#535 How To Deal With Regulation: Leadership Between Guardrails, Growth And Real-World Practice | Article by Niels Brabandt

How To Deal With Regulation: Leadership Between Guardrails, Growth And Real-World Practice

A leadership article by Niels Brabandt on regulation, compliance, safety, institutionalisation and the practical work of turning legal obligations into organisational value.

Executive Summary

Regulation is one of the least fashionable subjects in modern leadership and one of the most consequential. Business leaders often describe regulation as the enemy of speed, innovation and entrepreneurial judgement. Yet the deeper leadership question is not whether regulation is pleasant. The question is whether organisations can distinguish between regulation that protects people, markets and trust, and bureaucracy that merely produces paperwork without value.

In this episode of the leadership podcast and videocast, Niels Brabandt argues for a disciplined, business-focused approach: reject the simplistic claim that all regulation is bad, but challenge any rule that creates administration without improving safety, security, fairness, resilience or decision quality. The task for decision-makers is to build organisations that can implement regulation intelligently, institutionalise expertise where necessary and still protect productivity, innovation and customer relevance.

Why The Debate On Regulation Is Usually Too Shallow

The public debate often begins with a familiar complaint: regulation stops business. The statement is emotionally powerful, politically convenient and operationally incomplete. Regulation can stop certain behaviours, especially behaviours that create unacceptable risks for employees, customers, investors or the public. That is often precisely the point.

The more serious leadership question is not whether regulation constrains action. It always does. The serious question is whether the constraint creates a legitimate benefit. If it prevents avoidable harm, protects customers, strengthens trust or creates a market in which participants can act with confidence, regulation is not an obstacle to business. It is part of the infrastructure that makes sustainable business possible.

Niels Brabandt places this distinction at the centre of the discussion. Safer housing, safer food, safer water and fewer people dying at work are not accidental achievements. They are strongly connected to rules, standards, enforcement and institutional learning. A market without regulation does not become automatically fair. It usually becomes a market in which the economically strongest define the rules for everyone else.

Regulation As Guardrail, Not As Ornament

The strongest case for regulation is not ideology. It is trust. A customer investing money, booking accommodation, using transport, buying food or entering a workplace needs more than good intentions. They need confidence that certain minimum standards apply. Without such standards, the customer is not entering a market. They are entering a gamble.

That is why the financial example from the podcast is so powerful. No serious investor would hand over money to an institution that refuses to disclose where it invests, how returns are generated, what risks exist and whether the money can be recovered. A bank without meaningful rules is not entrepreneurial. It is opaque. The same logic applies far beyond finance. Regulation creates the minimum conditions under which trust can become rational rather than naive.

For leaders, this means regulation should be evaluated by its function. Does it create guardrails for the benefit of everyone participating? Does it reduce asymmetry between powerful providers and vulnerable customers? Does it make the market safer, more transparent or more accountable? When the answer is yes, leadership should not waste credibility fighting the existence of regulation. It should focus on implementation quality.

The Leadership Error: Treating Every Disruptor As A Problem To Be Regulated Away

The podcast uses transport platforms such as Uber to illustrate a recurring regulatory failure: regulators may correctly identify a changing market, yet respond with rules that protect legacy structures rather than improve public outcomes. The decisive question is not whether a platform is new or old. The decisive question is whether the rule improves safety, fairness and service quality in the world as it actually works.

If a rule makes ride-sharing more expensive without improving passenger safety, it may not return customers to the previous model. It may push them towards informal, uninsured and unsafe alternatives. This is where leaders must understand unintended consequences. Regulation that ignores real customer behaviour can make the formal market less attractive and the informal market more dangerous.

The business lesson is clear: disruption should not be romanticised, but neither should it be punished simply because it threatens incumbents. If customers leave an established model, leaders should examine service quality, pricing, availability, accessibility and trust. Regulation can be part of the answer. It cannot be the only answer when the underlying market experience is failing.

