IS the Legal and Regulatory Environment in the country an impediment or a catalyst to innovation?. What Strategic options do businesses have as they navigate the environment.
Answer:
We have entered a new regulatory environment, one that is intended
to change behaviors in addition to capturing information and
collecting fees. Such regulation-mandated change is difficult to
navigate (not only is it change, but the mandate comes from
outside), but it may also yield the biggest competitive advantage
if successfully and proactively implemented, according to "Business
Transformation and the Regulatory Environment," a report from KPMG
and Forbes Insights.
The two divisions as of now most influenced by administrative
change in the United States are medicinal services and money
related administrations. In different enterprises, for example,
interchanges or vitality, change might be activated by other
essential variables, yet it has a solid administrative segment.
These new regulations often demand complex changes, but they also
create a big opportunity to spearhead changes in other areas of
business for those companies that are able to gain a proactive view
of the current and upcoming regulatory landscape.
The vitality and exertion dedicated to the change activated by
administrative prerequisites ought to be used to improve business
all in all. "Guidelines are making new prerequisites. Brilliant
organizations are utilizing these necessities to change their
organizations past consistence, and utilizing this forward-looking
perspective and the results of their administrative endeavors as
wellsprings of upper hand," says Mike Nolan, Global Partner in
Charge, Risk Consulting, and KPMG.
It is imperative to recognize which regulations have the potential
to be used to catapult a company to a new level through a
transformation, either on a company-wide or a functional level.
Nolan outlines three different approaches that companies currently
employ, depending on the industry, the regulations and/or the
companies’ approaches to incorporating them:
Comply: approach based purely on compliance with
the regulations without making any transformative changes with
business strategy or operations. This methodology makes troubles on
effectiveness and benefits, without making much direct organization
budgetary or operational profit by administrative
consistence.
Compete: approach based on efficient incorporation
of compliance, aimed at achieving parity with direct competitors.
This methodology is frequently utilized in the social insurance
supplier space, with its razor-meager edges. Aggressiveness for
this situation depends on staying aware of adversaries as far as
efficiencies in consenting to ACA, HIPPA or different laws. This
approach ultimately aims to diminish the burden of compliance with
regulations but is not generally transformative at an enterprise
level.
In both of the previous approaches it is especially important to
recognize that what’s different about transformations triggered
primarily by the regulatory environment is the need to understand
the regulations themselves and how they will be interpreted, says
Todd Lohr, managing director, U.S. Transformation Enablement
Leader, KPMG. “You need to build a solution flexible enough to
accommodate future changes and different scenarios as they evolve,”
he says.
Catapult: approach based on using the information
necessary to comply with new regulations to achieve transformation
that improves business operations, resulting in competitive
advantage. As an example, banks are at a unique crossroads. The
current environment—marked by intensified regulatory attention and
increasing costs for noncompliance—creates an opportunity for banks
to use the new heightened regulatory awareness to shift away from
reactive remediation and to proactively adopt a culture of
compliance.
By embracing the underlying spirit of regulatory rules and
standards on an enterprise-wide basis, including its products,
services, operating models, affiliates and third-party
relationships, and refocusing corporate strategies toward customer
needs, banks can realize fewer complaints, lessened attrition,
improved organic growth and stronger economic return.
Another example of achieving competitive advantage by adapting to
the regulatory environment is a healthcare company that aimed to
comply with the medical device excise tax. After gathering new data
points required for compliance, the company undertook further
analysis of this new data, which revealed vast disparities in
prices charged for the devices in the same region. The company then
proceeded to reevaluate its product profitability, pricing
strategy; sales force performance and motivation, as well as
marketing relationships, thus opening the door to dramatic
performance opportunities.
The key and common element to the success of a regulatory
transformation is data. New regulations require that companies
gather new data points, for which many companies are not well set
up. However, for this to be transformative, organizations should
likewise be fit for breaking down the new information past
consistence, reaching inferences about how to improve business
dependent on this new, and rich trove of data. This will require
new abilities, center, and responsibility for some
organizations.
IS the Legal and Regulatory Environment in the country an impediment or a catalyst to innovation?...
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