila Galeza, Gaia Hatzfeldt, Graciela Garone, and the EqualAqua team for gender balance and diversity. We also acknowledge the contributions of Radoslav Zlatkov in the update of the UoF practices. For the third version of the UoF methodology (UoF3.0), special thanks go to Isle Utilities for the collection and curation of resources (case studies, examples, new practices) to strengthen​ the learning process for utilities during UoF implementation. For the fourth version of the UoF methodology (UoF4.0), special thanks for the development and update of new elements of analysis, material, or additional tools go to Gerhardus Nicolaas Albertus Soppe, Ma Fiorella Delos Reyes Fabella, and Patrick Egan (Non-Revenue Water), Johan Kruger (Financial Sustainability and Creditworthiness), Sven Schlumpberger and Gregory Calner Felter (Environmental Management and Climate Change); Joshua Newton (Human Resources), Julio Serna (Business and Investment Plan Playbook), Jean-Martin Brault (Digitalization), UNA Consulting (update of UoF core elements and development of the Local Government Unit element). We also acknowledge the Switzerland’s State Secretariat for Economic Affairs (SECO) for its support for establishment of the Utility of the Future Center of Excellence. Finally, we acknowledge the contributions and feedback of utilities using different modalities of the UoF methodology in countries such as Albania, Argentina, Bangladesh, Belarus, Bosnia and Herzegovina, Brazil, Burundi, Cambodia, Central African Republic, Democratic Republic of Congo, Arab Republic of Egypt, El Salvador, Ethiopia, Ghana, Honduras, India, Indonesia, Jordan, Kenya, Kosovo, Lebanon, Mexico, Moldova, Mozambique, Nepal, Nigeria, Pakistan, Peru, Philippines, Poland, Rwanda, São Tomé and Príncipe, Sri-Lanka, Timor-Leste, Republic of Türkiye, Uruguay, and Zambia. viii Executive Summary The Sustainable Development Goal (SDG) for water and sanitation—“to ensure availability and sustainable management of water and sanitation for all” (United Nations. n.d.[a])—represents both a formidable challenge and a significant opportunity in global development. Despite progress,​ approximately 2.4 billion people lack access to improved sanitation facilities, and some 0.7 billion people still do not have reliable sources of drinking water. For those with access, issues such as intermittent supply, sewerage system overflows, and inadequate customer service remain prevalent.​ The Utility of the Future (UoF) program provides a structured approach to address these challenges and guide water and sanitation utilities through a comprehensive transformation process. Definition of Utility of the Future A Utility of the Future (UoF) is defined as a future-focused, action-oriented, and continuously improving utility that provides reliable, safe, inclusive, transparent, and responsive water supply and sanitation (WSS) services. It achieves these services through best-fit practices that enable it to operate dynamically, efficiently, resiliently, adaptively, and sustainably. This definition underscores the program’s goal to transform utilities into providers that not only meet current service needs but also anticipate and adapt to future challenges. Utility of the Future Process The UoF program’s methodology, is divided into two main phases: the UoF Standard and UoF Advanced. The UoF Standard phase focuses on establishing a solid foundation for transformation through initial 360-degree analysis, action planning, and strategic vision development. The ix UTILITY OF THE FUTURE UoF Advanced phase builds on this foundation by implementing a comprehensive business and investment plan, followed by a tailored one-year deep-change program designed for each utility on the basis of context, need, priorities, internal capacities, and resources. This approach aims to address both immediate and long-term needs, ensuring utilities are well-equipped to meet​ evolving demands and achieve sustainable success. The UoF Program guides utilities to initiate their transformation journey; however, the true success of a utility’s improvement extends beyond the implementation of the UoF Program presented in this document. Successful implementation of the program identifies performance gaps, areas needing attention and highlights opportunities for improvement to trigger the reform momentum. Becoming the Utility of the Future, however, requires utility’s sustained efforts to materialize the improvement actions identified and initiated through the program. UoF Standard: The UoF Standard phase establishes the foundation for transformation through three stages: 1. Ignition: This stage involves a comprehensive 360-degree analysis of the utility’s current state. The analysis evaluates service delivery, performance levels, and operational maturity to identify opportunities for improvement. It results in a detailed report that highlights gaps and potential areas for action in both the short term and long term. 2. Action:Building on insights from the Ignition stage, the Action stage focuses on imple­ menting a 100-day action plan. This plan includes high-impact, short-term initiatives aimed at generating immediate improvements and engaging staff in the transformation process. 3. Vision:The Vision stage involves defining or refining the utility’s strategic architecture, including the vision statement, mission statement, and strategic objectives. This stage provides a clear direction for the utility’s future and establishes long-term priorities, forming the baseline for the five-year business and investment plan. UoF Advanced: The UoF Advanced phase is a tailor-made component and extends the transformation efforts with a focus on detailed planning, removing barriers, and creating internal capacities for sustained improvement through two stages: 4. Plan: The Plan stage involves creating a comprehensive business and investment plan that includes a baseline analysis, SWOT analysis, strategic objectives, KPIs, and x TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL financial forecasts. The plan outlines a transformation roadmap and tracking process to monitor progress and ensure alignment with strategic goals. 5. Acceleration: The Acceleration stage consists of a one-year Deep-Change Program designed for each utility to enhance internal capabilities, implement customized actions, and overcome barriers to change. This program pursues process optimization, talent development, technology upgrades, and other activities. Parallel to this process is the SPEED dimension—Shake up, Pursue, Envision, Energize, Dynamize—which takes a human-centered approach to the transformation process. The SPEED dimension ensures that utilities focus not only on technical and operational improve­ ments but also on leadership development, behavioral change, and staff engagement for a solid and sustainable transformation. The UoF program has demonstrated exceptional scalability and adaptability through its implementation in 100-plus utilities in more than 35 countries. This widespread application highlights the program’s capacity to be effectively customized for diverse operational environ­ ments and regulatory contexts. Its flexible framework accommodates various utility sizes and characteristics, from small municipal systems to large metropolitan networks, addressing a wide range of performance levels and challenges. Whether in developing regions grappling with rapid urbanization or in developed areas facing aging infrastructure, the UoF program could be a helpful platform to drive meaningful changes and improvements in water and sanitation services worldwide. xi UTILITY OF THE FUTURE xii Abbreviations Acronym Description CEO Chief Executive Officer EBITDA Earnings Before Interest, Tax, Depreciation, and Amortization GHG Greenhouse Gas FSM Fecal Sludge Management HRM Human Resource Management KPI Key Performance Indicator NRW Nonrevenue Water PIR Policy, Institutions, and Regulation SDG Sustainable Development Goal SPEED Shake up, Pursue, Engage, Energize, Dynamize SWOT Strengths, Weaknesses, Opportunities, and Threats UTF Utility Turnaround Framework UoF Utility of the Future UoF-CoE Utility of the Future Center of Excellence WSS Water Supply and Sanitation xiii UTILITY OF THE FUTURE xiv 1 CHAPTER Introduction The Sustainable Development Goal (SDG) for water and sanitation—“to ensure availability and sustainable management of water and sanitation for all”—embodies a critical and ambitious global objective. However, despite ongoing efforts, some 2.4 billion people still lack access to improved sanitation facilities, and approximately 0.7 billion are without reliable drinking water sources. Even for those who do have access, intermittent water supply, sewerage system overflows, and suboptimal customer service, and other issues continue to pose significant challenges (Mumssen, Saltiel, and Kingdom 2018). To address these challenges effectively and drive meaningful progress, the Utility of the Future (UoF) program offers a transformative approach. This program envisions a utility that is forward-looking, action-oriented, and continuously evolving, providing reliable, safe, inclusive, transparent, and responsive water and sanitation services. This document outlines the UoF program’s methodology, which is divided into two main phases: the UoF Standard and UoF Advanced. The UoF Standard phase focuses on establishing a solid foundation for transformation through initial analysis, action planning, and strategic vision development. The UoF Advanced phase builds on this foundation by implementing a comprehensive business and investment plan, followed by an intensive one-year deep-change program. This approach aims to address both immediate and long-term needs, ensuring utilities are well-equipped to meet evolving demands and achieve sustainable success. 1 UTILITY OF THE FUTURE A key aspect of the UoF methodology is integration of the SPEED dimension—Shake up, Pursue, Envision, Energize, Dynamize. This human-centered approach ensures that the transformation process not only addresses technical and operational improvements but also fosters behavioral change, leadership, and staff engagement. The SPEED dimension is embedded throughout the UoF program, reinforcing the importance of motivating teams, driving organizational change, and ensuring sustained commitment to the transformation objectives. The UoF program’s structured methodology aims to provide utilities with the tools and strategies necessary for effective transformation. It begins with building a solid framework and progresses through advanced stages that involve detailed planning and deep-change initiatives. By incor­ porating the SPEED dimension, the UoF framework ensures a holistic approach that addresses both operational and human factors, facilitating a successful and sustainable transformation process. 2 CHAPTER 2 The Utility of the Future Framework The Sustainable Development Goal for water and sanitation—“to ensure availability and sustainable management of water and sanitation for all” (United Nations n.d.[a])—is a lofty one. Worldwide, 2.4 billion people remain without access to improved sanitation, and nearly 0.7 billion remain without access to improved drinking water sources. Those who have access to water supply and sanitation (WSS) services often must cope with intermittent water supply, sewerage system overflows, and poor customer service (Mumssen, Saltiel, and Kingdom 2018). Poor service frequently stems from a vicious cycle of dysfunctional political environments and inefficient practices. Global forces—including climate change, water scarcity, population growth, and rapid urbanization—exacerbate these challenges to providing high-quality, sus­ tainable WSS service delivery. Therefore, WSS utilities require a new approach to planning and sequencing reforms to provide WSS services in a sustainable manner. The Utility of the Future (UoF) program provides this new approach, building on an extensive body of knowledge on utility performance improvement. Water and sanitation utilities are encountering both unprecedented challenges and significant opportunities. To effectively navigate this complex landscape and drive meaningful progress, a  UoF program can be crucial. The following objectives of the UoF program are crafted to address needs comprehensively, ensuring that utilities not only adapt but also thrive: 1. Ignite sustainable transformation:Facilitate the sustainable transformation of water and sanitation utilities. 2. Guide utilities through the trans formation:Lead utilities through a comprehensive and structured transformation process. 3 UTILITY OF THE FUTURE 3. Provide effective methodologies and learning opportunities:Offer practical, straight­ forward, and effective methodologies for implementation. 4. Strengthen internal capabilities and utility staff engagement:Enhance the internal capabilities of utilities, including operations, management, and leadership, and secure the active participation and engagement of utility teams. 5. Foster global networking and community building:Connect utilities with their peers globally to share best practices and insights. 2.1  Utility of the Future Concept The Utility of the Future (UoF) is defined as a future-focused, action-oriented, and contin­ uously improving utility that provides reliable, safe, inclusive, transparent, and responsive water supply and sanitation (WSS) services through best-fit practices that allow it to operate in a dynamic, efficient, resilient, adaptative, and sustainable manner (figure 2.1). FIGURE 2.1 The Utility of the Future ocused Reliable -f re tu Fu Ac Safe tio n-oriented Inclusive Transparent Co in nt uo Responsive usl y I m pro ving Source: World Bank. The UoF will set for itself ambitious objectives, such as helping meet Sustainable Development Goal (SDG) 6 to “ensure availability and sustainable management of water and sanitation for all” (United Nations n.d.[a]). Box 2.1 provides the relevant SDG 6 targets. 4 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL BOX 2.1 Relevant Targets of Sustainable Development Goal 6 • 6.1: By 2030, achieve universal and equitable access to safe and affordable drinking water for all. • 6.2: By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations. • 6.3: By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials, halving the proportion of untreated wastewater, and substantially increasing recycling and safe reuse globally. • 6.4: By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and sub­ stantially reduce the number of people suffering from water scarcity. Source: United Nations n.d.(b). Other relevant SDG targets include developing resilient infrastructure (target 9.1), increasing resource-use efficiency and adoption of clean and environmentally sound technologies (target 9.4), strengthening resilience and adaptive capacity to climate-related hazards and natural disasters (target 13.1), achieving universal access to basic services (target 1.4), reducing water-pollution-related deaths (target 3.9), and improving energy efficiency (target 7.3) (United Nations n.d.[a]). A “future-focused utility” is • Forward-thinking: having short-, medium-, and long-term actions and strategies that are all interconnected • Informed: constantly identifying trends, external drivers, and market/sector signals • Visionary: thinking strategically about possible and probable future scenarios • Foresighted: anticipating, adapting, and withstanding complex conditions • Progressive: being aspirational, innovative, and self-challenging 5 UTILITY OF THE FUTURE An “action-oriented utility” is • Proactive: taking initiative to address challenges and opportunities • Decisive: making timely and effective decisions • Goal-driven: focusing on achieving specific and clear objectives • Execution-focused: emphasizing prompt implementation of plans over extensive/ excessive planning • Efficient: aiming for quick and effective operations A “continuously improving utility” is • Lean: applying actions to enhance efficiency and agile models to respond swiftly to changes • Self-assessed: frequently evaluating performance and identifying rooms for improvement • Learning-focused: fostering an environment where learning and development are key priorities • Collaborative: encouraging a culture of teamwork and knowledge sharing for problem-solving • Human-centered: investing in staff education and skill enhancement Providing “reliable, safe, inclusive, transparent, and responsive WSS services” for all is the ultimate goal of the UoF, for which • Reliable means 24/7 continuous supply. • Safe means adhering to quality standards. • Inclusive means not excluding any party or group from the provision of service. • Transparent means relevant information is disclosed, clear, and accurate • Responsive means providing customers with a high-quality and timely response to ensure customer satisfaction. The UoF Program aims to enhance essential processes to ensure efficiency and continuity by leveraging world-class practices. It seeks to strengthen readiness, staying one step ahead in a rapidly changing environment. By improving processes and performance levels, the program is dedicated to deli vering superior customer service (figure 2.2). 6 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL FIGURE 2.2 Achieving Superior Customer Service Performance Indicators Customer Service Readiness Essential Processes Processes Maturity Source: World Bank. Essential Processes Strengthening: • Ensure operational continuity: Guarantee the uninterrupted continuity of operations to maintain consistent service delivery. • Enhance critical processes: Strengthen key processes to improve efficiency and effec­ tiveness across the organization. • Optimize resource use: Optimize the use of resources within the utility’s value chain to maximize productivity and cost-effectiveness. • Elevate quality standards: Improve the quality standards of essential processes to meet and exceed sector benchmarks. • Foster a culture of continuous improvement: Create and nurture a culture of continuous improvement to drive ongoing enhancements in all areas. Readiness: • Develop a strategic and long-term vision: Cultivate a forward-looking perspective to anticipate future trends and align organizational goals with long-term objectives. 