• In a high-regulated environment, red tape with long and complex processes prevents organisations from moving fast while innovating.

• However, we continue to see impactful innovations happening in some of the most regulated industries such as financial services and healthcare.

• Through fostering a culture of innovation and investing in future-forward technologies, organisations can find ways to achieve a 'just right' approach for radical and incremental innovation within a regulated environment.

From innovation labs to corporate incubators and new venture builders, a startup innovation culture is igniting across the world, and accelerating the development of disruptive ideas in this global competition.

Many thinks regulation inhibits innovation. Yet the world continues to see some of the most impactful innovations — such as digital banks, AI-enabled healthcare and digital therapeutics, coming from some of the most regulated industries.

These organisations have found ways to harness agility, not only to drive innovation but also to transform their approach to security and compliance.

So, what success patterns is needed for innovation to flourish?

Even in less regulated industries, innovation is often a challenging and messy process. Highly-regulated industries have the added challenge of well-meaning yet sometimes misguided processes adding red tape and drawing out timelines — a serious impediment when successful innovation depends so much on moving quickly.

Innovation in these industries is as much about finding ways to move fast without sacrificing security or compliance as it is about developing new products, services and solutions.

The NHS COVID App is a prime example of such an approach.

Developed as a vital part of the pandemic response in 2021, the test and trace solution illustrates how major policy changes and health requirements can be embedded into patient-centric digital solutions within a short timeframe.

Designed and built with a secure, privacy-first approach, the digital service monitors possible exposure to COVID-19. It is estimated to have prevented up to 600,000 infections and accelerated medical app innovation in the country.

The digital service also brought about a culture change within the Department of Health and Social Care (DHSC) — a ministerial department that aims to lead the nation's health and social care. A way for them to transform into an agile organisation leading public health through digital innovation.

As the delivery partner working with DHSC, Zühlke established a multi-disciplinary working group including policymakers, researchers, designers, engineers, and experts in security, ethics, accessibility and other areas, collaborating closely to launch the app in 12 weeks to serve over 22 million users.

The joint team operated in a highly incremental, agile way. Policy, compliance, user research and design were embedded in the weekly development build cycle. In addition, the use of native cloud services and automation of every aspect of the build, test and deployment process enabled the delivery of this class-1 medical device.

The Zühlke team was named "Development Team of the Year", receiving the UK IT Industry Award 2021 for its delivery of the COVID-19 app.

A culture conducive to innovation does not happen overnight. When asked to describe such cultures, employees often named expressions like willingness to experiment, psychological safety, open collaboration and communication.

Culture is only as strong as the people who bring it to life. Beyond hiring diverse talents, flexible-enough structures in organisations can help to bridge silos and create open lines of communication and collaboration between teams.

One simple yet powerful approach is to speak a shared, inclusive language. This can be in the way team goals are defined and communicated, with the goal of bringing people together and aligning their objectives.

Most breakthrough innovations are, in some ways, driven by new technology. Businesses are always on the search for the next big technology that can help them move ahead of the competition.

In doing so, these organisations must be well-equipped to operate in any regulatory environment. This means that the systems powering a company should be flexible and adaptable enough to scale such changes.

Think of data and the way organisations use it. Enterprise data tends to reflect the organisational structure that created it. In many highly-regulated sectors, it is often siloed, internally focused and structured to report based on the current regulatory landscape. As a result, organisations often find themselves at a disadvantage when forces outside the business require them to make changes rapidly.

Digital banks are an excellent example of this dynamic, where regulatory requirements vary by region.

Heavily regulated companies like banks spend millions of dollars on maintaining their core systems, which usually interface with hundreds of other systems and handle a massive amount of secured data. Core banking systems, for example, are designed to handle a high volume of transactions, be available 24x7 for customers worldwide, and be scalable to support the bank's strategy.

As digital banks take flight, they boast the advantages of their technology-first approach, with the ability to go lean and deliver features aimed at better customer experience.

Here is where streamlining back-end systems and data strategies can make a real difference down the line as these digital banks enter new markets. A modern, data-driven approach that can scale dynamically to meet performance or regulatory requirements.

Radical innovation — in the form of large, ambitious projects, often takes time to build momentum and deliver value in the regulated sectors.

Incremental innovations in the form of tactical projects or pilots mostly build on existing and well-understood products or services and improve on them incrementally. But they sometimes never take off or take too long to scale.

A lean project team working on an innovation initiative with executive sponsorship is one of the most effective setups for innovation to flourish. A single lighthouse project can pave the way for large-scale innovation to happen, while reassuring those responsible for complicated processes like legal and regulatory to understand both risks and benefits for the organisation.

This article was originally published in Issue 87 of the Orient Magazine, Official Magazine of the British Chamber of Commerce in Singapore.