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5 Considerations Regulators Need to Address for Sustainable Transformation

If the past five years have proven anything, it is the need for organisations to evolve and transform or die. Regardless of whether the organisation is governmental, large corporation, small business, sole trader, regulator, or anything in between, the need to transform service and value delivery to meet changing expectations now appears to be the pre-eminent strategic challenge.

For some organisations, the drivers behind the desire to transform revolve around remaining at the cutting edge of their industry or sector. For others, the drivers are more survivalist in nature, emanating from a need to keep pace with the evolution of their markets. However, for many enterprises, the need to transform the delivery of services and value has become a critical strategic issue, having previously been ignored or de-prioritised.

Regardless of the driver, the concept of organisational transformation of service and value delivery is inherently complex and is a process requiring significant planning, sequencing, cultural realignment, and capability development.

Inhabiting the most challenging space in any industry are the Industry Regulators. They face a triple threat with regard to disruption and transformation:

  1. They are charged with the responsibility of providing oversight and monitoring of current regulations, laws and standards,
  2. Regulators must also predict, respond and stay ahead of the evolving business practices of industry participants, disruptive technologies, changing consumer expectations and changing market participants.
  3. Regulators must also address their own organisational effectiveness, structures and capabilities, and continue to transform their service and value delivery to remain leaders of their industry.

For decades, Regulators have operated in environments, relatively less complex than they are today, defined by slower rates of change, lower levels of disruptive technologies, and predictable industry participation. Whilst the likes of Airbnb, Alexa, Amazon, and Uber are high-profile examples of disrupters that have triggered significant industry and regulatory transformation for their industries, across every market and sector - there are many more examples of prominent influences and disruptions that have triggered entire industries to re-evaluate what constitutes value, and how it is delivered.

Changes in manufacturing techniques, e-commerce, labour markets, globalisation, social media, population density, generational social patterns and global pandemics have arguably had the most significant effect on the way business is conducted and the way value is exchanged.

The flow on to regulators has also been significant, in some cases exposing critical and unresolved gaps in capabilities, data utilisation, technology and processes. For many regulatory bodies, this realisation has prompted the establishment of transformation teams, departments and programs to navigate this transformation triple threat.

Leonardo’s observation is that recognising the need to transform, many regulatory bodies embark on significant programs of change, focussing heavily on digitisation, automation and technology replacements. Irrespective of the financial impacts of these strategies, the process, cultural and capability impacts on the organisation are most often the root cause of the most significant issues. Our belief is that transformation does not need to negatively disrupt an organisation to deliver lasting and profound improvements.

Below are five recommendations that should be addressed prior to commitment to technical and digital change.

Addressing these can reduce the amount of redundant change that is committed to, help to reduce the negative impact of transformation, and pave a sustainable pathway to the desired level of change:

  1. Review the Organisational Intent and Industry Positioning
  2. Understand the industry participants and stakeholder Personas
  3. Understand the flow of services and functions as experienced by each Persona
  4. Assess your Organisational Capabilities
  5. Improve your use of Existing Data Assets

Review the Organisational Intent and Industry Positioning

This review is more than a revisit of the organisational strategy. We recommend a more context-driven and introspective reassessment of the core intent and the mandate of the organisation, the critical value being demanded and provided, the critical functions required to be delivered, and the required/desired positioning of the role of the organisation within the industry.

This is the first stage of defining the transformation scope and magnitude and is a critical step in ensuring the priorities for change are aligned to the revised intent.

Understand the industry participants and stakeholder Personas

Understanding of the many, and often changing Personas that inhabit the industry or sector, is far more complex than traditional industry segmentation. A better understanding of these stakeholder types provides essential insights into the emotional and behavioural triggers that drive the individuals, entities or customers within that sector or market. Without this understanding, many organisations make significant changes to service delivery platforms, digital capabilities, strategies, and processes that deliver sub-optimal benefits whilst leaving critical gaps unfilled.

Understand the flow of services and functions as experienced by each Persona

This stage builds on the previously developed industry Personas and illustrates how and where the specific needs, wants and required outcomes of each of these groups interface with your organisation. This stage will highlight where your core functions occur in the consumer journey, the level of coherence and connection between these functions, and how effective these functions are in delivering the desired end-to-end value to these Personas.

From this assessment comes a deeper understanding of how well aligned and tuned into the industry the organisation is and a clear view of service and value delivery gaps requiring attention.

Assess your Organisational Capabilities

Having developed an understanding of the critical service and value delivery functions, and their effectiveness, we recommend a detailed assessment of the capabilities that underpin your service delivery. This assessment covers both strategic and operational capabilities. It will provide an objective view of the areas requiring focus, and those that can be prioritised at a lower level.

The results of this assessment should then provide tangible inputs to help guide decisions around what and how much transformation activity is required to achieve the organisation's goals. In many cases, the critical transformation scope required will either be far less than initially projected or will be able to be progressively developed and scaled over a more sustainable timeframe.

Improve your use of Existing Data Assets

Lastly, and often overlooked, is more effective utilisation of the data assets already available to the organisation. Coupled with a greater understanding of the industry participants and personas, and the service delivery focus areas, an investigation and organisation of the available data will complete the view of where the most significant and effective change and development should be focussed.

The additional benefit of prioritising the discovery of data requirements ahead of the commencement of transformational change is that the critical reporting and insights that will be required to proactively monitor and stay ahead of the industry, are understood and scoped up front, rather than being reactively retro-fitted.

Having addressed these five aspects and developed an organisation-wide view of the priority targets for change, decisions regarding what to transform, which outcomes are most important to transform, how much to transform and when to transform, become much clearer. In our experience, transformation programs undertaken as a result of the outcomes of these assessments are less complex, cause less disruption, are better understood and accepted, and deliver more targeted and effective changes.

Regulatory Optimisation Roadmap

Ian Edwards
Ian Edwards
Ian is leader across APAC in Operating Model Design & Optimisation, Strategy Integration, Operational Effectiveness, Customer Centric Design, Process Architectures and Business Process Management

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