7 UTILITY OF THE FUTURE • Promote dynamic and continuous learning: Encourage ongoing learning and develop­ ment to adapt to evolving quality standards and sector conditions. • Incorporate new technologies and innovations: Embrace cutting-edge technologies and innovative solutions to stay up to date and drive growth. • Ensure long-term business sustainability: Implement strategies to ensure the sustain­ ability and resilience of the business model over the long term. • Foster agile decision-making: Develop agile decision-making processes to quickly and effectively respond and adapt to emerging opportunities and challenges. 2.2  The UoF Success Pyramid The UoF is a new paradigm for providing WSS services far beyond those most utilities have even aimed for, much less achieved. A UoF delivers high-quality services efficiently while maintaining innovation, inclusivity, resilience, and a market-oriented approach. The success pyramid (figure 2.3) illustrates the interdepen­ dencies and complexities of a UoF, as well as the different perspectives from which a utility can be analyzed. The ultimate objective, as shown at the top of the pyramid, is service to customers, which clearly depends on technical operations and commercial management, though not exclusively so. Other elements of sound utility management are strategy, organization and planning, human talent, and financial management, all interconnected and supported by a digital back-end architecture, or digital enterprise. At the bottom of the pyramid is the enabling environment, or the policy, insti­ tutions, and regulation (PIR) (World Bank 2022) under which the utility operates and which shape its environment, autonomy, restrictions, and flexibility to change. In addition, the UoF methodology incorporates complementary elements, called “zoom-in lenses,” such as energy efficiency, envi­ ronmental and climate change management, and gender balance and diversity which are optional for implementation, depending on the specific priorities, timing, and needs of each utility. In a rapidly changing world, success depends on more than these managerial and governance factors. As shown by the yellow circle surrounding the pyramid in figure 2.3, a UoF is also inno­ vative, inclusive, market-oriented, and resilient. For the purposes of this methodology, • Innovation means “a change made in the nature or fashion of anything; something newly introduced; a novel practice, method, and so on” (OED Online n.d.). • Inclusion means “the process of improving the ability, opportunity, and dignity of people, disadvantaged on the basis of their identity, to take part in society” and “leveraging the utility’s assets and operations to benefit the larger community, lessen negative impacts 8 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL from utility activities, and provide service equitably across the service area, particularly for traditionally underserved neighborhoods” (World Bank 2013; AWWA 2019). • Market-oriented means that the utility functions like a business in a competitive market by adopting practices that prioritize efficiency, differentiation, and customer needs. It treats customers as though they have the option to switch providers if dissatisfied, ensuring that service quality remains a top priority. • Resilience and business continuity means “the capacity of any entity—an individual, a community, an organization, or a natural system—to prepare for disruptions, to recover from shocks and stresses, and to adapt and grow from a disruptive experience” (Rodin 2014). FIGURE 2.3 UoF Success Pyramid e Inn enc ov il i a s tio Re Service to Customer n Commercial Technical Management Operations Strategy, Financial Human Organization Management Talent & Planning Enabling Environment (Policy, Institutions and Regulations) Ma rk Digi tal E n t er p ris e et on ie Or lu si nt c at Zo o m - s In io n in L e n s e Source: Adapted from Heymans et al. 2016. 9 UTILITY OF THE FUTURE 2.3  Knowledge Integration The UoF builds on the foundation of the Utility Turnaround Framework: A Guide for Improving Performance (Vol. 2) (Soppe, Janson, and Piantini 2018) and serves as an integrator of strategic initiatives developed by the World Bank Water Global Practice. This approach intentionally incorporates and aligns with existing tools and initiatives that support the mission of strength­ ening Water and Sanitation Utilities. The goal is to create a cohesive and synergistic program, where exposure to multiple initiatives ensures that the collective impact surpasses the imple­ mentation of individual programs. The UoF also draws on insights and lessons learned from previous iterations, enriched by feedback gathered during implementation. Since 2020, this approach has accumulated knowledge through engagements with over 100 utilities supported in approximately 35 countries, enhancing both the effectiveness and comprehensiveness of the program. The Utility Turnaround Framework The Utility Turnaround Framework offers guidance for turning around poorly performing WSS utilities and identifies five critical elements (or pillars) of sound management and performance: technical operations, commercial operations, HRM, organization and strategy, and financial man­ agement (appendix F). It describes how to conduct a comprehensive assessment of a utility’s performance and maturity level using qualitative and quantitative indicators for each of the five elements. The outputs of this assessment are a performance cobweb score and a maturity cobweb score of 1 (elementary) to 5 (world class). Action matrices and guidance notes describe how to translate the assessment into a prioritized action plan to initiate and sustain the utility’s turnaround. International Benchmarking Network for Water and Sanitation Services (New IBNet) IBNet is an independent global information system that provides data to help utilities, regulators, and researchers enhance utility performance and inform decision-making. It plays a critical role within the UoF by offering comprehensive data-driven insights that contribute to informed strategies for improvement. The indicators used for the quantitative analysis of the UoF are the same as those utilized by IBNet, ensuring consistency in the assessments conducted during UoF implementation and in any potential follow-up evaluations using IBNet. IBNet supports utilities in measuring and benchmarking their performance across various metrics, which are incorporated into the UoF’s 100-day plan as part of efforts to strengthen data management and performance tracking. (New IBNet) 10 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Gender Equality in the Water Sector (Equal Aqua) The Equal Aqua Platform promotes gender diversity in water sector jobs. Established in 2019, the initiative offers tools, resources, and services to support gender equality efforts among water institu­ tions worldwide. Equal Aqua is a core component of UoF, used to develop a “Zoom-in Lens”, which focuses on identifying gender balance gaps within water utilities and exposing organizations to best practices that enhance women’s roles and leadership, and promote strategies to foster a culture of gender balance and diversity, driving inclusivity and equality across the sector. (EqualAqua) Utility Creditworthiness As part of a renewed effort to scale up financing for water, the Water GP is intensifying its focus on mobilizing finance for development to promote sustainable private sector investments and solutions. The Utility Creditworthiness initiative is incorporated into the UoF program as one of its areas of analysis, or “Zoom-in Lens,” and includes a training program for utility staff: the Water Utility Creditworthiness Course. (Water Utility Creditworthiness) Digital Water Digital Water is an initiative by the Water Global Practice Group that supports water utilities globally in undergoing digital transformation. The initiative encourages the integration of digital solutions such as smart metering, e-billing, remote sensing, data integration, supervision, GIS, predictive maintenance, active leak detection, cybersecurity, and various software platforms into utility operations, driving the modernization of water and sanitation services. Digital Water, especially in the “Digital Initiator” phase, is embedded in the UoF analysis and is part of the improvement actions in both the 100-day and 5-year plans, which aim to develop a digitalization roadmap as part of a comprehensive improvement process within a utility. (Digital Water) Field-level Leadership Program (FLL) Field-level Leadership (FLL) is a value-driven change management approach that engages broad groups of change leaders within public agencies. As a staff-led, end-to-end process, FLL has multiple positive effects on organizational effectiveness, culture, and staff morale. The reorien­ tation it provides toward improving service quality and customer engagement leads to tangible performance improvements. The UoF approach integrates key elements of change management within the human dimension of the methodology called SPEED dimension, which supports behav­ ior change analysis throughout the implementation phases of the UoF program. (FLL Program) 11 UTILITY OF THE FUTURE Water Knowledge The Water GP and GWSP support knowledge management from various perspectives, which have been gradually integrated into the UoF methodology and will continue to be included as new initiatives emerge. The UoF also compiles collective knowledge and leverages the expertise of World Bank staff, ensuring that the program is grounded in both practical insights and technical proficiency. These initiatives and knowledge have been incorporated into the UoF program through the development of “Zoom-in Lenses,” which, following the UoF methodology, provide utilities with the tools to discuss and identify opportunities for improvement in areas such as energy efficiency, non-revenue water, environmental management, and climate change, among others. (more about GWSP) Utility of the Future 2020–2023 The UoF methodology began, in 2020, as a prototype (UoF-Version 0.0) implemented at 10 utilities in 8 countries. This prototype established the foundation for future developments. Version 1.0, released in 2021, evolved into a comprehensive framework with an implementation toolkit available in five languages. It marked the start of the UoF program’s expansion, reaching 40 utilities in 20 countries. UoF-Version 2.0, introduced in 2022, extended the program to 80 utilities in 30 countries. This version included new areas of analysis, including environmental management, energy effi­ ciency, and gender balance and diversity. It also integrated the change management dimension (SPEED), which emphasizes the importance of human factors in transformation processes. By the end of this phase, the program had reached more than 90 utilities in 34 countries. UoF Version 3.0, launched in 2023, included more than 300 case studies, examples, and resources, providing additional tools to strengthen the learning process for utility staff. Addi­ tionally, the structured “Utility Changers,” a train-the-trainer program, was introduced to build capacities and make the UoF methodology scalable, replicable, and adaptable. By this stage, the program had expanded to more than 100 utilities in more than 35 countries worldwide. Each UoF implementation represents a reciprocal learning opportunity. On the one hand, utilities are exposed to new practices and innovations within the water sector, enabling them to enhance their operations and service delivery. On the other hand, the UoF program gains valuable insights from the utilities’ existing practices and unique implementation challenges. These insights are crucial in refining not only the program’s content but also its methodologies, practical examples, and implementation model. Through a continuous exchange of knowledge, both the utilities and the UoF program evolve, driving innovation and improvement. 12 CHAPTER 3 Become a Utility of the Future The UoF implementation methodology is structured as a comprehensive five-stage cycle with two main phases (figure 3.1). • UoF Standard (stages 1 to 3): The UoF Standard phase comprises the foundational, structured steps necessary for a utility to begin its transformation journey. These steps are designed to set up a solid framework for the transformation process, typically requiring four to five months for implementation. This phase focuses on analyzing key processes, defining objectives, and setting the groundwork for subsequent stages. • UoF Advanced (stages 4 and 5): The UoF Advanced phase builds on the foundational work of the UoF Standard phase and is an optional extension of the UoF program that can be implemented after a comprehensive internal analysis of available resources and organizational capacity. This analysis helps a utility determine whether the phase will add value and aligns with its long-term goals. The UoF Advanced phase encompasses the more flexible, ongoing efforts needed to fully realize the utility’s transformation. This phase is tailor-made, adaptable to each context, and can extend beyond one year, depending on its design and implementation specifics. 13 UTILITY OF THE FUTURE FIGURE 3.1 UoF Implementation Methodology UoF Standard UoF Advanced E P Planning Action 5 Year 100 Day Business Improvement Plan Acceleration Plan Ignition One Year 360 Deep Change Analysis Vision Program Strategic Architecture S E D Organizational behavioral change Source: World Bank. UoF Standard 1. Ignition | 360-degree Analysis of Operations and Service Delivery and Identification of Opportunities for Improvement:In stage 1, the utility assesses its current state of operations and service delivery. It identifies opportunities for enhancement, prior­ itizes potential short-term actions, and establishes some initial long-term strategic priorities to drive sustainable growth and organizational effectiveness. 2. Action | 100-day Action Plan:In stage 2, the utility initiates change by implementing high-impact, easy-to-execute short-term actions. This stage emphasizes staff involve­ ment in kickstarting transformation through practical initiatives that pave the way for broader organizational improvements. 3. Vision | Strategic Architecture:In stage 3, the utility defines or updates its vision statement, mission statement, and strategic objectives to meet key long-term priorities identified in the previous stages. The strategic architecture serves as the baseline for developing a robust five-year business and investment plan. 14 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL UoF Advanced 4. Plan | Business and Investment Plan:In stage 4, the utility develops a clear and achiev­ able five-year business and investment plan built on the UoF Standard. The plan should contain a background analysis, a SWOT analysis, a demographic analysis, strategic objectives, key performance indicators, a project charter for each initiative to achieve the utility’s strategic objectives, a financial forecast with tariff and sensibility analysis, and a tracking process. 5. Acceleration | Deep Change Program:In stage 5, the utility creates a one-year program to strengthen its internal capabilities and to implement customized actions to realize its transformation. The Deep Change Program reflects the context in which the utility operates and its available resources and external support. The program should include specific actions to optimize key processes, reduce costs, remove barriers for performance improvement, and invest in training and development of staff in all areas of the organization. UoF Timeline Figure 3.2 depicts the average timeline for UoF implementation. FIGURE 3.2 UoF Implementation Timeline Ignition 1 1 week Assessment Action 2 3 months 100-Day Improvement Plan Vision 3 1 week Strategic Architecture Planning 4 3 months 5 years Business Plan Acceleration 5 1 year Deep Change Program Source: World Bank. 15 UTILITY OF THE FUTURE UoF Change Management Dimension The UoF methodology incorporates a human-centered dimension called SPEED (Shake up, Pursue, Engage, Energize, Dynamize), which provides guidance on behavioral change, leader­ ship, and teambuilding: Letter Definition Shake up the Status Quo: Disrupt the current situation within the utility by challenging existing practices and assumptions. The goal is to move the organization out of its com­ S fort zone and raise the relevance of change. This goal is achieved by highlighting the need for transformation and encouraging a willingness to embrace new approaches. Pursue the Change: Actively involve the utility team in the change process by motivating and engaging employees to take actionable steps toward transforma­ P tion. By building momentum and fostering a collective commitment to change, the organization starts to gain traction and align its efforts with the desired outcomes. Envision the Future: Actively involve utility staff in the process of shaping the future vision. By engaging employees at all levels, the utility fosters a strong sense of E owner­ship and ensures that the vision aligns with both individual and organizational goals. This inclusive approach helps cultivate a deeper commitment to the utility’s long-term success and helps embed the vision into the utility’s culture. Energize Change: Encourage staff to contribute meaningfully, identifying clear, actionable steps and fostering collaboration across departments. Success depends E on instilling a sense of ownership and responsibility in staff, with leadership playing a crucial role in maintaining momentum and addressing challenges. Dynamize Actions: Engage staff in self-reflection to identify personal barriers to improvement and to recognize their active role in the transformation process. By fostering internal awareness, employees become key drivers of change. Addition­ D ally, the program highlights the importance of cross-departmental collaboration, helping the utility identify synergies that enhance cooperation, break down silos, and maximize the impact of transformation efforts. Experience has shown that change management is best implemented through an approach that is collective, staff-led, and organic, rather than prescribed by the top management. 