Safety And Security Must Remain The Core Test

The most useful test for regulation is direct: does it improve safety and security for the people affected? In accommodation, for example, basic standards matter. Cleanliness, emergency exits, fire safety, accountability, customer support and hazard management are not decorative features. They are fundamental conditions of responsible service delivery.

This is why the comparison between hotels and short-term rental platforms is instructive. A frequent business traveller may prefer hotels because chains offer predictable standards, support systems, reception services, parcel handling, problem escalation and a more reliable infrastructure. Short-term rentals may work well for some customers. However, once they compete with regulated accommodation, the question of minimum safety standards cannot simply disappear.

The point is not to ban every new model. The point is to ensure that every model competing in a market can meet standards that protect people. If legitimate regulation disappears, another informal marketplace may appear. That marketplace is likely to be less transparent, less taxable and less safe. Mature leadership avoids both extremes: uncritical deregulation and performative overregulation.

Where Regulation Becomes Red Tape

The strongest critique of regulation begins when a rule produces administration without value. This is where many organisations damage their own credibility. A form is completed, filed and never read. A checklist is created, but no decision is improved. A report is produced, but no risk is reduced. A workflow is documented, but no one can explain what would become worse if the document disappeared.

This is not compliance. It is ritual. It consumes time, drains attention and creates the illusion of control. Leaders should be especially careful when internal legal, compliance or process functions introduce requirements that no longer connect to a clear organisational benefit. The right question is simple and powerful: what do we gain through this rule?

If the room becomes silent, the rule deserves scrutiny. If the answer is safety, security, accountability, learning, risk reduction, legal certainty or better customer protection, the rule may be justified. If the answer is merely that the document might be useful one day, leadership should insist on redesign. Regulation should make the organisation safer and better, not merely heavier.

Institutionalisation Is Not The Enemy Of Agility

A common executive mistake is to treat institutionalisation as automatically negative. It sounds like additional headcount, more committees and slower decisions. In reality, institutionalisation can be the difference between improvisation and competence. When an organisation repeatedly faces regulatory obligations, sustainability requirements, health and safety duties or compliance risks, relying on scattered individual knowledge is no longer serious management.

The sustainability example is particularly revealing. For years, organisations described themselves as sustainable because they introduced paper cups or recycling bins. These gestures were visible, simple and often shallow. More consequential decisions, such as reducing unnecessary short-haul flights or redesigning travel policies, were avoided because they challenged habits, convenience and status.

When sustainability became financially relevant, especially through credit conditions and stakeholder scrutiny, organisations suddenly created roles, departments and governance structures. Institutionalisation turned aspiration into ownership. The same pattern can be seen in compliance. Many organisations discover the importance of structured compliance only after prosecutors, regulators, whistleblowers or serious incidents force the issue.

From Law To Practice: The Missing Leadership Capability

The most valuable regulatory work happens between the written law and daily practice. A new law rarely tells every department exactly what to do on Monday morning. It requires interpretation, prioritisation, translation and implementation. This is where competent regulatory, legal, compliance and operational leaders create value.

A strong internal regulatory function can explain which parts of a law apply, which do not, what must change in practice and which controls are proportionate. This prevents two equally dangerous outcomes: ignoring obligations until fines or harm occur, and overreacting with excessive bureaucracy that paralyses the organisation.

For decision-makers, the leadership challenge is to create a practical bridge between legal interpretation and operational reality. The organisation needs people who understand the law, people who understand the work and leaders who can align both. Best practice is not copied from a conference slide. It is adapted into the actual operating model of the organisation.

How Leaders Should Challenge Regulation Without Losing Credibility

Leaders should challenge regulation when it fails to create value. However, the quality of the challenge matters. A broad statement that regulation is bad rarely persuades anyone. It often provokes defensiveness and may even lead to more regulation. A credible challenge is specific, evidence-based and focused on outcomes.

