Aliaxis Next - A Business Builder of Solutions to the World’s Water Problems

The UN predicts that under current trends, demand for water will exceed supply by 40% already in 2030. By then, 3.9 billion people will live in water-scarce areas. At the moment, 70% of the fresh water withdrawn from the planet is used in agriculture, 20% in industry and 10% in buildings where we live and work. Yet more than a third of that water is lost due to leaks. Furthermore, almost a third of the global population does not have access to piped water in their homes.

As a family-owned business that has been focused on building pipes, Aliaxis created a new division Aliaxis Next to address these issues.

Business Growth and Societal Impact

The mandate for Aliaxis Next is to deliver both business growth and societal impact, by providing water management solutions in alignment with Sustainable Development Goal 6, aiming to ensure water availability and sustainable management for all.

The four focus areas include reducing water consumption in buildings and industries, implementing sustainable water management, developing resilient water infrastructure through digitization, reducing water consumption in food production, and providing access to water for the 2.2 billion people who currently lack it.

Within each focus area they defined categories to ensure they are addressing the right problems with the appropriate solutions. The company seeks to collaborate with existing entrepreneurs who are already working on solutions and aims to take their work to the next level through classic corporate venturing, acquisition of businesses that align with their goals, and building ventures from scratch in their venture builder.

Aliaxis Next has engaged with eight startups so far, with a total of 15 engagements planned. These engagements include partnering with companies like HydroPoint to save water in buildings, CropX to reduce water consumption in agriculture, Optics to turn stormwater into an asset, and Apex10 to digitally optimize water utility infrastructure restoration.

The company carefully selects investments based on their potential to make a significant impact, even if they are not directly related to pipes or water. Its disruptive solution, Pool Pack, reduces water consumption in industrial processes. The solution has nothing to do with pipes but aligns with Aliaxis' water-saving objectives.

7 Choices

To succeed in their mission, they made several clear choices about how they operate the newly formed unit, as outlined below.

Organize for success - Aliaxis Next has been set up as a new division, with the same principles as their existing divisions. They have their own P&L.

Invest to make it happen - Unlike many corporate VC’s that invest in multiple bets to see if it happens, Aliaxis Next invests in companies to make it happen. They actively engage with the companies they invest in, providing support such as changing the dynamics of the board and coaching the CEO.

The ecosystem approach - The company believes in the power of partnerships and takes an ecosystem approach, collaborating with other companies, big and small, to address the big problems they aim to solve. They aim to have multiple entrepreneurs working in parallel towards the same goal rather than simply acquiring companies and trying to integrate them.

Build category winners - Their strategy is to build category winners, selecting one company per category and helping them become the largest player in that category through finding and acquiring necessary ecosystem contributors.

Create exponential growth - To achieve exponential growth, three key elements are necessary: a recurring business model, a strong customer relationship, and inbound lead generation through word of mouth and digital marketing. Providing an excellent customer experience is also crucial for sustaining exponential growth. Aliaxis typically guides their ventures to have three strong teams: sales and marketing, customer success, and R&D. The sales and marketing team focuses on attracting customers, while the customer success team ensures customer satisfaction and value realization.

Differentiate and disrupt – Aliaxis Next doesn’t at all work in Aliaxis’ core business. They allocate most of their efforts (70%) in the adjacent space coming up with solutions new to Aliaxis to differentiate itself from competitors, and the remaining efforts (30%) coming up with solutions new to the world, to disrupt the market.

Aim for control, over time…  - The company aims to take control over time. For VC’s and entrepreneurs they are a strategic partner, demonstrating long-term commitment.

Alignment With Mothership

When a separate business unit coexists with existing businesses within the organization, there may arise potential challenges and overlaps in solutions. The existing businesses realize that they cannot offer the same types of solutions and hence appreciate the separate unit for bringing innovative offerings. This allows the organization to present themselves as working on future solutions and become more interesting to customers.

The ready-to-use digital offerings that the separate unit provides can also benefit existing businesses, particularly in the utilities sector. While the existing businesses focus on traditional products and pricing, the separate unit addresses the need for digital offerings that are in high demand from customers. The separation of the unit was a positive decision as it allows the organization to cater to different customer requirements and expand their range of services. Overall, the separation works well for both the separate unit and the existing businesses.