16 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL UoF Worldwide The UoF program has been implemented in 100-plus water and sanitation utilities in more than 35 countries (figure 3.3). This extensive reach underscores the program’s robust scalability and its capacity to address the needs of different regions and operational contexts. The meth­ odology’s inherent flexibility and adaptability make it suitable for utilities of different sizes and performance levels and with different operational realities. Each implementation of the UoF program not only contributes to the specific utility’s transfor­ mation but also provides invaluable insights into best practices and innovative approaches used globally. These insights are systematically incorporated into the UoF Toolkit, ensuring that the methodology remains at the forefront of water sector advancements. By continuously integrating new practices and lessons from around the world, the program evolves to meet emerging challenges and drive sustained improvements across the sector. FIGURE 3.3 Utility of the Future Worldwide +100 Utilities +35 Countries Albania Democratic Republic Kosovo Poland Arab Republic of Egypt of the Congo Lebanon Republic of Türkiye Argentina El Salvador Mexico Rwanda Bangladesh Ethiopia Moldova São Tomé Belarus Ghana Mozambique Sri-Lanka Bosnia and Herzegovina Honduras Nepal Timor-Leste Brazil India Nigeria Uruguay Burundi Indonesia Pakistan Zambia Cambodia Jordan Peru Central African Republic Kenya Philippines Source: World Bank. 17 The UoF methodology is detailed in the UoF Toolkit, which can be accessed at www. worldbank.org/uof. The toolkit, along with the Implementation Guideline, are regularly updated to incorporate the latest practices and innovations. This ongoing refinement ensures that the resources remain aligned with the cutting edge of sector trends in water and sanitation management and operations. 18 CHAPTER ​ 4 Utility of the Future Implementation Process Before commencing the transformation process, each utility should assess its genuine interest in and motivations for adopting the UoF program. These incentives might include staff learning and development opportunities through exposure to international best practices, interaction with international experts, and access to potential external resources for implementing specific improvements. Utilities should carefully consider the benefits of the UoF program and determine the most appropriate timing for imple­ mentation. Because the process requires a commitment of internal time and resources for at least three months (UoF Standard) or more than a year (UoF Advanced), it is essential to ensure that the program aligns with the utility’s priorities and will deliver tangible benefits. Finally, securing commitment from the utility’s general director and endorsement from the board of directors is crucial because strong leadership is necessary to motivate staff, allocate resources, make timely decisions, maintain team momentum, and ensure continuity throughout the transformation. 4.1  UoF Standard UoF Standard is designed to establish a robust framework for the transformation process, typically requiring four to five months for implementation. Figure 4.1 depicts the three stages of this phase. 19 UTILITY OF THE FUTURE FIGURE 4.1 UoF Standard UoF Standard UoF Advanced E P Planning Action 5 Year 100 Day Business Improvement Plan Acceleration Plan Ignition One Year 360 Deep Change Analysis Vision Program Strategic Architecture S E D Organizational behavioral change Source: World Bank. Preliminary Steps 1. Devise implementation strategy:The implementation strategy involves outlining the scope of the UoF methodology to be applied, whether it involves the UoF Standard or an expanded version of UoF Advanced with additional elements. The strategy should define the expected results, identify outputs, and detail milestones and deliverables. Additionally, the strategy should align with any ongoing projects, leveraging their resources and expertise. 2. Establish implementation plan: The implementation plan involves assembling a cohesive team that includes utility staff and external support (if any) to ensure effective collaboration and execution. It establishes a comprehensive timeline detailing each phase of the UoF methodology, from Ignition Week (figure 4.2) through subsequent stages to set the foundation for the UoF program and to align all resources and activities for successful implementation. 3. Gather preliminary information (data input and sector overview): Collecting accurate basic data is essential for performance assessment. Some key metrics include popu­ lation served, total water service connections, domestic wastewater connections, and number of staff and annual revenues. Accuracy is crucial to ensure that the analysis reflects the utility’s true state. Additionally, understanding the enabling environment, sector trends, policies, regulatory frameworks, and recent contextual factors is 20 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL important for providing a comprehensive view of the utility’s operating environment and ensuring alignment with sector reality. 4. Set up a utility team: Effective implementation of the UoF program requires coordi­ nated roles across key positions. The general manager plays a crucial role in securing the necessary resources for UoF implementation. The general manager is responsible for keeping the team motivated and engaged throughout the transformation process. Additionally, the manager must ensure continuity in the process by overseeing its progression and addressing any disruptions, thus facilitating implementation. The utility focal point is tasked with monitoring work plan progress, thereby ensuring that milestones and objectives are met according to schedule. This individual should be a recognized natural leader within the utility, someone possessing the authority and respect necessary to drive the initiative forward. Direct interaction with the utility focal point is essential for coordinating efforts, addressing issues, and ensuring that the utility’s strategic goals are aligned with implementation of the UoF program. The utility team is responsible for key elements of the UoF methodology, including stra­ tegic planning, commercial management, technical operations (water, sanitation, or both), financial management, and human resources. The team should include young professionals to bring fresh perspectives and to ensure diversity in terms of age, gender, knowledge, and hierarchical level. This diversity enhances the team’s effectiveness and fosters a more comprehensive approach to addressing the utility’s needs and challenges. 5. Schedule UoF Ignition Week: UoF Ignition Week marks the official commencement of the transformation process. In addition to launching the UoF program, it sets the stage for the subsequent activities. The date of this event should be carefully selected and communicated to ensure that all relevant parties are available and prepared to participate. Effective coordination during this week will help build momentum, align expectations, and lay a solid foundation for the entire transformation journey. UoF Ignition Week UoF Ignition Week is an immersion period during which the utility’s key processes are thoroughly reviewed to identify areas for improvement (figure 4.2). Utility staff engage in detailed analysis to pinpoint inefficiencies and gaps. The outcome is a short-term action plan that addresses these issues. 21 UTILITY OF THE FUTURE FIGURE 4.2 Example UoF Ignition Week UoF Ignition Week Day 1 Day 2 Day 3 Day 4 Day 5 Kickoff Validation 100- Closing Meeting Day Action Plan Session 4 Technical B UoF Zoom-in Operations Lense B  Report Analysis Water, Organization Process Analysis and Strategy  Teams’ Sanitation, presentations or Both Commercial C UoF Zoom-in Management  Analysis key Lense C insights 1 Organization Financial 5 Human  Review final and Strategy Management Talent 100-day action Operation plan Visit Water,  Next steps 2 Commercial Selection UoF Utility Sanitation, or Management Zoom-in Lenses Facilities Both Launch 100-Day Human Action Plan Resources 3 Financial A UoF Zoom-in Draft 100-Day Zoom-in Sustainability Lense A Action Plan Lenses Source: World Bank. Ignition | 360-degree Analysis and Identification of 1 Key Opportunities for Improvement A 360-degree analysis is a comprehensive assessment that evaluates the current situation of service to customers, performance level, and maturity level. Current Service to Customers Service to customers is evaluated based on the basis of data uploaded in the UoF Toolkit on five critical parameters: reliable service continuity, ensuring consistent and uninterrupted service; safe service based on quality standards, guaranteeing that the water meets health and safety requirements; inclusive service coverage, ensuring access for all segments of the population; responsive attention to users, addressing customer inquiries and issues promptly and effectively; and transparent information, providing clear and accessible communication about services and performance. 22 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Output: The customer service output is expressed as a percentage level for each of the five key parameters, as depicted in figure 4.3. FIGURE 4.3 Current Service to Customers Overall Service Provision to Customers Reliable Safe Inclusive Responsive Transparent 70% 50% 40% 33% 47% Source: World Bank. Parameters: Five parameters are used to assess the quality of customer service (table 4.1). Appendix D provides detailed explanations of the parameters and their ranges. TABLE 4.1 Parameters of Service to Customers Continuity (hours per day on average) 24/7 Continuity (customers with 24/7 supply) (%) Reliable continuous Availability (liters/per capita/day) supply Availability of FSM emptying services (provided 24 hours after service requested) (%) Adheres to Water quality (samples meeting all WHO guidelines for Safe quality drinking water quality) (%) standards Wastewater and fecal sludge treatment (%) Excludes none from the Drinking water coverage (%) Inclusive provision of Sanitation service coverage (%) service Discloses Key information disclosure (%) information Application of practices to generate clear information (%) Transparent clearly and Application of practices for ensuring accurate accurately information (%) Capacity to Customers satisfied with service (based on assessment provides in the past two years) (%) Responsive quality and Grievances satisfactorily resolved within seven days (%) timely Percentage of sewer blockage complaints addressed responses within 48 hours (%) Source: World Bank. FSM = fecal sludge management. 23 UTILITY OF THE FUTURE Current Performance Level Performance level is assessed by combining key indicators that evaluate the five core elements and selected zoom-in lenses using the data provided in the UoF Toolkit. These indicators provide a comprehensive view of how well the utility performs across various dimensions, reflecting its overall operational effectiveness and efficiency. Output: The current performance level is expressed on a scale from 1 (elementary) to 5 (world class). The level is derived by combining the respective indicators for each core element (figure 4.4). This comprehensive scoring system provides a clear and quantifiable measure of the utility’s overall effectiveness and service quality. FIGURE 4.4 Representation of Current Performance Level Utility Current Performance Level Strategy and Planning 5 4 3 Human 2 Commercial Talent Management 1 0 Financial Technical Management Operations Performance Level Source: World Bank. 24 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Parameters: Five parameters are used to assess the current performance level (table 4.2). Appendix D provides detailed explanations of the parameters and their ranges. TABLE 4.2 Parameters of Performance Level Strategy and Adherence to planning schedule (%) Planning Budget adherence (%) Commercial Collection rate (%) Metered water connections (%) Management Service complaints resolved (%) Technical Nonrevenue water (liters/connection/hour) Nonrevenue water (%) Operations Sewer blockages (blockages/100km)) Financial EBITDA margin Management Operation cost coverage (%) Employees per 1,000 connections Human Employee turnover rate (%) Talent HR costs as % of total operating costs Source: World Bank. EBITA = earnings before interest, taxes, and amortization. Current Maturity Level Maturity level is measured by analyzing the current practices employed by the utility a cross all processes using the evaluation developed in the UoF Toolkit. This assessment looks at how advanced and effective these practices are implemented according to standards. The current maturity level for each process reflects the utility’s reality, as determined through an in-depth analysis of more than 150 processes within the five core elements, selected zoom-in lenses, and UoF dimensions (Figure 4.5). 25 UTILITY OF THE FUTURE FIGURE 4.5 Example: Current Maturity Level Essential Processes Future Thinking Processes Area Topic (Select ONE Current Level and ONE Next Level) (Select ALL THAT APPLY Current Level and Next Level) 1 2 3 4 5 Innovation Inclusion Market Orientation Resilience Utility integrates practices Utility integrates resilience into the strategic Utility incorporates innovation modeled after competitive framework including proactive measures to Strategic framework in as a core strategy. This Mission, vision, and Strategic framework contains vision, mission, Utility embeds inclusion as a markets, drawing inspiration anticipate and mitigate risks, ensuring place but not updated, commitment involves strategic objectives in strategic objectives, trategic programs, core strategy both within its from successful strategies operational continuity and the ability to contains vision, mission, fostering a culture of Mission and vision in place, not updated and not projects by program, corporate values, risk workforce and in its customer. employed in the private sector. adapt to unforeseen challenges effectively. values, strategic objectives. continuous improvement and Business Strategic No strategic architecture. place, but not updated and known within the utility. Annual plan is partially analysis, SWOT analysis, PEST analysis, This involves fostering a diverse By adopting private sector By embedding resilience into the core constraint analysis, scenario analysis. The creativity across all and respectful workplace culture proven methodologies, the utility Strategy Architecture not known within the utility. Annual plan and budget aligned with strategic operational facets. Utility strategy, the utility enhances the ability to No strategic objectives. not aligned with strategic strategic framework is communicated to all while ensuring services are ensures a proactive approach to sustain reliable service delivery, protect framework, and utility’s aims to identify and objectives, mission, and staff and external stakeholders. It is accessible and relevant to all adapting to sector dynamics, critical infrastructure, and safeguard employees are familiar implement cutting-edge vision. reviewed/updated annually. customers. and effectively meeting the against disruptions, thereby fostering long- with it. technologies, processes, and evolving needs of its customers term sustainability and customers and solutions. and stakeholders. stakeholder confidence. Current Level - x - - - - x - - Next Level - - - - x - x x x Current Level Source: World Bank. Output: The current maturity level is expressed on a scale from 1 (elementary) to 5 (world class). This level is derived by combining the respective process analyses for each core element. Figure 4.6 represents the overall maturity level of the utility, high­ lighting strengths and identifying areas for improvement. FIGURE 4.6 Representation of Current Maturity Level Current Maturity Level Core Elements and UoF Dimensions Strategy and Planning 5 4 3 Human 2 Commercial Talent 1 Management 0 26% 36% 25% 32% Innovation Inclusion Market Orientation Resilience Financial Technical Management Operations Maturity Level Current Level Source: World Bank. 26 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Parameters: The following parameters are utilized to evaluate the current maturity level of each of the five core elements. Regarding the UoF dimensions (innovation, inclusion, market orientation, and resilience), the current situation is assessed on the basis of the number of best practices implemented by the utility within each component. The UoF zoom-in lenses apply the same logic, providing a detailed analysis as outlined in the UoF Toolkit. This comprehensive approach ensures a thorough understanding of the utility’s operational maturity and highlights areas for potential improvement (Table 4.3). Appendix D provides detailed explanations of the parameters and their ranges. TABLE 4.3 Parameters Current Maturity Level Strategy  Digital strategy and governance  Business strategy  Digital enterprise and  Monitoring and reporting  Project management, IT, and Planning  Efficiency and Continuity technology  Customer relationship management  Billing Commercial  Collections  Customer service Management  Metering  Customer centricity  Asset management  Wastewater management Technical  GIS management and operation  Environment and climate change Operations  Drinking water quality  Energy efficiency  Nonrevenue water (NRW)  Smart operations Financial  Financial strategy and management  Asset accounting  Planning and budgeting  Control and transparency Management  Accounting and financial reporting  Financial sustainability  Performance management  Human resources management Human  Remuneration, incentives, and  Attraction and recruitment benefits Talent  HR sustainability  Culture and values  Training and development  Digital and innovation culture Source: World Bank. 27 UTILITY OF THE FUTURE Current Maturity Level vs. Performance Level To develop a comprehensive 360-degree analysis from a different