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Customer Stewardship Blueprint

Bedrock principles and pillars of practice
This blueprint is devised to help organisations achieve and consistently track towards customer stewardship in infrastructure.

The pillars and the underlying bedrock of values and principles are intended to work together to strengthen capability and accountability across the many dimensions in planning, designing, building and operating infrastructure.

Bedrock

To achieve or consistently track towards customer stewardship relies on an organisational foundation that must rest on firm values and a customer-centred culture that endures over the long term. Human capital management, customer-centred design, sustainability management, privacy and data integrity are essential bedrock values and principles that infrastructure service operators must establish before seeking to undertake customer stewardship.

The impact of these inputs is summarised as follows:

an improving culture, management of specific opportunities and risks, including health and safety, employee performance and incentives, are probably more likely to fit with a stewardship ethos.

For example, better practice consists of service providers that:

–   establish systems and processes to manage all aspects of human capital and its development

–   evidence the importance of organisational culture. Ensure incentives for staff and executives are transparent and linked to customer outcomes

–   keep a record of managing key risks such as health and safety, employee performance management and transparency, around incentive structures.

For example, how executives and staff are paid can influence their priorities to focus on quality of customer support and affect the quality of interaction with customers.

Linking pay and salaries to the delivery of relevant customer outcomes is one mechanism for testing whether the entity has aligned its incentives structures with customers. Linking pay to relevant customer service outcomes is an indicator the infrastructure service provider regards customer outcomes as materially important.

Investing in employee skill development, hiring practices, proactively managing employee performance and organisation culture programs are mechanisms that support organisations to deliver over the long term.

Strengthening human capital management is a bedrock value and cultural foundation that can help set up the infrastructure sector to achieve greater self-direction and self-regulation. In other words, less government intervention that can be prescriptive and reduce scope for a more dynamic, innovative partnership implied with customer-led infrastructure.

People matter in infrastructure and ensuring all systems and processes reinforce a customer-centred culture based on principles rather than rules.

is concerned with the extent an entity can demonstrate evidence of systems to measure and adjust in the process of sustaining long-term customer loyalty. This is fundamental in blending together short- and long-term considerations of customer stewardship.

The integration of customer needs and preferences into decision-making for infrastructure design and ongoing service delivery is pivotal to customer stewardship.

For example, better practice consists of service providers that:

–   establish and implement customer management systems that reinforce a customer-focused culture

–   put customers at the centre of everything that they do, and have systems that continue to address customer needs and preferences over time using existing ways to measure net promoter scores, satisfaction and other customer listening practices that:

»   demonstrate structures, processes and programs to gain continuous customer insights and customer feedback, focusing on: maintaining operational excellence

»   develop and maintain a customer-driven culture

»   deliver clear, simple and transparent information, services, or transactions so that customers get the most from the experience.

This bedrock value and cultural setting is broader than customer satisfaction, which is generally defined as being affected by recent experience at the point of consumption. Customer management systems need to have a focus on the long term and are about ensuring customer experience is repeated and enduring.

Customer-centred design seeks to instil a culture of continuous improvement. It is also highly consistent with evidence-based decision-making, where qualitative and quantitative data are more central.

These practices are helpful to proactively respond to challenges and adapt in the face of changing customer expectations.

is where management practices are focused on delivering long-term outcomes. Evidence that sustainability considerations are integrated into management practices would include:

–   alignment of executive remuneration to long term outcomes

–   consideration of long-term environmental and social risks

–   demonstrated commitment to planning.

is where management practices are focused on managing data with respect for individual privacy with data systems that protect against cyber hacking. Data is critical for better evidence-based  decision-making  and  improved service delivery. Evidence that privacy and data integrity are integrated into management practices would  include:

–   infrastructure risk management systems integrated with privacy and data

–   data used for executive management decisions, with a focus on ways new insights can be extracted from data drilling.

The Expert Reference Group developed five statements that are intended to serve as customer stewardship pillars of practice to support and sustain a long term ‘cycle of trust’ for infrastructure. These pillars are summarised in table 1.

Pillars of practice

The pillars are outcomes focused and effectively combine to communicate simply to customers and communities the qualities, principles and values that they can expect to be applied to the infrastructure that they use today, and how it will be planned and operated into the future.

Why it matters?

Customer stewardship requires infrastructure to work as a coherent system that is connected and integrated, functioning as part of a seamless, interdependent network.

Connectedness is important because infrastructure customers, communities and the economy rely  more than ever on highly functional interdependent networks to support economic and social well-being over the long term. Connectedness must bridge both the physical and technology dimensions of infrastructure assets and service provision.

What needs to change?

It goes beyond short-term functional relationships, so infrastructure assets and services can continuously adapt with the customer, stakeholders and the economy over the long term. To do this, connectedness when it operates well as a pillar ensures adjacent infrastructure complement each other to work as a network that can transform customer behaviour, service outcomes and regulation.

