The regulatory cuckoo!

In case you wonder this is another change analogy rather than a nature blog. It arose in my mind after talking with a friend about how many strategic developments are suffering as resources are diverted to either fixing operational problems or satisfying regulatory developments.

The tension between oeprational/tactical change and its strategic cousin has long been with us and a challenge for business and portfolio managers. By operational/tactical change I mean the actiivities that are not quite BAU, but arises from the aquisition of new business that needs something a little different, requirements to "fix" problems in the current BAU processes or may be small improvement initiatives related to the current business practices.

Strategic change is that which constitutes major or fundamental changes required to meet business objectives. Of course we can debate the boundaries and they are likely to be different for different businesses reflecting their ambition and appetite to spend/invest in change.

We could also debate whether straightforward system upgrades are strategic, tactical or indeed should be part of the BAU portfolio of work, but for now we will leave that.

Coming back on topic, many organisations have separate budgets and resources for operational and strategic change and this goes a long way to preserving the balance. Of course operational managers whose budgets have been pared to the bone will eye the change budgets enviously and look at access them wherever possible. There is nothing wrong with that as long as there is effective and apprpriate governance across the commissioning and management of change.

This BAU nibble mainly impacts the world of operational change, but I have managed small, but limited funding pools within a corporate portfolio to pay for small initiatives. This was quite effective and one I would commend to others.

In the strategic world there was always the question of "mandatory" changes that "just had to be done". The claimed priority over all the rest. Often these were infrastructural projects and increasingly were driven by changes in the regulatory environment. The balance between mandatory and "discretionary" changes and the allocation of appropriate funding was hard, but not impossible.

The issue now seems to be that regulation has become the cuckoo chick in the change nest. It has grown so big that it is squeezing out strategic change and exhausting the parent company's ability to sustain it. While at the same time, the number of things that need to be fixed seems to be growing everywhere, the squeeze on real value-adding and discretionary change is almost suffocating.

I have seen the response to this where business units see the need to look after themselves. They start squirreling (sorry for another nature analogy) away funds in their BAU budgets and start running change outside the main governance processes or skill sets. On the one hand this is good as it is change that the business clearly wants and is leading, but on the other hand it risks poor execution and a lack of perspective - often creating issues that then need fixing and distract from real operational change.

I am not sure if this is what might be called a perfect storm, but it is something and until we work out how to break out of it and run change better, I expect we will see the cuckoo getting fatter and fatter and the poor parent/business labouring more and more as the things it wants to get done to grow and thrive can't get done. It becomes a question of survival!

Do you know the balance of change in your organisation and do you project it forward? Are you happy with it? If not, what are you trying to do about it?

Any Comments? Suggestions?