perspective, utilities can super­ impose the performance cobweb on the maturity cobweb, as demonstrated in figure 4.7. This approach reveals discrepancies between performance and maturity levels. When an element exhibits a higher performance level than maturity level, the utility may need to enhance its maturity through improved processes, best practices, and systems to sustain or further elevate its performance. Conversely, if an element exhibits a higher maturity level than performance level, the utility has robust processes in place and the potential to improve performance more readily. In such cases, targeted efforts—such as focusing on specific indicators, forming task forces for key improvements, and addressing bottlenecks—can be helpful. Analyzing the util­ ity from maturity and performance perspectives enables the team to collaboratively explore diverse and innovative solutions, driving more effective and sustainable improvements. FIGURE 4.7 Representation of Current Maturity Level vs. Performance Level Current Maturity Level vs. Performance Level Strategy and Planning 5 4 3 Human 2 Commercial Talent Management 1 0 Financial Technical Management Operations Maturity Level Maturity > Performance Performance Level Performance > Maturity Source: World Bank. 28 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Gap Analysis The 360-degree analysis of all processes encourages the utility to envision its desired state five years into the future, identifying areas for improvement and starting to brainstorm potential actions to bridge existing gaps (Figure 4.8). This dual focus on present conditions and future aspirations helps the utility uncover opportunities for short-term (100-day), medium-term (one-year), and long-term (five-year) enhancements. The UoF methodology fosters a pro­ active approach, motivating the utility to set strategic goals and to begin implementing initiatives that drive continuous improvement and operational excellence. FIGURE 4.8 Example: Desired Maturity Level Essential Processes Future Thinking Processes Area Topic (Select ONE Current Level and ONE Next Level) (Select ALL THAT APPLY Current Level and Next Level) 1 2 3 4 5 Innovation Inclusion Market Orientation Resilience Utility integrates practices Utility integrates resilience into the strategic Utility incorporates innovation modeled after competitive framework including proactive measures to Strategic framework in as a core strategy. This Mission, vision, and Strategic framework contains vision, mission, Utility embeds inclusion as a markets, drawing inspiration anticipate and mitigate risks, ensuring place but not updated, commitment involves strategic objectives in strategic objectives, trategic programs, core strategy both within its from successful strategies operational continuity and the ability to contains vision, mission, fostering a culture of Mission and vision in place, not updated and not projects by program, corporate values, risk workforce and in its customer. employed in the private sector. adapt to unforeseen challenges effectively. values, strategic objectives. continuous improvement and Business Strategic No strategic architecture. place, but not updated and known within the utility. Annual plan is partially analysis, SWOT analysis, PEST analysis, This involves fostering a diverse By adopting private sector By embedding resilience into the core constraint analysis, scenario analysis. The creativity across all and respectful workplace culture proven methodologies, the utility Strategy Architecture not known within the utility. Annual plan and budget aligned with strategic operational facets. Utility strategy, the utility enhances the ability to No strategic objectives. not aligned with strategic strategic framework is communicated to all while ensuring services are ensures a proactive approach to sustain reliable service delivery, protect framework, and utility’s aims to identify and objectives, mission, and staff and external stakeholders. It is accessible and relevant to all adapting to sector dynamics, critical infrastructure, and safeguard employees are familiar implement cutting-edge vision. reviewed/updated annually. customers. and effectively meeting the against disruptions, thereby fostering long- with it. technologies, processes, and evolving needs of its customers term sustainability and customers and solutions. and stakeholders. stakeholder confidence. Current Level - x - - - - x - - Next Level - - - - x - x x x Current Next Level Level Gap Analysis Source: World Bank. Once the gap analysis is completed, the UoF Toolkit systematically calculates the number of gaps identified in each process (table 4.4). Additionally, it collects a set of preliminary actions, defined by the utility team, for inclusion in the 100-day action plan, along with potential initia­ tives for the five-year strategic plan. This comprehensive evaluation not only highlights areas requiring immediate attention but also suggests actionable steps and longer-term initiatives to be considered in the strategic plan. 29 UTILITY OF THE FUTURE TABLE 4.4 Gap Analysis Preliminary gaps Potential short- term Potential key long- Gap Analysis identified actions (100 days) term actions (5 days) Strategy and Planning 21  6  4 Commercial  6  5  2 Management Technical Operations  7  3  2 Financial  5  2  2 Management Talent Management  9  3  3 Total 48 19 13 Source: World Bank. The UoF Toolkit supplements each component with more than 300 case studies, examples, and proven practices. These resources are meticulously curated to provide practical insights and real-world applications, thereby facilitating a deeper understanding and more effective implementation of the practices. All these valuable materials ensure that utility staff members have the necessary tools to continuously improve their skills and increase their knowledge. Note: Utilities should adopt a transparent and honest approach when assessing their current maturity levels; equally important is setting goals that can be attained within a five-year timeframe. This approach is critical for conducting a thorough and accurate gap analysis, which in turn, forms the foundation for a precise and effective improvement plan. By being candid about their starting point and pragmatic about their future objectives, utilities can ensure that their strategies are both feasible and aligned with long-term goals. 30 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Final Output | 360-degree Analysis Report At the conclusion of Ignition Week, the UoF Toolkit generates a comprehensive executive report that provides a detailed overview of the utility’s current state in terms of customer service, maturity, and performance. In addition, the report includes a preliminary analysis for each core element and selected zoom-in lenses, offering an overview of the current situation across all relevant areas and UoF dimensions (figure 4.9). This thorough evaluation not only highlights existing conditions but also identifies opportunities for growth and improvement. By outlining both the present status and potential future levels, the report serves as a valuable tool for stra­ tegic planning and continuous enhancement of utility operations. FIGURE 4.9 Example: Output | 360-degree Analysis Report Strategy and Planning Analysis of processes and practices (current and next level) Business Strategy 5 4 3 Project 2 Efficiency and Management, 1 Continuity IT, and 0 Technology Digital Strategy Next Level 63% 69% 63% 80% Digital Enterprise and Governance Current Level 42% 56% 37% 55% Innovation Inclusion Market Orientation Resilience Current Level Next Level Potential room for improvement 21 Preliminary gaps 6 Potential short-term actions (100-Days) 4 Potential key long-term actions (5-years) Current performance (based on key indicators) Adherence to Planning Schedule Budget Adherence 70% 70% Well-Performing Well-Performing World-Class > 90% World-Class > 90% Source: World Bank. 31 UTILITY OF THE FUTURE S PEED | Behavioral Change Insights | S hake Up the Status Quo To initiate a change process, the management team must possess a firm conviction regarding the necessity of change. It must be willing to move away from traditional practices, disrupt the utility’s inertia, and challenge the status quo. The decision to embrace change is the first critical step, and active involvement of the management team is a key success factor in any transformation process. Before progressing further in the transformation process, the utility should reflect on the underlying causes of its current performance and maturity levels and should realistically assess the potential for short-term and long-term improvements, considering its capabilities, resources, objectives, constraints, and risks. The leadership team should foster an environment of trust to facilitate clear, honest, and objective discussions. Conducting a thorough and candid evaluation is fundamental for designing an effective improvement plan that will benefit the utility. Table 4.5 lists key aspects of change management that need to be analyzed at both the beginning and end of phase 1 to verify achievement of anticipated outputs. TABLE 4.5 Key Aspects of Change Management to Consider in Phase 1: Shake Up the Status Quo Main objective Engage senior leadership in disrupting the utility’s inertia (business as usual) and take the utility out of its comfort zone. Expected change in • Leadership team members are enthusiastic about becoming agents of behavior change. • They embrace innovative thinking, alternative approaches, and new solutions. • They are dedicated to actively engaging the entire utility staff in the change process. Key questions or • Is it the right moment to initiate a change process? (For example, would a self-reflections change of local government affect or stop the process?) • If the utility decides not to change now, what future problems (e.g., financial unsustainability, reputational risk, reduced coverage and quality of service) will it face? • What are the utility’s incentives (e.g., improve credit capacity, comply with regulatory requirements) for change? • Who are the main partners (e.g., regulators, the private sector, suppliers), and how can the utility engage them? • What are the first barriers to change that the utility will face (e.g., organizational culture, time, availability of staff), and how can the utility overcome them? (continues on next page) 32 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL TABLE 4.5 Key Aspects of Change Management to Consider in Phase 1: Shake Up the Status Quo  (Continued) Key actions • Obtain approval and commitment from the board of directors. • Identify and involve the utility’s natural leaders. • Motivate staff to join the effort. • Define a communication plan for the transformation process. • Assess organizational readiness for change. Expected outputs • Top managers/leaders/supervisors become convinced of the need ​ for change. • The utility internalizes the decision to initiate a transformation process. Source: World Bank. 2 Action | 100-Day Action Plan During Ignition Week, the utility team, in collaboration with the UoF team, identifies potential actions for the 100-day action plan. These actions are selected on the basis of their ease of implementation, potential for high impact, and lack of need for external resources (figure 4.10). Some actions may serve as foundational steps for future improvements. FIGURE 4.10 Selection of 100-Day Actions Potential Impact 100 Days Potential Actions Cost/Difficulty Source: World Bank. 33 UTILITY OF THE FUTURE The 100-day action plan has two primary objectives: 1. Improve performance, processes, or practices: Achieve measurable enhancements within the utility’s operations. 2. Build momentum and engage the utility team: Foster engagement and empower the utility team, thereby instilling a sense of ownership and commitment to the transfor­ mation process. The 100-day action plan typically includes an average of 20 to 30 actions distributed across the UoF core elements, ensuring that each element is addressed with at least one specific action. These actions can range widely in scope and focus. For instance, they may involve developing a process to start recording historical maintenance activities, which would serve as a baseline for a maintenance work plan. Other actions might include creating task forces to analyze potential energy efficiencies within utility processes, developing service-level agreements among depart­ ments to optimize workflows, or establishing a gender balance and diversity committee. Additional actions could involve conducting a staff survey to gauge utility culture and employee satisfaction or initiating an internal activity to gather ideas from all utility staff for improving processes through innovative practices. The UoF Toolkit provides a set of example actions for the 100-day action plan. By incorporating a diverse range of targeted actions, the plan aims to drive comprehensive improvements across the utility, leveraging the insights and expertise of the entire team to foster a culture of continuous innovation and engagement. Key Success Factors for a 100-Day Action Plan Some key success factors for a 100-day action plan: • Clear and realistic goals: Specify achievable actions that align with the utility’s overall transformation process. • Strong leadership and commitment: Ensure that the management team is fully com­ mitted to the plan and actively involved in its execution. • Effective communication: Maintain open and transparent communication channels to keep all utility team members informed and engaged. • Resource allocation: Ensure that necessary resources, including time, personnel, and tools, are available and allocated efficiently. 34 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL • Quick wins: Identify and implement actions that can deliver immediate, visible results to build momentum and confidence. • Engagement of utility staff: Involve utility staff at all levels to foster a sense of ownership and commitment to the plan’s success. • Continuous monitoring and feedback: Regularly track progress against the plan, usually every 2 weeks, adjusting as necessary based on feedback from the team and changing circumstances. • Collaboration and teamwork: Promote a collaborative approach, leveraging the collec­ tive expertise and insights of the team. • Flexibility: Adapt the plan as needed to address unforeseen challenges or opportunities. • Celebrating successes: Acknowledge and celebrate milestones and successes to maintain motivation and morale. By focusing on these success factors, the 100-day action plan can effectively drive near-term improvements and lay a strong foundation for continued progress. Retrospective Analysis The conclusion of the 100-day action plan implementation presents a critical opportunity to evaluate the overall experience and derive valuable insights. A workshop involving utility staff and key stakeholders will enable in-depth discussions about the 100-day action plan outcomes and will allow participants to share insights and best practices and strengthen col­ laboration. By addressing challenges, celebrating achievements, and planning future actions, this workshop will ensure that lessons are effectively integrated into ongoing and future efforts, fostering a culture of continuous improvement and strategic alignment. The retrospective analysis should cover the following elements: • Results and process improvements: Assess the tangible outcomes and the specific processes that were improved. Evaluate how these changes have positively affected the utility’s operations and performance. • Staff engagement and behavior change adoption: Analyze the level of staff engage­ ment throughout implementation of the 100-day action plan and the extent to which new behaviors and practices have been adopted. 35 UTILITY OF THE FUTURE • Key elements of success: Identify the critical factors that contributed to achievement of the 100-day action plan. Highlight strategies and actions that were particularly effective. • Top actions implemented as potential case studies: Document the most successful actions implemented during this phase. Draft case studies to illustrate these successes, providing detailed examples and insights. • Lessons, obstacles, and strategies: Reflect on the lessons learned during the imple­ mentation process. Identify any obstacles encountered and the strategies employed to overcome them, thereby providing a roadmap for future initiatives. • Actions removed from the plan or postponed: Review any actions that were removed or postponed, analyzing the reasons for these decisions to better understand potential challenges and potential adjustments to future plans. • Recognition: Celebrate high-performance teams and individuals demonstrating exceptional dedication and effectiveness during implementation of the 100-day action plan. Acknowledging their contributions not only boosts morale but also reinforces a culture of excellence and continuous improvement within the utility. By conducting this analysis and capturing lessons learned, the utility can ensure sustained prog­ ress and refine its strategies for future transformation efforts. This reflective process is essential for maintaining momentum, fostering a culture of learning, and driving ongoing success. S P EED | Behavioral Change Insights | P ursue the Change In this phase, the emphasis transitions to actively involving the utility team in the change pro­ cess. This task entails motivating and engaging utility staff to undertake actionable steps toward transformation. By building momentum and fostering a collective commitment to change, the utility begins to gain traction and align its efforts with the desired outcomes. This phase is crucial for successful change management. Its success depends, in part, on fostering a sense of respon­sibility for and commitment to achieving results and strengthening collaboration. Additionally, the leadership team plays a vital role in maintaining momentum and motivation over the 100-day period by supporting the team, providing solutions, and actively participating in the change process. Table 4.6 outlines relevant aspects of change management that should be analyzed at both the beginning and end of this phase to ensure the expected outcomes are achieved. 