Putting it into practice

Connectedness must seek to ensure there is a strong alignment of values, and a shared commitment to securing outcomes that extend beyond the traditional boundaries of infrastructure assets and operations to the networks its customers rely upon, regardless of public or private ownership, including payment and information systems.

For example cars, buses and trains may all be used to complete a single journey and rely on an integrated connectedness that is physical,informational and payment-dependent to deliver a desired outcome. Breaks in connectivity areimmediately obvious to customers of the network as they traverse it, and have immediate adverse effects.

While a water network, for example, is usually managed by one entity, it is still in reality a network of many elements of public and private infrastructure, with very similar connectedness requirements. In these cases, customers of the network may only notice connectedness failures  at the end point of the network or in its outcomes, rather than along the supply chain journey.

Infrastructure assets and networks should  always make living and working both easier, more productive and resilient. In doing so they power better long-term economic and social opportunities for our communities and the nation in the future.

Are we there yet?

What to look for in your organisation includes but is not limited to:

–   evidence of policies and processes where the infrastructure asset operator demonstrates awareness of dependence of connected and adjacent networks

–   evidence the entity is investing and working beyond defined institutional boundaries where necessary to ensure stewardship practices improve its economic, social and environmental ecosystems

–   is there evidence the entity is active with ‘blue sky’ alternatives that originated with customers, stakeholders and communities through the development of trials and pilot schemes

–   evidence the entity is responding to customer demand, including considering new investments, mainly using business as usual/profit, operational measurements

–   evidence that focus is on managing risks, with risk management processes incorporating broader network considerations, and values reflect community strengthening.

 

Why it matters?

Customer stewardship requires infrastructure that ensures informed choice for customers and stakeholders.

Informed choice is important because it equips customers and stakeholders with the necessary information to choose wisely and with an understanding of the consequences of their decision. For owners and operators this is valuable in informing the allocation of capital and other resources efficiently and effectively today and in planning for the future.

What needs to change?

Too often the decision to invest is an administrative/ bureaucratic process devoid of customer input or discovery mechanism to identify preferences.

Inherent and fundamental to this pillar is the quality, accuracy and timeliness of information and data to inform when and how to engage with the infrastructure asset and services to best meet their particular needs and preferences.

Good choices can only be built on good information that is inclusive of price to reflect cost of delivery, and access to a range of different quality of services.

Putting it into practice

Informed choice applies to two broad categories:

Customer choice: users and customers can make good decisions to meet their unique needs and preferences, eg choose an energy supplier, transport mode and route; decisions concerning whether or not to buy adjacent services, such as a home water filter or home energy storage device. It is critical that information for the customer is presented simply so they can act upon it to fulfil their preferences. A ‘price discovery mechanism’ is desirable wherever possible through choice of different prices for service quality outcomes, especially in respect to peak periods of demand. Information given to customers should not be  limited to financial costs – sustainability, security, convenience and so forth all represent costs that customers should have access to quality information so as to inform their decisions.

Stakeholder choice: organisations, governments and communities are able to make the right investment decisions, eg do we need a wider road, a desalination plant, a new power station, or an upgraded stadium, and with what attributes? Capital allocation decisions are then led by the use of customer needs and preferences, willingness to pay, data, benefits, and direct customer engagement, to support enhanced infrastructure efficiency and efficacy. Unlocking deeper customer interaction with asset owners, and facilitating an environment for informed choice in new products and services can encourage the better use of existing assets, before committing to building new assets.

Are we there yet?

What to look for in your organisation includes but not limited to:

–   evidence the entity can demonstrate willingness to interact with customers, with its focus on delivery of basic outcomes in terms of information and choice to aid customer outcomes

–   evidence the entity is seeking to address passivity from customers faced with too much choice or choice that is too complex to effect positive change for them

–   evidence of reaching out to provide customers with information to aid choice, eg when to engage, best ways/means to do it

–   evidence the entity is accelerating its interaction with customers, with new trials and pilot programs to inform its capabilities and product/service development.

–   evidence that price for quality offering is being pursued.

 

Why it matters?

Adaptable infrastructure is important because these asset and service networks must be dynamic parts of our society not historical relics.

Customer stewardship requires infrastructure that can change, be repurposed, and made more resilient to meet long-term economic, social and environmental challenges and opportunities of the future.

What needs to change?

There is too much focus on design and construction of physical assets and too little attention to whole of life incentives to change, and where restrictive contractual and regulatory practices prevent innovation, customer and community-centricity that undermine long-term productivity, economic growth and liveability.

Putting it into practice

Infrastructure planning and management must be hardwired for adaption to customer needs, and where necessary have well defined independent and transparent mechanisms (ie merit and judicial review processes) that enable change to occur.

Private investors must also seek to be better at adapting infrastructure, and embrace the benefits of managing risk and seizing new opportunities through use of debt and equity holdings to support long- term dynamic change wherever possible.

