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Organizing Regulatory Change Projects: How do you eat an elephant?

Financial organizations are constantly confronted with complex, regulatory-driven change. Complying with those regulations can sometimes involve years of work, with the organisation turned upside down.

Regulations often require transformational changes. Here, figuring out where and how to get started can be difficult in and of itself – especially when changes can touch architecture, systems, processes, and even people. How do you begin?

As Desmond Tutu famously said, “There’s only one way to eat an elephant: a bite at a time”.

Develop a Clear Plateau Plan

Starting a big project is daunting. You have a mountain in front of you and you have to get to the top.

Breaking it down often means setting plateaus and breaking your multi-year plan into stages. At ACE, we find breaking plateaus into foundational themes is a solid strategy:

Plateau 1/ Mobilization– Here, you establish the building blocks and foundations, that will pave the way for later stages. You ensure you have the right people (with the right skills) to implement the change, establish a clear vision, objectives, and priorities, and align the organisation to the changes about to come their way. During Mobilisation you invest in a dual-speed approach – while establishing the fundamentals, you pilot options, test ideas, and ensure there are no “big” questions outstanding before you launch.

Plateau 2/ Execution – Building upon the foundations already laid, you move fully into execution mode, with iterative rollouts of capability, and into business as usual. It is imperative in such large programmes that changes manifest regularly and visibly into the business, even if they begin in a minimally-viable manner. Doing so builds trust and credibility throughout the organisation, while mitigating the risk of gold-plating solutions or a big bang approach.

Plateau 3/ Consolidation – Implementing the capability does not mean the benefits are realized. During the consolidation stage, the focus is on exploiting delivered capabilities, and on ensuring the business embeds change into its standard ways of working.

Change Has to Happen Sooner Rather than Later

Any regulatory change can require complex changes. Often these can take years to implement. Unfortunately, regulatory bodies won’t normally wait until your project is fully implemented. They want to see change and immediately, sometimes with yearly updates.

For example, the ECB “Supervisory assessment of institutions’ climate related and environmental risks disclosures”, explicitly stated that 45% of organizations’ disclosure was insufficient . Responding to long-term ECB demands can often require structural improvements – but at the same time, you have to show short-term results.

Mixing short- and long-term results

In our view it is no longer possible to have a single delivery speed – instead organisations require the ability to run at two speeds The first is the long-term plateau plan with a multi-year approach designed to generate the stable, structural results, utilizing end-state systems, architecture, and processes.

The second should be more agile, able to implement change with what you have in front of you right now. This “quick and dirty” approach can seem terrifying, as it requires implementation without all the desired building blocks and hygiene elements. But doing so provides an invaluable beachhead, enabling prototyping, testing, and refining of requirements. Lessons learned can be used to refine and solidify the structural, end-state designs.

Eventually, no regulatory change management project is ever easy. It requires planning, strategy, and a good view of where you need to be. But, it also requires taking steps to improve now.

If you’re embarking on a regulatory change project or want insight into another aspect of regulatory change, ACE is here to help. Contact us to schedule a discussion.