36 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL TABLE 4.6 Key Aspects of Change Management to Consider in Phase 2: Pursue the Change Main objective Develop a motivated and enthusiastic team that is ready both to implement the defined actions and to involve more staff in the transformation process. Expected change ​ • Staff are empowered to drive change, even in small tasks. in behavior • Hierarchical barriers are eliminated, ensuring that the entire utility team has a voice in the change process. • A sense of pride in contributing to tangible change is created, thereby fostering a culture of continuous improvement that becomes ingrained in the team’s DNA. Key questions ​ • In what ways (e.g., weekly meetings, team recognition) can the or self-reflections leadership team maintain momentum, dynamism, and constant communication for 100 days? • How can the team motivate/engage those who resist change within the utility? (Could they, for example, be assigned tasks to make them feel part of the process or invited to be part of a team working in a different area?) • How does the leadership team engage more and more staff in the transformation process? (Could it, for example, conduct workshops that are open to all staff or create one suggestion box per theme that can be accessed by all staff?) • How does the leadership team leverage the lessons learned during the process? (Could it create internal newsletters to communicate achievements and lessons?) Key actions • Keep the team motivated, engaged, and informed through weekly follow-up meetings. • Communicate continuously with all internal and external stakeholders on the progress of the 100-day actions. • Maintain dynamism in the process; move those actions that are slowing down the process to the long-term strategic plan. Expected outputs • The team is proud of the results it has achieved. • It is motivated to take the utility to the next level. • The leadership team identifies and recognizes new leaders and high- potential staff. Source: World Bank. 37 UTILITY OF THE FUTURE 3 Vision | Strategic Architecture Defining the strategic architecture of a water and sanitation utility is crucial for establishing a robust framework that supports a long-term business model. A well-articulated, clear, and ambitious, yet realistic, vision guides the utility and its staff toward one direction. Utilities’ existing strategic framework, vision statement, mission statement, and strategic goals often are not effectively integrated with daily operations or planning processes. They are fre­ quently not revisited or updated. The UoF program presents an ideal opportunity to redefine the utility’s strategic architecture, to inspire the utility team, and to communicate to stakeholders that the utility is undergoing significant transformation and is becoming a Utility of the Future. Developing the strategic architecture should leverage the momentum generated by the change process. Given that the utility and its staff are already engaged in transformation, formulation of the new strategic architecture during the 100-day action plan is recommended. If the utility has recently developed a strategic framework, UoF implementation provides a valuable opportunity to review and refine it. Engaging the entire utility team in this effort ensures alignment with UoF implementation and reinforces commitment to the revised strategic direction. Strategic Vision Definition: The strategic vision of a water and sanitation utility is a forward-looking statement of the organization’s long-term aspirations and desired future state. It provides a clear picture of what the utility aims to achieve in the future and serves as a beacon for all strategic decisions and actions. Characteristics: • Inspirational: It should inspire and motivate utility staff, stakeholders, and the commu­ nity by presenting an ambitious yet attainable future. • Long-term focused: It typically looks at least 5 to 10 years into the future. • Overarching: It outlines a broad picture of success without detailing specific actions. Example: “To be the leading provider of sustainable and innovative water and sanitation service, ensuring a resilient and thriving community for generations to come.” 38 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Mission Statement Definition: The mission statement defines the utility’s core purpose and primary objectives. It explains why the utility exists, what it does, and whom it serves. This statement is focused on the present and on short-term activities. Characteristics: • Purpose-driven: It clearly communicates the utility’s core function and its commitment to serving customers. • Action-oriented: It often describes what the utility does on a day-to-day basis. • Customer-centric: It should reflect the utility’s commitment to providing value to its customers and stakeholders. Example: “To deliver high-quality and reliable water and sanitation services while safeguarding public health and the environment through innovative practices and exceptional customer service.” Strategic Objectives Definition: Strategic objectives are specific, measurable goals that the water utility aims to achieve to fulfill its mission and realize its vision. They provide clear targets and milestones that guide operational planning and performance evaluation. Characteristics: Strategic objectives should be SMART. • Specific: Clearly define what needs to be achieved. • Measurable: Include criteria to track progress and measure success. • Achievable: Be realistic and attainable, given resources and constraints. • Relevant: Align with the utility’s vision and mission, addressing key areas of focus. • Time-Bound: Have defined timelines for achievement. Examples: • Operational Efficiency: “Reduce water loss by 15 percent over the next five years through the implementation of advanced leak detection technologies and infrastructure upgrades.” 39 UTILITY OF THE FUTURE • Customer Service: “Achieve a customer satisfaction rating of 90 percent or higher within the next three years by enhancing service delivery and response times.” • Sustainability: “Increase the proportion of renewable energy used in operations to 50 percent within the next decade to support environmental sustainability goals.” • Financial Stability: “Improve financial health by increasing revenue by 10  percent and reducing operational costs by 5 percent over the next five years through strategic investments and cost management practices.” Long-term Priorities During Ignition Week and throughout the execution of the 100-day action plan, utilities identified specific actions to address the gaps between current performance levels and desired outcomes for each core element and UoF zoom-in lenses. They incorporated some low-cost, low-effort actions into the 100-day plan to begin closing these gaps and catalyzing the transformation process. Long-term priorities, in contrast, are those actions that require extended timeframes, additional resources, and substantial funding to implement (figure 4.11). These priorities are expected to have a significant impact on the utilities’ customer service. FIGURE 4.11 Selection of Long-term Priorities Potential Impact 5 Years Potential Actions Cost/Difficulty Source: World Bank. 40 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Long-term priorities should be seamlessly integrated into the utility’s strategic architecture. Each long-term priority should be thoroughly detailed and explicitly linked to at least one the strategic objectives previously defined. This process involves a comprehensive analysis to confirm that each priority aligns with and supports the established strategic goals. If a long-term priority does not directly contribute to or support any of the strategic objectives, it should be reassessed or removed. Once the final long-term priorities are selected and described with more detail, the utility can create a comprehensive strategic map (figure 4.12). This map will integrate the defined stra­ tegic objectives with the established long-term priorities, serving as a foundational framework for high-level strategic programs. The strategic map provides a clear and structured overview of where to focus efforts and allocate resources over the next five years. It enables the utility to align its resources and actions with its long-term goals, thereby facilitating more effective planning and execution. This exercise is not a business plan in itself but rather serves as a foundational baseline for developing one. The strategic map outlines the key areas of focus and provides a strategic direction, which will then inform creation of a detailed business plan that includes specific operational and financial strategies. FIGURE 4.12 Strategic Map Strategic Map Objective (n) Objective 1 Objective 2 Objective 3 Objective 4 Strategic Strategic Strategic Strategic Strategic Strategic Programs Commercial Commercial Management Program Technical Operations Operations Program Finance Financial Management Program Human HR Resources Program Element/ Element (n) Department (n) Program Long-term priorities Source: World Bank. 41 UTILITY OF THE FUTURE BOX 4.1 Rebranding and Identity As part of the utility’s transformation process, the utility’s logo, brand, and corporate image ideally would be updated or redesigned to align with the utility’s new vision. This strategic action not only reinforces the internal change process but also effectively communicates the improvements and advancements to customers. Updating the utility’s identity can significantly enhance the perception of the utility, signaling a fresh start and a commitment to innovation and excellence. This new identity can be imple­ mented efficiently and cost-effectively across various platforms, such as the utility’s website, invoices, and promotional materials. Such a rebranding effort ensures that the utility’s renewed focus and strategic direction are clearly conveyed to both internal stakeholders and the broader community. SP E ED | Behavioral Change Insights | E nvision the Future This phase focuses on sustaining the momentum of change and collaboratively developing a new strategic vision, incorporating lessons learned from the 100-day action plan regarding orga­ nizational culture, teamwork, and leadership. Staff should feel actively involved in shaping this new vision to foster their sense of ownership and engagement. Given the high turnover rates in top management positions within water utilities—typically with tenures averaging three to four years due to changes in local government—it is imperative to involve personnel from various hierarchical levels in this phase. This approach ensures the preservation of strategic knowledge within the utility and maintains continuity in the transformation process despite leadership changes. Moreover, it is crucial to analyze key aspects of change management at both the beginning and end of this phase to verify that the expected outcomes are achieved. Table 4.7 outlines these aspects, providing a framework for evaluating progress and ensuring that the transformation efforts remain aligned with the utility’s long-term goals. 42 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL TABLE 4.7 Key Aspects of Change Management to Consider in Phase 3: Envision the Future Main objective Co-create the roadmap to becoming a Utility of the Future. Expected change in • Utility staff adopt a long-term vision and a culture of future thinking. behavior • Enhanced teamwork and collaboration co-create the desired future for the utility. • Utility staff are aligned with the new vision, mission, and strategic objectives. Key questions or ​ • How can the mindset of utility staff shift from a sole focus on day-to-day self-reflections tasks to also engaging with long-term objectives? • Does the utility have the right team in place to co-create the strategic vision? (Does it, for example, have low staff turnover, natural leaders, high-potential staff?) • What internal human resource capabilities and knowledge (e.g., strategic planning, financial planning, foresight) need to be strengthened to achieve the new vision? • How can the utility avoid returning to the state of inertia? (Could it, for example, identify a small set of key performance indicators that alert the utility team to a trend of inefficiency in a specific process?) • How can the new vision be communicated accurately and clearly to reach all levels of the organization as well as external stakeholders? (Would an annual organizational culture and staff satisfaction survey with questions related to strategy work?) Key actions • Create the strategic framework in a participatory manner. • Create task forces for the definition of each strategic program (commercial, technical operations, finance, human resources, organization, and strategy). • Communicate the strategic framework (internally and externally). • Link staff objectives to the utility’s strategic objectives. • Identify strategic partners for the fulfillment of the strategic vision. Expected output • The strategic vision is communicated and understood by the entire staff. • The strategic framework is developed collaboratively. • Continuous improvement becomes part of the organization’s DNA and core values. 4.2  UoF Advanced The UoF Advanced phase is an optional extension of the program that can be implemented after a comprehensive internal analysis of available resources and organizational capacity. This evaluation helps determine whether the phase will add value to the ongoing process and align 43 UTILITY OF THE FUTURE with the utility’s long-term goals. The UoF Advanced phase encompasses the more flexible, ongoing efforts needed to fully realize the utility’s transformation. The phase is adaptable to each context and can extend beyond one year, depending on its design and implementation specifics. It includes two stages: planning and acceleration (figure 4.13). FIGURE 4.13 UoF Advanced UoF Standard UoF Advanced E P Planning Action 5 Year 100 Day Business Improvement Plan Acceleration Plan Ignition One Year 360 Deep Change Analysis Vision Program Strategic Architecture S E D Organizational behavioral change Source: World Bank. 4 Planning | Business and Investment Plan Every water and sanitation utility should develop and regularly review and update a business and investment plan. This plan is instrumental in prioritizing actions, creating coherent annual plans, and aligning utility staff efforts to meet common goals. The UoF program provides guidance to assist utilities in this critical planning process. The business plan is invaluable for translating the utility’s strategic vision into actionable steps. It ensures that all activities and investments are aligned with overall objectives, prioritizes essential actions, and helps allocate resources effectively. By doing so, the plan ensures that the most critical projects receive the necessary attention and funding, facilitating the creation of annual plans that add substantial value to the utility’s operations. Alongside the business plan, utility should develop internal capabilities to strengthen the planning process. This work involves establishing robust procedures and policies that provide 44 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL a clear framework for decision-making and implementation. Developing a skilled and trained team is fundamental to executing the plan effectively. Monitoring tools are also vital, enabling the utility to track progress, measure outcomes, and make necessary adjustments to stay on course. Ensuring that the utility has the resources to support a world-class planning process is essential. These resources include financial resources, technological infrastructure, and access to relevant data and information. A comprehensive business and investment plan for a water and sanitation utility includes four main components: (1) a baseline analysis, (2) objectives, (3) a business plan document, and (4) a transformation roadmap and tracking process (figure 4.14). The baseline analysis involves evaluating the utility’s current operations, infrastructure, financial health, and service delivery to establish a foundation for planning. Objectives are set by reviewing the utility’s vision and mission and strategic goals as developed during the UoF Standard implementation and by identifying performance targets. A business plan translates these objectives into relevant information to disseminate internally to all utility staff and externally to key stakeholders.​ Finally, the transformation roadmap and tracking process outlines key milestones and timelines, establishes monitoring and evaluation frameworks, and incorporates continuous improvement practices to ensure that the utility remains on course and adapts to evolving needs and challenges. FIGURE 4.14 Business and Investment Plan Cycle Business and Investment Plan 1 2 3 4 Transformation Baseline Strategic Business Plan Roadmap and Analysis Objectives Document Tracking Process Source: World Bank. 1.  Baseline Analysis Baseline analysis thoroughly assesses the utility’s current state and establishes a foundation for strategic planning. It involves seven steps: 1. Establish a project team:Assemble a dedicated project team composed of UoF focal points and key stakeholders. This team will oversee the baseline analysis, coordinate 45 UTILITY OF THE FUTURE efforts, and ensure alignment with the UoF framework. The team should include representatives from various departments to provide a comprehensive perspective. 2. Document past performance: Review and document the utility’s historical perfor­ mance using insights and data from previous UoF initiatives. This step involves ana­ lyzing past performance metrics, project outcomes, and lessons to understand how previous efforts have influenced the current state of the utility. 3. Review key strengths and weaknesses:Assess the utility’s strengths and weaknesses as identified through UoF evaluations. This step involves reviewing feedback, perfor­ mance assessments, and reports to identify areas of excellence and areas needing improvement. 