Infrastructure and Leadership: Nicola Shaw on Navigating Water, Energy, and Transport Sectors

[00:00:00] Piers Clark: Welcome to the Exec Exchange; 15-minute podcasts in which a leader from the water sector shares a story to inspire, educate, and inform other water sector leaders from across the globe. My name is Piers Clark and today my guest is Nicola Shaw, Chief Executive at Yorkshire Water.
[00:00:15] Nicola Shaw: Nice to be here Piers. Thank you.
[00:00:16] Piers Clark: We always start by delving into a little bit of background about our podcaster. So, tell me about your journey. How did you get to where you are today?
[00:00:24] Nicola Shaw: I started my career in transport, I spent a bit of time in energy, and then I joined the water sector about two and a half years ago. The UK has one high speed railway line. That's the railway line that runs from central London through to the channel tunnel. And that business, I started running it in 2011. I was there until 2016 and then in 2016, I moved to National Grid to run the electricity and gas transmission businesses for the UK.
We also at that point owned a gas distribution business, which is now Cadent. Part of what I was doing was selling that and then enabling the system operator to become independent. So, lots of change within that too.
[00:01:02] Piers Clark: What I want the audience to get a sense of is you're someone who's been very big in distributed infrastructure, whether it's transport or water or gas. And that you've been at the helm of some organizations through some pretty testing times. High speed rail, with all the government changes, that must have kept you awake.
[00:01:19] Nicola Shaw: Let's run right back to why I get into transport in the first place and why that's led to the various steps in my career. I basically left university thinking, "I'm interested in people and I'm interested in cities, that's where the excitement comes together for the economy, and where..." Actually, when I left university, the UK was seeing a depopulation of center cities still. We were sort of trending towards American lifestyle, and London had both employment and residential numbers coming down during the 1980s. It was only in the 1990s that it turned the other way. So, London was still, for the UK, obviously a hugely important attractor for business and wealth into our economy. But things didn't seem right. And I thought, if you can make life a little bit better in cities, then maybe you can make the economy work better and therefore, life better in general. So that's what got me into transport. It turned out I wasn't just interested in that I was interested in operations, the finances, the regulation, the political stuff. I spent the first major portion of my career, probably two thirds of it so far, has been in transport in both the network side, so in the infrastructure side, and in the operation side. So, I ran UK's largest bus business for five years. I think that was all about enjoyment. I found I enjoyed the people; people who are committed to doing something that serves other people is a really nice place to be.
[00:02:45] Piers Clark: Let's talk about Yorkshire Water before we get much further. Where is Yorkshire Water? How many people do you serve? What sort of things do you do?
[00:02:51] Nicola Shaw: So, Yorkshire Water is the water and sewage business for the UK's largest county which is Yorkshire. And we are based around Bradford, which is a city in the north of England. We also operate in Leeds, in Sheffield, Hull; all of those are cities that people might've heard of around the world. And we have a large agricultural and rural part of our business in North Yorkshire. Some beautiful national parks and areas of outstanding natural beauty that we operate in as well.
[00:03:21] Piers Clark: Let's talk about the main topic of today, which is you joined the water sector two and a half years ago, at a time when the industry was being, and these are my words, not yours, but demonized in the press. Partly because of the political structure that we had, partly because of the behaviors that certain water companies were adopting. What's it been like, and has there been moments when you've regretted taking on this role?
[00:03:43] Nicola Shaw: Oh, big question. Um, let me give you a bit more background to how I got to this decision, if that's helpful, which is, I decided to join the sector having spent six years at National Grid where I'd learned very much about two things. First about net zero. If I said cities and the development of cities was a kind of core driver of me going into transport, net zero is a core driver of me going to electricity and gas business, because I thought that was the next big challenge for economies, and I want to understand more about it. But I also wanted to see how management and leadership worked in a place where I wasn't deeply experienced in the detail. And I wanted to see how you do that. It's great, actually. It's how you think about influencing people is really very important because in the end, everything is delivered by people. It doesn't really matter whether you've got a good strategic vision or not. If they don't want to do it, it's not going to help.
[00:04:36] Piers Clark: I think distributed infrastructure, whether it's trains and stations or it's water companies with pipes and pumping stations, there's a lot of similarities between how you deal with companies that are all based around infrastructure. Would you agree?
[00:04:52] Nicola Shaw: So, networks; totally. And all of my training for transport was about the importance of links and nodes. So, understanding how a network works is important. Understanding how engineers think is also important. And I think your leadership of those types of businesses require that very much. So, I left National Grid thinking, I know the water sector is a mess. But in the UK, it was led by more women than female chief executives in any other sector. And, I'm generally of the view that, if things are broken, let's go and try to help fix it rather than stand back and just throw more mud at it. I knew it was going to be tough, but I also thought it was something that I'd like to see make progress. And I'd like women to know that we weren't vilified as the CEOs, because it's important that women CEOs are successful. And your point is, has it been as bad as I expected? Yes, and a bit worse. But no, I haven't ever thought I didn't want to do it.
