Regulation as Opportunity

Organizaions often have trouble writing about their own technology solutions because they think the problems being solved are a real turn-off -- or that the subject is just too boring -- or that it's already been covered ad nauseam. Here's a trick: Just fill in the blank in this title: " _____ as Opportunity." Say, for example, "Regulation as Opportunity."

You're challenging the reader by saying that all that stuff you thought was bad is really good. It's provocative and sets up a tension which, by the way, is something every good piece of marketing writing has to do.

IT is obnviously a huge enabler when it comes to helping organizations deal with the often crippling consequences of regulation -- witness Sarbanes Oxley. But the subject, to say the least, has been done and over done. So look at how McKinsey covers the topic in an article in the latest McKinsey Quarterly: The Role of Regulation in Strategy by Scott C. Beardsley, Denis Bugrov, and Luis Enriquez. (You have to register to read the McKinsey Quarterly.) This article doesn't happen to mention Sarbanes Oxley. But it does cite many other examples of how companies can turn the burden of regulation into an opportunity -- from Medicare to power deregulation to the Euro.

Specifically the article discusses scenario modeling, trading off stakeholdere interests, communication of stakeholder issues (including one's own), and formalizing and elevating the regulation management process.

As a professional communicator, I like McKinsey's presentation because it illustrates the lemons vs. lemonade approach very well. But I do have a couple of nits. First, all the actions mentioned (like modeling) obviously lend themselves to strong IT. Actually, entire tech sectors have been created around maximizing the regulation "opportunity." But McKinsey does not explore the IT angle.



For an example of an article that does explore this angle, take a look at the one I wrote for Lodestar Corporation in World Energy on just one aspect -- electricity billing.

My second nit goes back to the whole commoditization thing we've been talking about in previous blogs. Regulation management is a huge barrier to commoditization. The McKinsey authors cite an electric utility achieving an almost 2% higher return on investment thanks to its regulation coping strategies. These strategies by nature are highly particular to specific geographic and political regions. They are therefore inherently differentiating, as the utility example (a commoditized industry if there ever was one) demonstrates. I think the authors might have done something with this as well.