🔒Ask ACE: How do we incorporate flexibility and innovation while meeting our compliance obligations?

Q: We’re in a highly regulated industry. How do we incorporate the flexibility and innovation needed to expand our business, while meeting our compliance obligations?

ACE advises: In highly regulated industries, compliance drives everyday operations. Policy manuals, checklists, multiple levels of review and narrow standards can lead to rigid bureaucracy. At the same time, even regulated businesses must grow, and unnecessary procedures can drain resources and hinder flexibility.

In “The Workplace Within,” Larry Hirschhorn describes a bank seeking to loosen its bureaucratic structure to become more entrepreneurial. Employees handling large sums of money rely on clear procedures to reduce anxiety, while managers feel more secure when authority is tightly defined. Although bureaucracy provides order and emotional safety, it can also restrict communication and innovation. Many businesses struggle with this tension: structure provides security, but flexibility supports growth.

1. Balancing structure and innovation: The work often begins with a review of business metrics and key operational and governance processes. These areas come under pressure when an organization is trying to grow, adapt to new conditions or shift its culture. Technical and procedural checks are only part of the picture. Interpersonal conflicts, communication breakdowns, and managerial dilemmas can complicate change. Organizational change brings emotional complexity. Managers and staff may hold competing desires that shape their actions. This is especially true when governance structures are complex. Success requires navigating relationships between consumer owners, volunteer board members and professional executives, who may have differing expectations or levels of experience. Sensitive governance matters, such as selecting new board members or conducting a CEO search, often arise.

2. An outside perspective: Directors, officers, managers and staff may be too close to a situation to make objective decisions. Consultants can help leaders understand these dynamics and create conditions where people can work together more effectively, addressing interpersonal and psychological factors so organizations can move through change with greater clarity, alignment and confidence.

Alex Adler, PsyD, is an advanced candidate at the Massachusetts Institute for Psychoanalysis and a member of the International Society for the Psychoanalytic Study of Organizations. He works in Portland and can be reached at (617) 653-0526.