4. Analyze outputs and lessons from the UoF 100-Day Action Plan:Evaluate the outcomes and insights gained from the 100-day action plan implemented as part of the UoF program. This analysis indicates the immediate impacts of the action plan, including successes, challenges, and areas for further development. 5. Analyze demographics: Perform a detailed analysis of the utility’s demographics, including the workforce, customer base, and service areas. This step includes exam­ ining factors such as population growth, migration, customer needs, and workforce composition to better understand the context in which the utility operates. 6. Review the enabling environment:Review existing policies, institutional frameworks, and regulatory requirements that impact the utility’s operations. This step ensures that the utility operates within a supportive framework and identifies any necessary adjustments to facilitate effective transformation. 7. Develop a SWOT analysis:Conduct a comprehensive SWOT (strengths, weaknesses, opportunities, and threats) analysis of the utility. This step involves identifying internal strengths and weaknesses, as well as external opportunities and threats, to provide a clear understanding of the utility’s strategic position and to inform future planning. 2.  Strategic Objectives Setting strategic objectives clearly defines and aligns the utility’s long-term goals and perfor­ mance metrics based on the preliminary exercise developed during implementation of the UoF Standard phase. It involves seven steps: 1. Refine the mission, vision, and strategic objectives leveraging UoF implementation: Revisit the utility’s mission, vision, and strategic objectives based on insights and 46 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL outcomes from UoF implementation. This step ensures that the mission and vision reflect the utility’s evolved goals and that the strategic objectives are aligned with the UoF framework. 2. Define utility-wide key performance indicators (KPIs), adapting UoF KPIs:Establish utility-wide KPIs that measure progress toward the strategic objectives. Adapt existing UoF KPIs to ensure they align with the utility’s refined objectives, providing a clear and measurable way to track performance and success. 3. Review key long-term priorities identified during UoF implementation:Reassess the long-term priorities that were identified during UoF implementation. Evaluate their relevance and importance in light of the refined strategic objectives and ensure they remain integral to the utility’s long-term vision. Obtain formal approval and sign-off on the 4. Sign-off on strategic objectives/KPIs:   refined strategic objectives and KPIs from senior management and key stakeholders. This step ensures consensus on and commitment to the objectives and performance measures, facilitating alignment and accountability. Designate responsible individuals or 5. Assign owners for each strategic objective:   teams for each strategic objective. This step ensures clear accountability structures are in place, with designated parties responsible for driving progress and achieving objectives. 6. Align on programs/initiatives to achieve objectives, leveraging UoF best practices Identify and align on specific initiatives and actions required and long-term priorities:   to achieve strategic objectives. Leverage best practices and long-term actions detailed during UoF implementation to ensure that the initiatives are grounded in proven methods and align with the utility’s overall strategy. 3.  Business Plan Document Developing the business plan document creates a comprehensive and actionable plan for the utility. It involves four steps: For each strategic program/ 1. Develop project charters per program/initiative:  initiative identified, create detailed project charters. Each charter should outline the initiative’s objectives, scope, deliverables, timelines, and responsible parties. This step ensures that each initiative is clearly defined and has a structured approach for implementation, including specific goals and metrics for success. 47 UTILITY OF THE FUTURE Develop a 2. Create a profit and loss (P&L) statement and a capital investment plan:   comprehensive financial forecast, including a P&L statement and a capital investment plan. The P&L statement should project revenues, costs, and profits over a specified period, providing insight into the financial viability of the programs/initiatives. The capital investment plan should detail anticipated investments in infrastructure, technology, and other capital expenditures required to support strategic initiatives. Perform a sensitivity analysis to assess how changes 3. Conduct a sensitivity analysis:   in key assumptions, tariff scenarios, and other variables might impact the financial forecast and overall business plan. This analysis helps identify potential risks and uncer­ tainties, providing a range of possible outcomes and allowing the utility to prepare for multiple scenarios. Gather all components into a cohesive business plan doc­ 4. Compile the Business Plan:   ument. This integration should ensure that the project charters, financial forecasts, and sensitivity analyses are aligned and presented in a unified format. The final business plan should provide a clear, actionable roadmap that aligns with the strategic objectives and includes implementation, monitoring, and evaluation details. 4.  Transformation Roadmap and Tracking Process Developing the transformation roadmap and tracking process ensures that the utility effectively manages and monitors its progress toward achieving strategic objectives. It involves three steps: Create a 1. Develop a business plan tracking process and templates (dashboards):   robust tracking process to monitor implementation of the business plan. This step includes developing and utilizing tracking templates and dashboards that provide real-time visibility into progress, performance metrics, and key milestones. These tools should be designed to capture relevant data, track the status of initiatives, and highlight any deviations from the plan. The dashboards should be user-friendly and tailored to the needs of different stakeholders, enabling efficient monitoring and management. Establish a dedicated 2. Establish a stand-up tracking team and meeting cadence:   tracking team responsible for overseeing the implementation of the business plan and ensuring adherence to the transformation roadmap. This team should be composed of individuals with the expertise to manage and analyze performance data. Implement a regular meeting cadence to review progress, address any issues, and make necessary 48 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL adjustments. Meetings should be structured to facilitate effective communication, problem-solving, and decision-making. Develop and execute a commu­ 3. Disseminate and communicate the business plan:   nication strategy for disseminating the business plan both internally and externally. Internally, ensure that all staff members are informed about the business plan, its objectives, and their roles in its implementation. Use various communication chan­ nels, such as internal newsletters, meetings, and training sessions, to keep utility staff engaged and informed. Externally, communicate the business plan to stakeholders such as customers, regulators, and partners to ensure transparency and build support for the utility’s transformation efforts. Tailor the communication approach to different audiences to effectively convey the plan’s relevance and impact. SPE E D | Behavioral Change Insights | E nergize Change: In this phase, the focus transitions to actively developing and implementing the business plan to motivating the entire utility team. This work involves inspiring staff to contribute meaning­ fully to the planning process, setting clear and actionable steps, and fostering a collaborative environment aligned. Key to success are ensuring that staff feel a sense of ownership and responsibility for the plan and enhancing teamwork through cross-departmental collabo­ ration. The leadership team plays a crucial role in maintaining momentum and addressing challenges, supporting the team with resources and guidance. This comprehensive approach ensures that the business plan is effectively developed and supported, with all team members aligned in achieving the utility’s strategic objectives. TABLE 4.8 Key Aspects of Change Management to Consider in Phase 4: Energize Change Main objective Develop a comprehensive business plan that effectively translates the utility’s strategic vision into actionable and financially viable initiatives, while fostering a collaborative environment and securing broad staff engagement in the planning process. Expected change • Shift the mindset from day-to-day tasks to long-term vision. in behavior • A strong sense of discipline emerges, turning ideas into actionable steps. • Staff recognize their role as integral to the larger organization. (continues on next page) 49 UTILITY OF THE FUTURE TABLE 4.8 Key Aspects of Change Management to Consider in Phase 4: Energize Change  (Continued) Key questions or • How can the leadership team ensure that staff are actively involved in the self-reflections business plan development process? (For example, would cross-functional workshops, brainstorming sessions, and feedback loops work for this purpose?) • What strategies can be employed to integrate diverse perspectives and expertise from across the organization into the business plan? (Would forming focus groups, conducting surveys, or organizing collaborative meetings work?) • How will the leadership team communicate the importance of the business plan and its impact on the utility’s future to all staff? (Would, for example, transparent updates, town hall meetings, and detailed briefings work?) • How can the leadership team recognize and address resistance or concerns from staff regarding the business plan? (Could it provide additional support, address concerns in a timely manner, and involve resistant staff in solution development?) Key actions • Facilitate collaborative planning workshops: Organize workshops and meetings that bring together staff from various departments to contribute to the development of the business plan, ensuring diverse input and fostering a sense of collective ownership. • Implement feedback mechanisms: Create channels, such as suggestion boxes, surveys, and review sessions, for staff to provide feedback on the business plan and to ensure that their input is considered and incorporated. • Communicate progress and rationales: Maintain ongoing communication about the development process, progress, and rationales for key decisions. Use multiple channels such as internal newsletters, email updates, and interactive forums to keep everyone informed. • Recognize and address concerns: Identify and address any resistance or concerns from staff by providing clear explanations, additional training, or support as needed. Involve resistant staff in resolving issues to build trust and engagement. Expected outputs • A collaborative and comprehensive business plan reflecting a broad range of perspectives and expertise and effectively addressing the utility’s strategic goals is finalized. • Staff members who are actively engaged in the planning process demonstrate a higher level of ownership and accountability for the business plan’s success. • Improved communication within the utility regarding the business plan leads to greater understanding and alignment across the organization. • Recognition of staff who have shown exceptional engagement and leadership potential during the business plan development process contribute to the utility’s future leadership pipeline. 50 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL 5 Acceleration | One-Year Deep Change Program The primary objective of the One-Year Deep Change Program is to accelerate the transforma­ tion process by enhancing internal capabilities, removing barriers to change, and prioritizing essential structural elements. By strengthening the utility’s core competencies—including skills, knowledge, systems, and resources—the program prepares the utility to effectively navigate evolving sector conditions. It should enable the utility to respond more swiftly and effectively to emerging challenges and opportunities through optimized processes, strategic restructuring, talent development, technological advancements, and continuous monitoring (figure 4.15). FIGURE 4.15 Deep Change Representation One-Year Deep Change Program Agility Acceleration Time Source: World Bank. The One-Year Deep Change Program is not a one-size-fits-all solution. It should be tailored to meet the specific needs, priorities, and challenges of each utility. The program should con­ sider factors such as the utility’s current capacities, available staff, and internal and external resources. The program should be designed to achieve substantial change while maintaining 51 UTILITY OF THE FUTURE operational continuity and preserving daily business activities. Although each One-Year Deep Change Program is customized to address specific needs, utili­ ties may consider incorporating one or more of the following key elements (table 4.9): Streamlining operational processes and improving 1. Process and cost optimization:   cost efficiency while establishing a disciplined organizational structure to enhance overall effectiveness. Redesigning the organi­ 2. Organizational structure and human talent development:   zational structure and investing in the development of human capital to build a robust team capable of driving and sustaining change. Identifying and addressing impedements 3. Dismantling of barriers and bottlenecks:   to progress and creating a smoother workflow by eliminating operational bottlenecks. Upgrading systems and technologies to 4. Enhancement of systems and technology:   achieve efficiency and effectiveness, thereby improving operational performance and agility. Building on existing strengths 5. Reinforcement of current strengths and best practices:   and implementing best practices to ensure that successful elements are leveraged and sustained throughout the transformation process. TABLE 4.9 Elements of the Deep Change Program One-Year Deep Change Program 1 1 Process and cost optimization 2 Organizational structure and human talent development 5 2 Acceleration 3 Knock down barriers and bottlenecks 4 Enhancement of systems and technology 4 3 5 Reinforcement of current strengths and best practices Source: World Bank. To design the One-Year Deep Change Program, utilities should consider the following components: 52 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL • Scope and outcomes: Clearly define the program’s objectives, deliverables, and boundaries to ensure a focused approach. • Timeline: Establish a detailed schedule with milestones and deadlines for each phase of the program. • Stakeholders: Identify and define the roles of key stakeholders, both internal and external, to ensure effective collaboration. • Risk assessment: Conduct a comprehensive quick risk analysis to identify potential challenges and develop mitigation strategies. • Quality management: Define quality standards and processes to ensure that delivera­ bles meet established criteria. • Communication plan: Develop a strategy for ongoing communication to keep all stakeholders informed and engaged throughout the program. • Follow-up and evaluation: Implement mechanisms for tracking progress, evaluating outcomes, and making necessary adjustments. Finally, the One-Year Deep Change Program should clearly define the resources necessary for its implementation: • Approximate budget: Estimate the total required budget, including personnel costs, training expenses, and external support. • Internal capacities: Assess available internal resources such as staff, technology, and existing processes. • Funding options: Explore and secure potential funding sources to support the program. • Utility focal point: Assign a dedicated individual within the utility to oversee program planning, coordination, and execution. • Utility team: Designate a dedicated team with clear roles and responsibilities. • External support: Engage external organizations or consultants for additional exper­ tise and support. The One-Year Deep Change Program represents a strategic opportunity to focus on profound transformation rather than incremental adjustments. It aims to integrate key activities that drive deep, systemic change within the utility, emphasizing the incorporation of continuous improvement, learning, and team building into the organization’s core values and culture. The program encourages the utility to undertake initiatives that challenge existing norms and foster a culture of innovation and resilience. It targets improvements in process optimization, 53 UTILITY OF THE FUTURE cost efficiency, and comprehensive staff development and aims to embed these improvements into the utility’s everyday practices. It seeks to create an environment that encourages contin­ uous learning and fosters and collaboration to achieve strategic goals. The One-Year Deep Change Program is designed not only to address immediate needs but also to cultivate a sustainable culture of excellence, ensuring that the utility is well-positioned for long-term success and capable of handling future challenges. SPEE D | Behavioral Change Insights | D ynamize Actions In this phase, the focus transitions to implementing a customized one-year program aimed at driving utility transformation. The program is designed to remove barriers to change by encour­ aging utility staff to engage in self-reflection, identifying their own obstacles to improvement and recognizing how they can actively contribute to the transformation process. With this internal awareness, employees become key drivers of change rather than passive participants. Additionally, the program emphasizes the importance of identifying and leveraging synergies across all departments. This collaborative approach enhances cross-functional cooperation, enabling the utility to generate greater value and maximize the impact of transformation efforts. By breaking down silos and encouraging teamwork, the utility can create a more cohe­ sive and aligned organization, ultimately leading to more sustainable outcomes. 