regulation innovation

Struggling to Innovate in a Highly Regulated Industry? The Problem Could Be You

Companies will find the path to transformation easier if they can learn to get out of their own way.

Mistakes cost lives in industries such as healthcare, pharmaceuticals and medical devices, or aerospace, defense and manufacturing. As a result, most businesses accept and welcome a high degree of regulation as a way to maintain public confidence in the safety and quality of their solutions or services.

But where innovation is concerned, regulations tend to get a bad rep. Innovation remains as important in highly regulated industries as in others, yet strict processes created in the name of compliance routinely limit the rapid iteration and shorter release cycles that are synonymous with transformation. In these industries, IT and the product teams they support are all too familiar with the heartbreak of having exciting ideas shut down or hollowed out by the gatekeepers of compliance.

For heavily regulated organizations then, agility becomes doubly important. Businesses must find ways to harness agility, not only to drive innovation, but also to transform their approach to compliance.

And to do that, companies need to be prepared to admit that maybe it’s not the regulations that are getting in the way of innovation – it’s them.

Companies need to be prepared to admit that maybe it’s not the regulations that are getting in the way of innovation – it’s them

Prisoners to process

The misplaced perception that regulations are a barrier to innovation stems from the way organizations often become prisoners to their own processes.

Generally, regulations describe required outcomes and controls. Companies then create internal controls that prescribe ways of working. This interpretation of regulations and their conversion into processes allows for a kind of folklore to develop around the real law. The letter and the spirit of the regulation will allow for ample flexibility to adapt internal controls as times, or technologies, change. But more often, a policy of executing those controls without deviation takes hold inside organizations and are often decades old. As such, organizations become locked into a specific approach – an approach that they chose and which exerts far more influence over the way they work than any regulation.

So when the hallway conversations that generate some of the best ideas are stopped in their tracks by “oh, well, that’s against the regulations,” people assume – reasonably – that it’s out of their control.

But they’re usually wrong. It is in their control to adapt processes and innovate without compromising compliance. If, that is, they can carry key internal stakeholders along with them.

Turning adversaries into advocates

It’s unrealistic to demand rapid and wholesale process changes, of course. Most organizations will have too many projects already in flight through deeply embedded systems that are nearly impossible to unpick.

Instead, small changes to processes can go a long way to achieving the breakthroughs that enable innovation to thrive. So can early engagement with quality or regulatory assurance teams (QA/RA). These key internal stakeholders are a vital part of the machinery that turns an idea into an in-market product – and they’re critical to making change possible.

First, open a conversation about exactly what compliance processes you are trying to accomplish, and why. Based on this information, you can propose alternative, compensating controls that deliver the same outcomes as existing processes and yet allow you to be more nimble. Once properly documented, these small exceptions can be signed off by QA/RA stakeholders and implemented across the organization.

Without this early engagement, many innovation projects miss, at best, a big opportunity to recruit some valuable advocates. At worst, they develop some powerful and perhaps unbeatable adversaries.

For example, one of our customers, a medical device manufacturer, had a product development process heavily tied into a series of manual, human-driven tests. Automating this testing would significantly shorten their time to market on new products, and cloud technology was available to do it. Yet each test was tracked by a rigid quality control system that was fundamental to their entire workflow and compliance posture – the system wasn’t going anywhere any time soon.

With buy-in from QA/RA, we were able to combine many of the existing tests into a single automated test, and then house that test under a single step in the quality control workflow. Now this company can rapidly advance their product development cycles with almost a single click to confirm that the tests have taken place and the results have been evaluated.

Finding the right vehicle for change

It’s difficult to undertake any transformation without a business initiative attached to it, so these early conversations with QA/RA should be framed around a current and urgent business challenge.

In my experience, a single project team working on a green field/blue sky initiative that has executive support is the ideal vehicle for test driving process changes or exceptions. For example, product or service release deadlines with a roadmap for subsequent and regular updates provide essential impetus for change – especially when all the attendant financial implications are considered. And a single project can pave the way for more wide-ranging innovation in the future, while reassuring those responsible for current processes that any changes will be controlled and manageable.

These factors will make the difference in securing the scope you need to move faster and more aggressively than you have in the past. They also give QA/RA teams and other stakeholders something they can rally around and contribute to, rather than query and contest.

Speed and compliance can co-exist

Even in unregulated or lightly regulated industries, innovation can be a difficult and messy process. But highly-regulated industries have the additional challenge that well-meaning yet misguided processes draw timelines out – a serious disadvantage when successful innovation depends so much on moving quickly.

Ultimately, innovation in these industries is as much about finding ways to move fast without sacrificing safety or compliance as it is about developing new products, services and solutions. This in itself can be thought of as an additional innovation objective: How can you give the organization the artifacts and inputs required to meet regulatory and quality constraints, while also delivering the agility required to remain competitive and attractive to top talent?

If you’re in one of these industries, then you can make innovation faster and (a little) less painful by engaging regulatory and compliance colleagues early on, with an appropriate project on which you can collaborate to identify small but meaningful process changes.

Or you can get back to butting heads with QA/RA stakeholders.


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About the Authors

Tolga Tarhan, Chief Technology Officer

Chief Technology Officer

Tolga Tarhan

As Chief Technology Officer of Rackspace Technology™, Tolga leads the vision, driving innovation and strategy for technology offerings. With more than two decades of experience leading product and engineering teams, and as a hands-on technologist at heart, he brings unique insights to customers undertaking the journey to the cloud. As an early pioneer of cloud native thinking, Tolga's passion has driven the company’s technical approach and transformed customers into cloud-native thinkers. Tolga continues to show thought leadership in the field through his extensive speaking engagements at AWS events, industry conferences and educational groups. Tolga previously served as CTO of Onica, which was recently acquired by Rackspace Technology. Before that, he was a co-founder of Sturdy Networks, where he served as the Chief Executive Officer through to the acquisition by Onica. Tolga holds an MBA from the Graziadio Business School at Pepperdine University.

Read more about Tolga Tarhan