Infrastructure should continually adapt to and deliver services when and how customers want them today, and into the future, based on fair and reasonable costs of provision, pricing and quality of service. Risk and innovation should be central to planning to allow flexible responses to, for example, changing technology, trends in disruptive activities and shifts in customer preferences and behaviour.

Where infrastructure appears inflexible, flexibility should still be sought. For example, while a road tunnel cannot be easily widened or changed once built, dynamic lane control may make it adaptable to meeting customer, stakeholder and investor expectations.

Easy substitution is a valid form of adaptability.  That is, if an asset is designed to be easily replaced, upgraded or substituted at reasonable cost, convenience and sustainability, then it serves the adaptability goal even it if is not adaptable in itself. This process of substitution generally occurs through a well- functioning network of interconnected assets and services.

Are we there yet?

What to look for in your organisation includes but not limited to:

–   evidence the entity has structured its approach to innovation and risk management through master plans, eg 20-year horizon/5- year update. Weighted Average Cost of Capital (WACC) drive capital decisions; the market sets expected returns

–   evidence the entity understands innovation from a technology perspective; reacts to disruption where it affects business

–   evidence risk plans are signed off at board level with individual board members responsible via sub-committee

–   evidence master plans and capital budgets are delivering; the entity will embed trials into planning cycles to build enhanced organisational capability for dynamic change

–   entity proactively embeds innovation in decisions, implements trials, scans the horizon

–   evidence risk matters for whole board, with entity demonstrating evidence it understands and practices the connection with innovation and planning evidence long-term environmental and social risks are considered.

 

Why it matters?

Transparency is important so infrastructure can be an agent of change pursuing continuous improvement, not a static asset. It can help keep political interference in-check, identify under and exemplary performance and inform follow up actions with investors, operators, market disruptors, regulators and customers.

Customer stewardship requires infrastructure that is accountable to long term goals throughout its life cycle; where operational performance and governance of data and payment systems are transparent and open to regular review.

What needs to change?

Infrastructure assets should provide quality and timely information through an open platform that enables the previous informed choice pillar, making it easy to determine how, what and where to use an asset or service while driving contestability through innovation and investment.

Putting it into practice

Community trust is significantly sourced from transparency being consistently applied to all lifecycle phases, assessment, implementation, strategic planning and ongoing operations.

Transparency requires formal and embedded practices, including reporting, disclosure and governance, in a manner that protects these practices in the long term from individual decisions, political cycles or any other short-term demands.

Are we there yet?

What to look for in your organisation includes but not limited to:

–   evidence the entity reports on an annual cycle focusing on issues that are seen to be sensitive to stakeholders

–   evidence the entity provides some disclosure of its approach to human capital management and customer-centred design

–   evidence the entity is progressively and innovatively embedding transparency into management practices with a

readiness to communicate in ways to meet customer and community expectations outside of annual reporting cycles

–   evidence the entity understands the importance of enhanced reporting on approach to human capital management and customer-centred design

–   evidence the entity is moving away from a disclosure approach to transparency to embrace stakeholder engagement.

Why it matters?

Lifting economic and social inclusion, along with enhanced environmental outcomes must be done through open and contestable mechanisms. Serving all in society is important because infrastructure must continue to demonstrate that it can address economic, social and environmental challenges for all, not just those that can afford to pay for it.

What needs to change?

Customer stewardship requires infrastructure that serves all members of society, over its long life to a satisfactory standard.

Serving all requires government and private owners and operators working together; where efficiency and efficacy of regulation, pricing and subsidies supporting universal access can be sustained over the long term.

Transparency is essential to this pillar, to invite innovation and competitive disruption without being dominated by vested interests; while continuing to attract long-term private investment and enterprise

Putting it into practice

Several layers of ‘serving all’ are recognised when putting this pillar into practice, and all of these should be addressed where appropriate to the infrastructure in question.

–   Personal benefit: some assets and services must provide direct benefits for all, eg for essential services like water or energy, along with access to labour markets through use of toll roads, are recognised as being important.

–   Indirect personal benefit: some assets may provide indirect benefits to a segment of the community, eg the rail link I never use still speeds up my drive to work; these benefits to indirect beneficiaries must be considered and maximised.

–   Societal benefit: some assets may provide only societal benefits to a segment, eg money is spent on a stadium I never use but I recognise society as a whole benefits from strong sports infrastructure provided it goes all the way to community-level facilities to champion wide-scale participation.

At no stage should a greater burden be placed on those that are disadvantaged when infrastructure changes, both for current and intergenerational stakeholders.

Are we there yet?

What to look for in your organisation includes but not limited to:

–   evidence the entity emphasises widespread community communications to inform stakeholders of areas of change

–   evidence the entity promotes special offers to all customers

–   evidence planning encompasses consideration of vulnerable and disadvantaged customers

–   evidence the customer charter impacts on management practices, including commitment to trial and pilot programs to support social inclusion

–   evidence the entity will report on performance and action plans to support continuous improvement in respect of social inclusion

–   evidence planning and investment decisions consider the outcomes of vulnerable and disadvantaged customers.