[00:05:51] Piers Clark: Can you tell me some of the things that you're proud of that you've done so far and some of the things that you're hoping to do in the future?
[00:05:58] Nicola Shaw: Yeah, so we've changed our strategy at Yorkshire Water and it was one that was focused on a number of big pushes, but we decided we were going to be a bit clearer about what mattered to the business. So, we set out that we want to do the right thing by the environment and the right thing by our customers in order to achieve a thriving Yorkshire over the next 10 years. And that is really simple, but it is what people at Yorkshire Water think they're doing when they come to work. They think they're meeting customer needs and they're not affecting the environment negatively. It turns out that we do affect the environment negatively in a number of different ways at the moment, most of which relate to pollution into rivers. And that's the thing that has been particularly controversial in the UK. But at least setting out, we want to change that and we've got a plan to do. It was really important in both our external communication, but also actually engaging people in the business, um, about four and a half thousand staff.
And what we'd seen is a decrease in their engagement scores from about 2020 onwards. So, if you think the high point for almost all businesses was the pandemic about how people have felt engaged with their business, if it was doing what it should have been doing. Yorkshire Water was very attuned to its staff then, and we'd only been seeing that fall and fall and fall until we launched our new strategy, and since then, we've only seen it go up.
[00:07:20] Piers Clark: Everybody needs to have a reason for getting out of bed on a Monday morning and you've got to buy into the vision through the shadow of the leader who's at the helm and says this is what we're going to do.
[00:07:30] Nicola Shaw: If we hadn't been getting that, there was no way we were going to start improving our relationships with our customers, our regulators, politicians, or anybody. So, make sure we've got engaged staff who are delivering day in day out is really important.
[00:07:42] Piers Clark: So, in the UK we have a five-year regulatory cycle where we submit our business plans to our regulator. And they then make a determination, then you drive the business forward. Of course, it gives you some opportunities to do things in the next five years. Can you comment at all on those, or is that still a bit too secretive?
[00:07:59] Nicola Shaw: So, we have been investing about 5 billion over the last five years, we will be investing between 2025 and 2030 about 8-billion-pound sterling. Huge difference in investment levels, and a big focus of that investment is on improving river health through first reducing the number of discharges from our combined sewer overflows, which we have about 2100 across Yorkshire. So, reducing that, but also removing phosphorus and a number of other things. And then the other thing that I think is worth drawing out is a big investment in improving asset health, big mains replacement program, and a commitment to come back and have another look at asset health over the course of the next five years, which is, I think, a really interesting change for the sector as a whole. Asset health has been declining and we need to understand the link between that and performance and to be really clear about what needs to be invested over probably the next 30 years to replace a number of aging assets.
[00:08:58] Piers Clark: In the water sector we tend to treat our pipes and the amount of investment we put into them makes an assumption of them having lifetimes of a thousand years. You didn't have that in the gas sector and it always strikes me as being somewhat nonsensical that we just don't have the right approach to our asset infrastructure and the asset health.
[00:09:14] Nicola Shaw: I think the risk in the gas sector is very different. The risk of a failure in gas is enormous and its only downside. The risk of a failure in a pipe in water or in waste is of a different magnitude. It matters and we have to take it seriously, but the scale is different.
[00:09:33] Piers Clark: As you probably know, we always finish with a question about what advice would you give your younger self.
[00:09:39] Nicola Shaw: Yeah. Well, you now embarrass me because 25 years ago I was about 30. So, I'd been working for 10 years. I'd been abroad. I had been both trained at MIT in the US and then I'd worked abroad as a consultant and I'd been back in the UK for about a year.
[00:09:54] Piers Clark: I want to go back to the 30-year-old Nicola Shaw, not the 20-year-old Nicola Shaw. What would she say?
[00:09:59] Nicola Shaw: So, I think I would say encourage me to keep pushing, because that was a bit what I did, but there were moments when I thought I can't. And actually, you can always do a bit more than you think you can. And there were moments I think around, then when I was not very confident. And I was worried about things I was delivering and worrying more than I needed to.
So I would encourage people to keep pushing themselves because you can probably get a lot more out of yourself than you think at the time.
[00:10:29] Piers Clark: Thank you very much, Nicola.
You have been listening to The Exec Exchange with Piers Clark and my guest today has been Nicola Shaw, the Chief Executive at Yorkshire Water.
Please join us next time. Thank you.