54 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL TABLE 4.10 Key Aspects of Change Management to Consider in Phase 5: Dynamize Actions Main objective Cultivate a motivated and engaged team that actively participates in and drives the one-year transformation program, fostering widespread involvement and commitment to change. Expected change • The utility recognizes the critical importance of change management in in behavior driving successful transformation. • The utility breaks down silos, encouraging collaboration and teamwork across all departments. • A vision aligns staff efforts with the utility’s long-term goals. Key questions or • How can leadership sustain momentum and enthusiasm throughout the self-reflections year? (Could it implement regular check-ins, recognition programs, and transparent communication?) • What strategies can engage and motivate those resistant to change? (Could they be assigned in meaningful tasks or involved in cross-functional teams?) • How can leadership effectively involve more staff in the transformation process? (Could they establish inclusive workshops, suggestion platforms, and feedback mechanisms?) • In what ways (e.g., periodic updates, internal newsletters) will lessons be communicated and leveraged? Key actions • Hold frequent meetings to keep the team motivated and informed and recognize achievements. • Keep all stakeholders updated on the program’s progress and successes, ensuring transparency and engagement. • Identify and address any obstacles or slowdowns by adjusting plans and reallocating resources as needed. Expected outputs • Teams take pride in their accomplishments and contributions to the transformation. • They are committed to advancing the utility’s goals, with leadership acknowledging their efforts. • New leaders and high-potential staff are identified and recognized, contributing to the utility’s future success. 55 56 CHAPTER 5 Conclusions The path to becoming a Utility of the Future is both challenging and rewarding. As the global water and sanitation sector continues to grapple with significant access and service delivery issues, the UoF program offers a viable framework for utilities to enhance their operations and service standards. By adhering to the UoF methodology, utilities can navigate the complexities of their environments, implement effective changes, and achieve sustainable improvements. The UoF program’s structured approach, encompassing the UoF Standard and UoF Advanced phases, provides utilities with the tools and processes necessary for a successful transformation. The program’s methodology is both comprehensive and adaptable. Integration of the SPEED dimension further emphasizes the importance of engaging and empowering staff, which is crucial for the long-term success of transformation efforts. The journey to becoming a Utility of the Future is not only about overcoming current challenges but also about seizing opportunities for innovation and excellence. The comprehensive nature of the UoF program ensures that utilities are equipped to meet the demands of today and tomorrow, contributing significantly to the overarching goal of ensuring sustainable water and sanitation management for all. By embracing the UoF methodology and continuously striving for improvement, utilities can play a pivotal role in advancing global water and sanitation goals, ultimately leading to increased health, environmental sustainability, and quality of life for com­ munities worldwide. 57 58 References AWWA (American Water Works Association). 2019. A Water Utility Manager’s Guide to Community Stewardship. Denver, CO: AWWA. https://www.awwa.org/Portals/0/AWWA/Communications/AWaterUtilityManagers​ ­GuidetoCommunityStewardship.pdf. Heymans, Chris, Rolfe Eberhard, David Ehrhardt, and Shannon Riley. 2016. Providing Water to Poor People​ in African Cities Effectively: Lessons from Utility Reforms. Washington, DC: World Bank. https:// openknowledge.worldbank.org/handle/10986/25115. Muhairwe, William T. 2009. Making Public Enterprises Work: From Despair to Promise—A Turnaround Account. Kampala: Fountain; London: IWA. Mumssen, Yogita, Gustavo Saltiel, and Bill Kingdom. 2018. Aligning Institutions and Incentives for Sustain­ able Water Supply and Sanitation Services: Report of the Water Supply and Sanitation Global Solutions Group, Water Global Practice, World Bank. World Bank, Washington, DC. http://documents.worldbank​ .org/curated/en/271871525756383450/pdf/Aligning-institutions-and-incentives-for-sustainable​ -water-supply-and-sanitation-services.pdf. OED (Oxford English Dictionary) Online. n.d. “Innovation.” Oxford University Press. Accessed February 19, 2020. https://www.oed.com/view/Entry/96311?redirectedFrom=innovation. Rodin, Judith. 2014. “Remarks by Dr. Judith Rodin at the 2014 Aspen Ideas Festival.” The Rockefeller​ Foundation, June  29. https://www.rockefellerfoundation.org/about-us/news-media/remarks-by-dr-judith​ rodin-2014-aspen/. Schnackenberg, Andrew K., and Edward C. Tomlinson. 2016. “Organizational Transparency: A New Perspective on Managing Trust in Organization-Stakeholder Relationships.” Journal of Management 42 (7): 1784–810. First published March 10, 2014. https://journals.sagepub.com/doi/pdf/10.1177/​ 0149206314525202. Soppe,Gerhardus Nicolaas Albertus, Nils M. Janson, and Scarlett Piantini. 2018. Water Utility Turnaround Framework: A Guide for Improving Performance (Vol. 2) (English). Washington, D.C.: World Bank Group. 59 UTILITY OF THE FUTURE http://documents.worldbank.org/curated/en/515931542315166330/Water-Utility-Turnaround​ -Framework-A-Guide-for-Improving-Performance. United Nations. N.d.(a). “UN Sustainable Development Goals Knowledge Platform.” Accessed January 27, 2020. https://sustainabledevelopment.un.org/. United Nations. N.d.(b). “Sustainable Development Goal 6.” Accessed January 27, 2020. https://sustainable​ development.un.org/sdg6. University of California–Berkeley. N.d. “Change Management Toolkit: Tips, Tools, and Techniques for Leading a Successful Change Initiative.” Berkeley, CA. Updated 2019. https://hr.berkeley.edu/sites/ default/files/change_management_toolkit.pdf. World Bank. 2013. Inclusion Matters: The Foundation for Shared Prosperity. New Frontiers of Social Policy​ series.Washington,DC: World Bank.http://documents.worldbank.org/curated/en/114561468154469371/ Inclusion-matters-the-foundation-for-shared-prosperity. World Bank. 2022. Water Supply and Sanitation Policies, Institutions, and Regulation: Adapting to a Changing World Synthesis Report (English). Washington, DC: World Bank. http://documents.worldbank.org/curated/ en/099015208242275252/P165586002283004a086e105a00d8430696. World Bank. 2023. Closing the financial gap: e-Learning course on Water Utility Creditworthiness. https:// blogs.worldbank.org/en/water/closing-financial-gap-take-new-e-learning-course-water-utility-credit​ worthiness World Bank. 2024. Digital Water initiative. https://www.worldbank.org/en/programs/digital-water/about-us World Bank. 2024. Equal Aqua Platform. Gender Equality in the Water Sector. https://www.worldbank.org/ en/topic/water/brief/inclusive-water-institutions-platform World Bank. 2024. Field Level Leadership : Motivation to Serve - A guide to FLL and Implementation. https://​ documents.worldbank.org/en/publication/documents-reports/documentdetail/099925001162311748/​ p16984800f367f0000aa310d9a294f5cb46 World Bank. 2024. International Benchmarking Network for Water and Sanitation Services IBNet. https:// newibnet.org/ 60 Appendices Appendix A.  Components of a World Class Water Sector POLICY Legal and Policy The legal and policy framework for water management establishes Framework comprehensive guidelines and regulations that ensure clarity, enforceability, and adaptability to local contexts. It integrates robust stakeholder engagement, ensuring broad participation from governmental bodies, communities, industries, and the private sector to foster inclusive decision-making. Transparent governance, public awareness campaigns, and alignment with international standards further enhance effectiveness, promoting long-term water security, ecosystem health, and equitable access to safe water for all. Decision-Making Decision-making processes for the water sector prioritize transparency, Processes accountability, and inclusivity. These processes rely on robust, evidence-based approaches, incorporating scientific data and stakeholder input to inform adaptive and flexible policies. Legal clarity ensures compliance with established regulations, while strategic planning integrates long-term goals for sustainability and resilience. Effective conflict resolution mechanisms and continuous monitoring and evaluation further enhance governance effectiveness, ensuring decisions are timely, informed, and aligned with societal and environmental needs. SECTOR INSTITUTIONS Institutional Institutions in the sector have robust internal capabilities and internal Capacities processes and adequate personnel. They continuously invest in training, resources, and technology to enhance effectiveness. They have the expertise and resources necessary to implement innovative solutions, address complex water issues, and meet emerging challenges. (continues on next page) 61 UTILITY OF THE FUTURE Clear Clear institutional roles and responsibilities minimize overlap and ensure Institutional efficient coordination among agencies involved in water supply, sanitation, and Roles and resource management. They foster accountability, enhance decision-making Responsibilities processes, and promote effective implementation of policies and programs. INTERGOVERNMENTAL RELATIONS Intergovernmental Effective coordination of local, regional, and national governments allows for Coordination harmonizing policies, sharing resources, and addressing water challenges comprehensively. Collaboration facilitates cohesive policy implementation, optimizes infrastructure development, and enhances responses to water-related crises. It involves establishing cohesive policy frameworks, communication channels, and shared decision-making processes to optimize resource allocation, mitigate jurisdictional conflicts, and address water challenges across administrative boundaries. Alignment of Aligning long-term goals across governmental levels and stakeholders Long-Term Goals promotes consistency in water management strategies, investment priorities, and environmental stewardship. It ensures sustainable development, resilience to climate change impacts, and equitable access to water resources for future generations. Alignment ensures consistency in policy implementation, resource allocation, and investment priorities, promoting resilience, sustainability, and equitable access to water resources over time. FINANCING Sustainable Financing mechanisms diversify funding sources, incorporate innovative Financing financing models, and ensure transparency and accountability in financial Mechanisms management. They secure adequate resources for infrastructure development, maintenance, and service delivery while promoting long-term financial stability and resilience to economic fluctuations. Effective Tariff Tariff structures strike a balance between affordability for users and revenue Structures sufficiency for operational maintenance and infrastructure investments. These structures are based on accurate cost assessments, socioeconomic considerations, and transparent governance processes, ensuring fairness, public acceptance, and sustainable financial viability of water services. Transparent tariff-setting processes help generate revenue for operations, maintenance, and infrastructure upgrades while protecting vulnerable populations. REGULATION Clear Regulatory Clear regulatory standards establish and enforce rigorous guidelines for water Standards quality, service reliability, and environmental protection. These standards are supported by robust monitoring, compliance mechanisms, and swift enforcement actions to safeguard public health, ensure service consistency, and maintain ecological integrity. Monitoring and Monitoring and compliance mechanisms involve real-time data collection, Compliance regular assessments, and transparent reporting to track adherence to Mechanisms regulatory standards and operational performance in the water sector. These mechanisms enable proactive management, timely corrective actions, and public accountability, ensuring effective governance and continuous improvement in water service delivery. 62 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Appendix B.  Customer Service Component Description 1 2 3 4 5 RELIABLITY Continuity Average number of (hours per day hours per day that on average) water or sanitation services are available. It reflects the consistency of service delivery and helps assess <8 ≥8–15 >15–20 >20–24 24 the reliability of the utility’s infrastructure and operations. Higher values indicate a more consistent service supply. Continuity Percentage of (customers customers who with 24/7 receive water or supply) (%) sanitation services continuously, 24 hours a day, seven days a week. It <5 ≥5–25 >25–60 >60–<100 100 highlights the extent of uninterrupted service provision and can signal the reliability of the utility’s infrastructure. Availability ​ Average daily (l/pc/day) volume of water provided to each connection. It indicates how well <30 ≥30–50 >50–120 >120–240 >240 the utility meets the demand for water and the adequacy of the supply to fulfill customer needs. (continues on next page) 63 UTILITY OF THE FUTURE Component Description 1 2 3 4 5 Availability of Percentage of FSM emptying requests for fecal services sludge management (provided emptying services 24 hours that are fulfilled after service within 24 hours of <30 ≥30–50 ≥50–75 >75–90 >90–<100 requested) (%) request. It reflects the responsiveness and efficiency of sanitation services in meeting urgent customer needs. SAFETY Water quality Percentage of (samples water samples that meeting comply with all World all WHO Health Organization guidelines for guidelines for <50 ≥50–85 >85–95 >95–97 >97–<100 drinking water drinking water quality) (%) quality. It provides insight into the safety and health standards of the water supply. Wastewater Percentage of and fecal wastewater and sludge fecal sludge that treatment (%) undergoes treatment before disposal or reuse. It is critical <30 ≥30–50 ≥50–75 >75–90 >90–<100 for ensuring environmental protection and public health by minimizing the impact of untreated waste. INCLUSIVENESS Drinking water Percentage of the coverage (%) population with access to improved and reliable drinking water sources. It highlights the <50 ≥50–75 >75–85 >85–95 >95–<100 extent to which the utility serves the community and meets basic water needs. (continues on next page) 64 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Component Description 1 2 3 4 5 Sanitation Percentage of the service population with coverage (%) access to improved and reliable sanitation services. It reflects the utility’s <10 ≥10–20 ≥20–50 >50–80 >80–<100 effectiveness in providing essential sanitation facilities and services to the community. TRANSPARENCY* Key Percentage of key information information about disclosure (%) utility operations, such as performance data and service standards, that is disclosed to the <20 >20–40 >40–60 >60–80 >80 public. It measures the transparency of the utility and its commitment to keeping stakeholders informed. Application of Percentage practices to of practices generate clear implemented by information (%) the utility to ensure that information provided to stakeholders is clear <20 >20–40 >40–60 >60–80 >80 and understandable. It assesses the effectiveness of the utility in communicating information transparently. Application Percentage of of practices practices adopted to for ensuring ensure the accuracy accurate of information information (%) provided by the utility. <20 >20–40 >40–60 >60–80 >80 It reflects the utility’s efforts to maintain high standards of data integrity and reliability. (continues on next page) 65 UTILITY OF THE FUTURE Component Description 1 2 3 4 5 RESPONSIVENESS Customers Percentage of satisfied with customers who service (based express satisfaction on assessment with the utility’s in the past two services, based on years) (%) assessments or <20 >20–40 ≥40–55 >55–70 >70–90 surveys conducted over the past two years. It reflects the utility’s performance in meeting customer expectations. Grievances Percentage of satisfactorily customer grievances resolved within that are resolved seven days (%) satisfactorily within seven days. It highlights the <20 <25 ≥25–50 >50–70 >70–<100 efficiency and effectiveness of the utility’s complaint resolution processes. Percentage of Percentage of sewer sewer blockage blockage complaints complaints that are addressed addressed within 48 hours. within 48 hours It indicates the (%) responsiveness <10 ≥10–25 ≥50–75 >75–90 >90–<100 of the utility in managing and resolving sewer- related issues promptly. 66 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Appendix C.  