Disruptive Technology driving innovation
We believe that infrastructure is no longer just about bricks and mortar, and that the pace of technological change means that historical assumptions on usage and growth need to be regularly refreshed. As a result, at Wren House, we believe that we need to be continually thinking about the impact of disruptive technology and innovation on existing and future investment opportunities.
We are continually seeking new ideas; ideas that might break the business models of our existing portfolio companies, ideas that might help or accelerate the delivery of their ambition, or indeed, ideas that we believe will lead to the infrastructure opportunity of the future. We do this by engaging with leading thinkers around the world including; advisors, academics, entrepreneurs, government bodies, and seeking ways to find and partner with the innovators of the future.
We also seek to ensure that the companies we invest in have the capability (people, processes and systems) to identify disruptive technology and the impact it may have on their business model, and to deploy relevant innovative ideas and approaches for the benefit of their customers, employees and ultimately investors.
While ‘disruptive technology’ is a popular buzzword today, not only do we believe that it is here to stay, but we believe that it is great for our portfolio companies and for the sector as a whole. Being thoughtful about the impact and opportunities that disruptive technology will bring helps to deliver our ultimate aim, and that is sustainable and profitable investments in the infrastructure sector.
There are many themes that we are following around disruptive technology and innovation – both in terms of opportunity for investment, but also opportunities for our portfolio companies. A few examples of themes we are monitoring include;
As the capture and use of data increases exponentially, this creates significant opportunities for our portfolio companies. Recent benefits have included an improved ability to target consumers and their specific preferences, greater insight on usage trends, improved predictive analytics to drive operations and maintenance activity, and the ability to drive the efficiency gains required to deliver on continued pricing pressure from customer and regulators.
The electrification of transport and distributed energy solutions are having a significant impact on traditional transport solutions and energy supply chains, leading to new business models and sector convergence.
The ability of computers to learn without being explicitly programmed is accelerating the arrival of the autonomous vehicle, and with it, significant implications for the traditional transport networks and services provided to the infrastructure sector. Machine learning and robotics is also helping to drive human interaction towards the more value-add elements of an infrastructure value chain and supporting efficiency improvements.
At Wren House, we are continually gathering information and ideas on disruptive technology and the likely impact on our sector. We do this by regularly communicating with technology innovators, through relationships developed with academics, by working with trusted advisors, through deep relationships with experienced non-executive directors and by leveraging insights from our portfolio companies.
We use this information to identify potential emerging opportunities, both for investments and for partnerships with our portfolio companies. The pace of technological change is so great that the historical model of acquiring small start-ups is giving way to a model of partnerships and collaboration to enable increased agility. A key element of our asset management strategy is to support our portfolio companies through the identification and introduction of emerging technologies.
As part of our pre-deal screening process, we will consider the potential implications of disruptive technology on a company’s business model to determine any potential threats to the sustainability of the plan. If we believe that the risks can be mitigated, we will incorporate actions associated with them into our 100 day planning process.
Beyond this, we have integrated the assessment of the impact of disruptive technology into our Asset Management approach. This is a key part of the Business Planning process. We work with our portfolio companies to identify and ‘future proof’ their business models by understanding emerging trends. In parallel, we also ensure that they have the capability required to prepare for the future, and access to the delivery partners who can work with them to deliver the required changes.
We work extensively with many partners as part of our Asset Management approach including; key academic institutions, strategic advisors, technology providers and government organisations. This will enable us to be best placed to identify early opportunities for investment in, or in support of, our portfolio companies, keeping innovation through disruptive technology at the heart of our approach.
Innovation through Technology
Thames Water has recently hired a Chief Digital Officer from Bain Consulting to “find more efficient ways to manage our networks and equipment and transform the way we work”. Thames has recognised the opportunity to leverage its data more effectively and use leading technology to drive improvements in the management of the waste and water networks, improve predictive maintenance through machine learning and increase the effectiveness and agility of their communication and planning for its field force.
Associated British Ports
Associated British Ports has continued to intensify its focus on delivering the highest standards of customer service by embracing a holistic view of supply chains facilitated by data and technology.
ABP's ports are at the heart of the supply chains for manufacturers and businesses across the UK. Advanced data capture and analysis has enabled ABP to build a comprehensive picture of cargo flows across Britain, creating new solutions capable of optimising supply chains and delivering enhanced value for customers.
ABP has also reinforced its commitment to maximising the efficiency and sustainability of the supply chains of the future. ABP is progressing a range of initiatives that will continue to minimise the environmental impact of port operations and ensure its ports remain at the forefront of technology.
London City Airport
London City Airport is currently installing the UK’s first Digital Air Traffic Control Tower as part of its £500million airport expansion. The Tower will be operated by controllers based at the NATS facility in Swanwick 80 miles away from the airport. The Digital Control Tower will “enhance safety and improve resilience, setting a new standard for the global aviation industry to follow”. The cameras used will provide a 360 degree view of the airfield in more detail than a human eye could provide as well as in-built monitors and alerts to ensure safety of the airfield. London City Airport is also using data from 190 data capturing cameras installed by its partner CrowdVision to monitor the flow of passengers through the airport to address bottlenecks in real time. This is enabling the airport to deliver on its ‘20:15’ promise – getting passengers from front door to gate on departure in under 20 minutes, and 15 minutes back again on arrival.