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Is compliance holding your organization back?
F1 teams go fast in a regulated environment by doing these five things
As a leader, you want to meet the ever-changing customer demands. You’d like to be an innovator in your field and have many new ideas for your products and services.
But your teams say, “That sounds great… but… compliance”. In other words, you can’t go fast because you operate in a highly regulated industry.
That might be true, but let’s look at the world of Formula 1. With 1,000 changes per week, they are proving they can go fast in a highly regulated environment. The FIA ensures cars comply with a thick rulebook for safety and competitive reasons.
I’ve helped numerous financial and pharmaceutical institutions increase their speed and agility. Here are five things the winners do differently.
1. Collaborate with the regulator
There is toxic fear of regulating bodies. “Be careful what you say to them, or else…” Only a few people in the organization are allowed to interact with them to control the messaging. It makes sense. Fines and other possible consequences are enormous. However, if that relationship is turned around, I’ve seen outstanding results (both in F1 and finance).
Imagine this alternative conversation: “Hey, we’re trying xyz to comply; we’re not sure if it is working. Can you look at it with us?” or “We have an innovation, and we want it to be compliant. Can you help us do it?”
Regulators highly value this behavior because it creates trust. And having a regulator that trusts you creates speed.
2. Look closely at the literal rulebook
I’ve seen many cases where teams were paralyzed because of a ‘myth’ about what can’t be done. It only takes one person to shout, “We can’t possibly share this data because that is against GDPR!” for an innovative project to get killed. When this happens often enough, the whole culture becomes one of keeping the status quo.
But what F1 teams understand is that it is essential to look at the precise ‘letter of the law’ to find the areas where innovation is possible. This highlights the importance of teams having access to and understanding the actual rulebook so they can myth-bust themselves. This brings me to the next point.
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3. Compliance teams become enablers and consultants
So often, I’ve seen centralized compliance departments acting as a ‘checkpoint’ for anything that leaves the building. When you’re considering starting a project, they require a detailed project plan to tell you if it meets the rules. Then, later on, when you’re ready to launch it to the market, they do a compliance inspection.
This approach is problematic because this centralization creates waiting times. And if the process is heavy, it promotes ‘big bang’ releases instead of quick short cycles of innovation. Even worse, it deprives front-line teams of the knowledge and responsibility of designing compliant solutions because someone else will handle it.
To get out of this trap, you’ll need to flip the mindset of the compliance department. One from being the ‘police’ to one where they become an ‘enabling team,’ teaching and advising teams trying to go faster. I’ll share more on this in the next paragraph.
4. Autonomous teams within enabling constraints
The holy grail for speed is teams that can autonomously deliver value to the customer, with as little as possible dependencies on others. In a highly regulated environment, think of rules as enabling constraints.
This is what it looks like in practice, with a compliance department acting as an enabler:
Simple to understand summaries of regulations, containing heuristics of how to comply and when to pay extra attention
A compliance ‘hot line’: “Call us any time, and one of our compliance experts be with you within an hour to help.”
5. Automate inspection
An F1 team produces thousands of new parts every week. All of them have to be safe and compliant. When I visited the Red Bull Racing factory, I saw a room with a 3D scanner that they used to inspect every new part. It allowed them to check on a micrometer scale if the thing they produced precisely matched the original CAD design they made on the computer. This inspection doesn’t cost a lot of time. Drop the part in the room, press the button, and the light turns red or green.
Businesses can learn from this. Wherever it is possible to automate quality and compliance checks, do it.