Performance Level Assessment Element Description 1 2 3 4 5 COMMERCIAL OPERATIONS Collection rate (%) Percentage of billed revenue that a utility successfully collects from <60 ≥60–70 >70–90 >90–95 >95 its customers within a specified period. Metering rate Percentage of (customers customers whose metered) (%) water consumption is measured by meters. It reflects the extent <25 ≥25–60 >60–85 >85–95 >95 to which a utility has installed meters to accurately monitor and bill water use. Service Percentage of customer complaints service complaints that resolved are resolved within a specific timeframe. It indicates the <60 ≥60–80 >80–90 >90–95 >95 effectiveness of the utility in addressing and resolving issues reported by customers. TECHNICAL OPERATIONS NRW (liters/ Nonrevenue water connection (liters/connection per per hour when hour when the system the system is is pressurized) NRW pressurized) refers to the amount of water produced but not billed to customers >50 >25–50 >12–25 >6–12 ≤3–6 due to leaks, theft, or other losses. This metric measures the volume of NRW per connection per hour when the system is under pressure. (continues on next page) 67 UTILITY OF THE FUTURE Element Description 1 2 3 4 5 Nonrevenue water Nonrevenue water (%) percentage represents the proportion of water produced by a utility >40 >20–30 >10–20 >5–10 ≤5 that is not billed to customers due to losses or unauthorized use. Sewer blockages Frequency of sewer (blockages/100km) blockages per 100 kilometers of sewerage infrastructure. It reflects >30 >20–30 >10–20 >5–10 ≤5 the efficiency of sewer system maintenance and management. FINANCIAL MANAGEMENT EBITDA margin EBITDA margin (%) represents the proportion of a utility’s earnings before interest, taxes, depreciation, and <0 >0–5% ≥5–19 >19–30 >30 amortization relative to its total revenue. It indicates the utility’s operational profitability. Operation cost Percentage of coverage (%) operational costs covered by the utility’s revenue. It indicates the utility’s <60 ≥60–80 >80–90 >90–100 >100 ability to finance its operating expenses through its income. HUMAN RESOURCE MANAGEMENT Staff per Number of utility staff 1,000 connections per 1,000 customer connections. It provides insight into the staffing >10 >6–10 >5–6 >3–5 ≤3 levels relative to the number of connections and can indicate operational efficiency. (continues on next page) 68 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Element Description 1 2 3 4 5 Employee turnover Employee turnover rate rate measures the rate at which employees >10 >7–10 >5–7 >3–5 ≤3 leave the utility and are replaced over a specified period. HR costs as % of Proportion of total total operating operating costs that are costs attributed to human resources expenses. It provides insight into <20 ≥20–40 >40–60 >60–80 >80 the cost of managing the workforce relative to overall operational expenditures. ORGANIZATION AND STRATEGY Adherence to Extent to which the planning schedule utility adheres to its planned schedules for project implementation and other operational <30 >30–50 >50–70 >70–900 ≥90 activities. It indicates the utility’s ability to meet deadlines and manage projects efficiently. Adherence to Extent to which the utility budget adheres to its allocated budget for various activities and projects. <30 >30–50 >50–70 >70–900 ≥90 It reflects the accuracy of financial planning and control. 69 UTILITY OF THE FUTURE Appendix D.  Useful Resources and Tools The following resources and tools informed the World Bank Water Global Practice’s develop­ ment of the UoF program and UoF Toolkit. Enabling Environment and Finance 1. High-Level Panel on Water Financing:Easing the Transition to Commercial Finance for Sustainable Water and Sanitation 2. Ministers of Finance Meeting Summarizing Recommendations: Financing Options for the 2030 Water Agenda 3. Official Development Assistance in Water:Aid Flows to the Water Sector 4. Financial Inclusion: Fintech for the Water Sector:Advancing Financial Inclusion for More Equitable Access to Water 5. Working Paper on Accessing Financial Resources for Climate Adaptation in Transboundary River Basins: Financing Climate Change Adaptation in Transboundary Basins: Preparing Bankable Projects 6. Working Paper on Capital Subsidies:Capital Subsidies Implicit in Concessional Finance 7. Urban Water Synthesis:Reform and Finance for the Urban Water Supply and Sanitation Sector 8. Blended Finance: Achieving Universal Access to Water and Sanitation by 2030: The Role of Blended Finance 9. Policies, Institutions, and Regulations:Aligning Institutions and Incentives for Sustain­ able Water Supply and Sanitation Services 10. Discussion Paper on Regulation:Regulation of Water Supply and Sanitation in Bank Client Countries: A Fresh Look 11. Utility Turnaround: Water Utility Turnaround Framework 12. Subsides: Doing More with Less:Smarter Subsidies for Water Supply and Sanitation 13. Capital Expenditure Efficiency:Better Use of Capital to Deliver Sustainable Water Supply and Sanitation Services: Practical Examples and Suggested Next Steps 14. Public-Private Partnerships in the Water Sector:Delivering Universal and Sustainable Water Services: Partnering with the Private Sector 15. Commercial Finance: Introducing Commercial Finance into the Water Sector in Devel­ oping Countries 16. Foundational Maximizing Finance for Development (MFD)(joint publication with IRC and Water.Org): Mobilizing Finance for WASH: Getting the Foundation Right 70 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL 17. Blended Finance: a. Facilitating Access to Finance for Household Investment in Sanitation in Bangladesh b. Facilitated Access to Finance for Domestic Private Water Operators in Cambodia c. Institutional Blending via Second-Tier Lender FINDETER in Colombia d. Scaling Up Blended Financing for Water and Sanitation in Kenya e. Pooled Municipal Bond Issuance in Tamil Nadu (India) f. Blended Financing for the Expansion of the As-Samra Wastewater Treatment Plant in Jordan g. Municipal Bond Issue by the Municipality of Tlalnepantla de Baz (Mexico) h. Water Revolving Fund in the Philippines i. Municipal Project Finance in the Municipality of Rustenburg (South Africa) 10. Change Management Toolkit: Tips, Tools, and Techniques for Leading a Successful Change Initiative—University of California–Berkeley: https://hr.berkeley.edu/sites/ default/files/change_management_toolkit.pdf. Energy Efficiency 11. Energy Efficiency Guidance Note: Mainstreaming Energy Efficiency Investments in Urban Water and Wastewater Utilities 12. Energy Management for Water Utilities in Latin America and the Caribbean—Case Studies 13. Exploring Energy Efficiency and Energy Recovery Potential in Wastewater Treatment Plants 14. Primer on Energy Efficiency for Municipal Water and Wastewater Utilities Resilience 15. Building Resilience of WSS Utilities to Climate Change and Other Threats: A Roadmap 16. Resilient Water Infrastructure Design Brief 17. Efficient and Effective Management of Water Resource Recovery Facilities 18. From Wastewater to Resource 19. Wastewater to Resource Initiative—Case Studies Inclusion 20. Women in Water Utilities: Breaking Barriers. For other relevant Water Global Practice publications, please visit Knowledge Highlights from the Water Global Practice and GWSP 2016–2023. 71 UTILITY OF THE FUTURE Appendix E. Glossary Accounts receivable (days): The average number of days that a customer invoice is outstanding before it is collected. This is accounts receivable (net of provisions for doubtful accounts) divided by revenues and then multiplied by 365. This indicator allows an organization to evaluate the effectiveness of its credit and collection efforts. Action planning process: A 15-step approach to translate the results of the Utilities of the Future diagnostic assessment into a prioritized and sequenced action plan. Area: Used in the maturity assessment of the five elements of water utility management, an area is a broad category under which specific topics are covered. Examples include meter­ ing, billing, and collection (commercial operations); expansion and rehabilitation planning, asset management, and water treatment and quality (technical operations); budgeting, cash flow management, and accounting and financial reporting (financial management); human resource management and development, recruitment, and compensation (human resource management); and organizational direction, strategic and business planning, and monitoring and reporting (organization and strategy). Collection rate: The percentage of the total amount billed that is actually collected. It is calcu­ lated as cash collected divided by revenues. Commercial losses (or apparent losses): These losses include all types of inaccuracies asso­ ciated with customer metering as well as data handling errors (meter reading and billing), plus unauthorized consumption (theft or illegal use). Commercial operations: One of the key water utility management areas, it deals with cost recovery and customer engagement in the utility (including metering, billing, collections, and customer records). Connections: The fixtures, joints, and pipes connecting the main to the measurement point or the customer curb stop, or where several registered customers share a physical hookup. Continuity: A period of uninterrupted water distribution to customers divided by the maximum possible period (24 hours per day, 365 or 366 days per year). 72 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Coverage: The population with access to water services (either with a direct service connection or within reach of a public water point) as a percentage of the total population under the utility’s service responsibility. Customer: An individual or organization that is an authorized recipient of water services from the utility. Earnings before interest, tax, depreciation, and amortization (EBITDA): A measure of an organization’s operating performance, evaluated without factoring in financing decisions, accounting decisions, or tax environments. EBITDA is calculated by adding back the noncash expenses of depreciation and amortization to an organization’s operating income. Economic level of nonrevenue water (NRW): The level of water losses that results from a policy under which the marginal cost of each individual activity for managing losses can be shown to be equal to the marginal value of water in the supply zone Element: A pillar of sound management and performance for water supply and sanitation (WSS) utilities. Enabling environment: Characterized by the legal and governance framework, the enabling environment affects what actions the utility can take and when. It is important to know the current state of a utility’s enabling environment to better understand binding constraints preventing the utility from taking action. Indicators of the quality of the enabling environment are measured against the system for setting service standards, the system for setting tariffs, institutional setup, financing, and autonomy and accountability. Financial management: The process of establishing procedures and mechanisms to ensure that the utility is financially sustainable. A financially sustainable utility covers its reasonable costs with a relatively predictable income stream, primarily derived from tariffs charged to its customers.​ It uses that income stream efficiently by controlling expenses and managing cash flow. Greenhouse gas (GHG): A gas that absorbs and emits radiant energy within the thermal infrared range, causing the greenhouse effect. Human resource management: The process of developing and managing human resources effectively. This process entails, for example, developing and implementing a staffing plan that 73 UTILITY OF THE FUTURE is consistent with the utility’s multiyear strategy and that incorporates staff evaluations and training as they relate to performance management. Inclusion: “The process of improving the ability, opportunity, and dignity of people, disadvan­ taged on the basis of their identity, to take part in society” (World Bank 2013); and “leveraging the utility’s assets and operations to benefit the larger community, lessen negative impacts from utility activities, and provide service equitably across the service area, particularly for traditionally underserved neighborhoods” (AWWA 2019). Innovation: “A change made in the nature or fashion of anything; something newly introduced; a novel practice, method, and so on” (OED Online n.d.). Market and customer orientation: The utility operates like a firm in a competitive market, prioritizing efficiency and customers’ wants and needs, and treating its customers as if they could change their service provider if unsatisfied. Maturity: The state of a water utility ranging from 1 (elementary) to 5 (world class). Measured by qualitative indicators in each of the five elements of utility management (commercial operations, technical operations, financial management, human resource management, and organization and strategy). Nonrevenue water (NRW): The difference between the volume of system input and billed authorized consumption. NRW includes not only real and apparent losses (that is, physical and commercial water losses), but also unbilled authorized consumption. Organization and strategy: An overview that accurately diagnoses the utility’s financial, opera­ tional, and commercial situation. A well-developed organization and strategy provide the most accurate picture possible for setting yearly targets and overall objectives for the utility. As the utility improves its performance, the information it has available will increase and become more precise. A utility should define a multiyear plan on the basis of the current situation and desired performance. The plan should clearly define multiyear targets, the actions required to meet those targets, and the resources needed to finance actions. Performance: Measured by quantitative indicators in each of the five elements of utility management (commercial operations, technical operations, financial management, human resource management, and organization and strategy). 74 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL Physical losses (or real losses): Actual water losses from the system and the utility’s storage tanks, up to the point of customer use. In metered systems, this point is the customer meter. In unmetered situations, it is the first point of use (tap) within the property. Reliable: 24/7 continuous water supply. Resilience: “The capacity of any entity—an individual, a community, an organization, or a natural system—to prepare for disruptions, to recover from shocks and stresses, and to adapt and grow from a disruptive experience” (Rodin 2014). Responsive: Dedicating personnel to customer engagement and prioritizing customer satisfaction. Safe: Adhering to quality standards. SDG 6: Sustainable Development Goal for water—”to ensure availability and sustainable man­ agement of water and sanitation for all” (United Nations n.d.[b]). Service: Measured by reliability, safety, inclusivity, transparency, and responsiveness. Smart water utility: A utility that adopts innovative approaches and technologies to (1) create a resilient water supply, (2) provide effective wastewater management, and (3) build a responsive utility. This concept includes the principles of resilience, financial and operational efficiency, energy and water efficiency, inclusion, circular economy, innovation, and good governance. Maturity depends on a list of qualitative practices (such as what type of accounting system is used to prepare financial statements and how assets are managed). The legal framework and governance, which represent the enabling environment, are at the bottom of the pyramid because they shape the utility’s governing environment. Subsidies: A subset of funding flows among governments, service providers, and customers. Subsidies occur when a user/customer pays less for a product or service than the service provider’s cost, leaving a third party (for example, government, other users, future generations) responsible for covering the difference. Tariff: The price or prices a water provider charges its customers for water services. 75 UTILITY OF THE FUTURE Technical operations: One of the five elements of water utility management, involving areas related to infrastructure and tangible components of the water supply process. These areas include expansion and rehabilitation planning, asset management, water treatment and quality, distribution and nonrevenue water, wastewater and fecal sludge management, energy efficiency, and circular economy. Topic: One maturity matrix per element, which is divided into areas (such as billing) and topics (such as billing frequency). Each topic corresponds to one row in the matrix and includes one or more practices per level. The utility’s maturity level for each topic is determined by the practice that best matches the utility’s current state. Each topic also includes practices that are charac­ teristic of a Utility of the Future. These practices are categorized on the basis of four dimensions: innovation, inclusion, market and customer orientation, and resilience. Not all dimensions apply to all topics. Transparent: Auditing and publishing operational data. Utility of the Future (UoF) framework: Provides a step-by-step approach to initiating and maintaining reform efforts that set a utility on a path to becoming a Utility of the Future. Utility of the Future: A future-focused utility that provides reliable, safe, inclusive, transparent, and responsive WSS services through best-fit practices that allow it to operate in an efficient, resilient, and sustainable manner. Utility Turnaround Framework (UTF): This framework offers guidance for turning around poorly performing WSS utilities and identifies five critical elements of sound management and perfor­ mance: technical operations, commercial operations, human resource management, organization and strategy, and financial management. Utility: A formal provider of water or sanitation services through a network. Water balance: A top-down audit of physical (real) losses of the whole system, starting with​ the total system input. A well-established water balance requires estimates of water volumes to​ be made at each measurement point applicable to the system being evaluated. Where actual measurements are available, these data should be used. In the absence of meters, a best estimate based on other, related available data and sound judgment may be required. A water balance 76 TAKING WATER AND SANITATION UTILITIES BE YOND THE NE X T LE VEL is normally computed over a 12-month period and, thus, represents the annual average of all components. Water losses: The difference between system input and authorized consumption. Water losses can refer to the total volume for the whole system, for partial systems (such as transmission or distribution schemes), or for individual zones. Water losses consist of physical and commercial losses. Water services: Services involving the supply of water to people and organizations, the removal of wastewater from their premises, and the drainage of water from areas where it is not wanted. 77 SKU W24040