Innovation at American Water

How Paul Gagliardo Taps the 'Next Big Thing' at American Water

Who would predict that an environmentally conscious hippie would become a prominent name at America's largest publicly traded water utility (or a self-proclaimed alien, for that matter)? Yet those who hear Paul Gagliardo talk about his work as manager ofAmerican Water's Innovation Development Program can't help but think that his has a lot of fun with it.

"I am a venture capitalist without the capital," says Gagliardo. Basically, just like a VC, he shifts through pitches from people who have great ideas about how to make American Water's business cleaner, more efficient and more successful. Those who make the cut get 15 minutes to state their case. Next, Gagliardo decides if the idea has any merit to be eligible for the next steps, potentially resulting in a strategic partnership.

He looks at new technologies, products and services, and vets them for their technical efficacy and value proposition. "If it's only 5 percent better than what works now, it's not that big a deal," says Gagliardo, "if it's 50 percent better, now we're talking. And so that's how we look at it.

Looking for the next big thing in the water space, he says, "My hit rate is 2 or 3 percent, which is a typical venture capitalist hit rate. You get to plow through a lot of stuff to see what works, how it applies to your business, where the big value proposition is, where the interest is in the company. And the business models of both companies have to align."

After almost 25 years working on waste projects with the city of San Diego, Gagliardo called it quits. A stint at an engineering firm and with a real estate developer followed before he says his "perfect job" opened up in New Jersey at American Water, revenue $2.9 billion in 2013.

What would be really cool and is badly needed, he says, are water-borne drones with a very special skill set. The drone of his dreams would be very small, less than four inches, and could be deployed into a water pipeline through a fire hydrant. Untethered, it could be driven with a handheld device, going upstream or downstream. It would spot a leak in a pipeline, stop, hover, and then fix the leak with special glue that works even under water.

"That is one of my personal favorites," says Gagliardo, "super glue could work when it's fully wetted, in other words, when the pipe is full of water, but that's certainly an issue. A bigger issue may be communicating with the drone, untethered."

Thepotential would undoubtedly be hugesince the largest expenditure that all water utilities are facing is fixing and replacing existing underground infrastructure, namely pipes.

"The lessons I learned a long time ago and have carried through over the years I worked for American Water is to get rid of the losers fast," he says.

Gagliardo learned the business part of the job at a later stage of his career, yet his interest in the environment sprouted early. Growing up on Long Island, he often took a boat with his father onto the South Oyster Bay, where he would notice when the sewage plant wasn't working very well or when residents' septic tanks were leaking. For him, these problems were obvious, even though not many people in the 1950s and 1960s would acknowledge them.

"I spoke at the first Earth Day in 1980," says Gagliardo, "so I was more an environmentalist than a hippie, I guess." When it was time to pick his first job, he went for a poorly paying solar company instead of a well-paying oil firm.

Following his green-leaning beginnings, Gagliardo, an engineer by trade, took a job with the city of San Diego. Starting in public works construction, he moved on to hazardous waste remediation, because that became a "big thing" in the mid-1980s. He moved to the trash business in the early 1990s, when that became a "big thing". "I don't know if you noticed a pattern here," Gagliardo says. "Everything is a big thing; that's when I get involved."

In the mid-1990s, when the drought hit California, he was shifted to a big toilet-to-tap program. The idea: Filter and purify sewage water to make it potable again. By 1999, all the major problems were solved and the program was ready to be implemented. However, the effort was killed by what Gagliardo describes as "political reasons."

Source: GreenBiz

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