I’ve had a distinct case of ‘OWS’ this week. Anyone else suffering from it? That’s Olympic Withdrawal Syndrome - missing that buzz of waking up to see if Team GB has won new medals overnight; the excitement of seeing some less traditional sports such as surfing or climbing; and the highs and lows on the faces of the athletes as years of hard work either pays off, or it doesn’t. Despite the lack of crowds, I loved Tokyo 2020 and all the emotion that top class competition can bring.

Competition also plays a major role in my working life. Having been at MOSL for just over a year now,  I’ve been reflecting on how competition is working in the non-household water market. As Finance Director, I’ve been particularly interested in the financial aspects of the market – from cost to serve and price protections to profitability.

And, stay with me on this, I’ve been thinking about the parallels between the competition on display in Tokyo, and the water retail market.

Comparing the non-household market with the Olympics games is maybe a little unfair – the games have been evolving for about 125 years whilst we are just approaching five years of market operation, with some big challenges still to resolve to let the market deliver its full potential for customers. But nonetheless, here are a few of the comparisons I have drawn and examples of where we might learn lessons from the world’s greatest sporting event.

Innovation. I love a gadget or a new bit of kit. This Olympics saw some new innovations which helped create some fantastic performances - some (controversial) new spikes, a super quick bouncy running track and of course the latest amazing bikes. Elite competition drives innovation with athletes always looking for an edge. A competitive market should do the same – enabling innovation and new ideas to encourage efficiency and improve service. But the non-household market may not yet be set up for these opportunities. If we imagine the market as an Olympic road cycle race, it’s pretty difficult for a team to succeed even with a shiny new bike if its riding on a pot-holed muddy trail  – you may as well be on an old Raleigh Chopper!

Working with Ofwat and trading parties, MOSL is trying to ‘improve the track’ so that the basics of the market work more smoothly and new types of innovation have a clearer route to success. For example, the new Bilaterals hub will make it quicker and cheaper for retailers and wholesalers to interact and manage processes for customers. MOSL’s Data Insight Improvement programme is looking at ways we can cleanse and share data to make operating easier (and deliver environmental benefits) and the Strategic Metering Review has a number of ‘quick start’ projects to help simplify metering activities across the market. These should all make the basics of operating in the market easier, helping free up companies to innovate.

But some innovation can be expensive and this can make it challenging to get new ideas off the ground or developed fast enough. With wholesalers facing a stretching PR19, retailers making losses and the challenges of COVID-19 still being felt by all parties operating in the market (and business customers), how will trading parties be able to invest in innovation? Remember, that Team GB’s fortunes didn’t really turn until lottery funding kicked in in the early 2000s.

Well, the new Market Improvement Fund is not quite the national lottery, but it is one way that innovation and improvement projects are being encouraged. The fund takes some of the performance charges previously redistributed in something of a money merry go round, and uses them to fund market improvement projects (up to £150k, from an initial £1 million pot). The first round will open up for bids on 1 September and the fund presents an opportunity to kickstart innovative new projects focused on the non-household market.

Returning to the Olympics, my favourite sports were those where the Games represented the real pinnacle for the athletes. So I really enjoyed the likes of cycling, gymnastics, rowing and athletics – whereas football, golf and basketball didn’t quite feel the same when there are other trophies with equal or greater standing. This can mean you don’t quite see that same hunger to win in my view and often not all the top players enter. A challenge facing the water retail market, is that there may be some parts of the market that are not attractive enough to drive real competition. Really low consuming customers, for example, may be in danger of being the ‘event’ where very few can or want to compete, given the lack of returns available. If retailers aren’t really competing for these customers, then the risk is that service suffers and the market stagnates. For its part, MOSL is working with other market stakeholders on how we can reduce the cost to serve for these customers in the immediate and longer-term, tackling the ‘one size does not fit all’ issue and looking at ways to bring these customers into the ‘mainstream’ games.

The final aspect of the Olympics that always had me rivetted are those sports with real jeopardy - surfers tackling enormous waves, skateboarders taking on fiendish track layouts and cyclists going at speed without brakes. Many times over the last few weeks I heard commentators say that the organisers were pushing the limits in order to really test athletes, but had to be mindful that the tracks and challenges needed to remain in the ‘art of the possible’ as no-one wants everyone to fail.

Certainly, risk of failure is an important part of any competition and the non-household market is no different. Without risk, you have less reward for those willing to push themselves further, innovate and deliver a real quality performance. Again, it is useful to compare, and look at retailer failure risk. COVID-19 presented a huge challenge to retailers and it was clear that a wide range of measures would be needed to prevent more systematic failure. But there remain longer term risks. For example, the cost of additional bad debt may be felt for some time yet, with the additional cost being spread between retailers and businesses.

In a competitive market, some business models are not sustainable, and it is right that these may fail. However, the risk of a major retailer failing and other retailers not coming forward to take on affected customers remains high on MOSL’s risk radar. A review of the ‘supplier of last resort’ arrangements was included in Defra’s recently published Strategic Policy Statement consultation. It is an area that MOSL will continue to engage closely with Ofwat on, to ensure the market is resilient for current and future customers.

So there it is - my somewhat convoluted attempt at comparing the greatest sporting competition in the world with the still maturing non-household water market! The market needs to ensure that there remains some jeopardy and risk of failure, but that it is prepared for a ‘big fall’ and can respond accordingly. It needs to ensure that all of the events really are worth winning, with the right prizes on offer, and so are subject to real competition. And finally, it needs to ensure the right underlying conditions are in place so that competitors know it is worthwhile innovating and driving efficiency on their part.

And don’t worry about those Olympic withdrawal blues too much – the Paralympics starts on the 24th August!

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