In a corporate world where we’re all looking for value, the perceived burden of compliance and regulation is often seen as a barrier to growth. It’s all too easy to blame the regulators for hampering innovation and strangling markets, but the truth is that the most enduringly successful businesses are those which embrace regulation, going beyond compliance (for evidence, see this report from PA Consulting).
From a quality management and continuous improvement perspective, going beyond compliance should be a given. Embracing the spirit of the law and building enhanced compliance into your long-term business strategy provides a competitive advantage on many levels e.g. superior product quality, a reputation for excellence and even a preferential relationship with the regulator and the ability to help shape future regulation.
Despite this, compliance is all too often seen as an expensive box-ticking exercise rather than an investment opportunity to grow value. Merely complying with the letter of the law is the route many companies take, doing the minimum necessary to escape the approbation of the regulators. A few businesses even take the view that it’s worth bending the rules for short-term gain, off-setting the fine against a temporary spike in sales.
The recent woes of the banking industry and the resultant influx of financial regulation serves as a salutary lesson to this approach, as explored by Accenture in this report. Whether ethical, environmental, technical or financial, the regulatory framework in which we operate is ultimately designed to create a safe, fair and sustainable world. View the framework as a prison and you will be constrained by it; treat it as a trellis upon which innovation can grow and flourish and it will be a powerful driver of value.
Going beyond compliance is all about the long-term. It requires strong leadership, clear strategic planning, cross-functional teamwork, rigorous measurement and, perhaps most importantly, must be embraced as part of the company culture. As such, there are many parallels with Lean, Six Sigma and Total Quality Management.
There is also a strong people perspective to going beyond compliance. Just as small children thrive on having boundaries, employees challenged to innovate and drive value within a framework are more engaged and derive greater job satisfaction (a subject explored further here).
Furthermore, in the same way that close relationships with suppliers will drive value, so you should treat regulators as an extended part of your team. Rather than being ‘the enemy’, regulatory bodies are ultimately on the same side as those businesses which they regulate, seeking to develop a sustainable industry. Companies which can ‘think like a regulator’ will have a significant competitive advantage.
The evidence is clear: going beyond compliance is a common trait of many successful businesses. To quote PA Consulting’s report Beyond Compliance: boosting corporate performance through regulatory management, “The degree to which these strategies affect performance varies from sector to sector, but across all the sectors we looked at … the picture was consistent. Adopting a strategic, rigorous and positive approach to regulatory management is associated with superior financial performance.”
How does your business benefit from going beyond compliance? If you need assistance, please drop me a line to [email protected].