The right challenge sounds different. It asks whether the rule improves safety, security, accountability or trust. It asks what risk the rule is meant to reduce. It asks whether the same risk could be addressed with less administrative burden. It asks whether customer behaviour, employee behaviour or market behaviour will change in ways the rule did not anticipate.

This is the tone decision-makers need: respectful towards the purpose of regulation, rigorous towards the quality of implementation. Leaders who can hold both positions are more effective than leaders who either attack regulation reflexively or accept every new process without scrutiny.

A Practical Leadership Framework For Regulation

The following framework translates the podcast argument into executive practice. First, define the purpose of the regulation. If nobody can explain the risk, harm or market failure being addressed, the implementation will become weak from the beginning.

Second, identify the affected stakeholders. Regulation should not be evaluated only from the internal perspective of the organisation. Customers, employees, suppliers, investors, communities and regulators may all experience the consequences differently.

Third, separate safety-critical controls from administrative routines. Safety-critical controls need discipline, ownership and enforcement. Administrative routines need constant simplification, automation or elimination.

Fourth, institutionalise expertise where the issue is recurring, material or legally significant. Do not build a department for every inconvenience. Do build capability where poor interpretation could create harm, fines, reputational damage or strategic delay.

Fifth, create a review mechanism. Regulation should not become organisational furniture that nobody dares to question. Every recurring compliance process should be reviewed for value, proportionality and practical effectiveness.

The Strategic Conclusion

Regulation is neither the enemy of leadership nor a substitute for leadership. It is a reality that must be interpreted, implemented and challenged with judgement. Poor leaders reduce the debate to slogans. Strong leaders ask whether regulation protects people, improves markets, strengthens trust and creates better decisions.

The central message from Niels Brabandt is pragmatic and demanding: accept regulation where it creates real value, challenge it where it becomes empty administration and institutionalise the capability to turn law into workable practice. Organisations that master this balance will not merely comply. They will lead more safely, more intelligently and more sustainably.

Niels Brabandt

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Mehr zu diesem Thema im dieswöchtigen Podcast und Videocast: mit Niels Brabandt: Videocast / Apple Podcasts / Spotify

Das Transkript zum Podcast und Videocast befindet sich unter diesem Artikel.

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Kontakt: Niels Brabandt on LinkedIn

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Podcast and Videocast Transcript

Niels Brabandt EMBA MBA MSc

Regulation. You love regulation, don't you? Or you don't?

Niels Brabandt EMBA MBA MSc

How come? Oh, it stops you from doing business. And that's exactly what we're going to talk about today. We're going to talk about why do we need regulation? Do we need regulation? In what way do we need regulation? How to implement regulation in your organization?

Niels Brabandt EMBA MBA MSc

Also, how to deal with existing regulation? Because many people today say we have too much regulation in place. And the question is, is that actually true? Or is that a made-up thing where people just don't like to stick to the rules? Let's talk about regulation. When we talk about regulation, a very important first step is many great things, massive achievements for humankind's life have been done by regulation. We have less people dying at work due to regulation.

Niels Brabandt EMBA MBA MSc

We have safer housing due to regulation. We have safer food and water due to regulation. So if anyone claims regulation is genuinely bad, the market regulates itself, No, it doesn't. As soon as you say we need no regulation at all, it simply means survival of the fittest, and the fittest usually in this case means the economically strongest, and they set the rules for them and their peers, and anyone else, good luck, your life expectancy might be 35 by next year. So very important here is how to deal with regulation in a reasonable way. When we talk about regulation, the first, of course, we have to look into what is the idea of regulation. Regulation in theory is something where people say we put this in place because we need guardrails for the benefit of everyone participating.

Niels Brabandt EMBA MBA MSc

I give you a very simple example. Let's say you made some money and you want to invest the money. And then you come to me, I'm a bank, and you say, okay, I'd like to give you the money. What is the interest rate? And where do you invest in? And how can I be sure that I get my money back? And my answer will be, you know, you can get some interest, maybe, maybe not.

Niels Brabandt EMBA MBA MSc

I'm not going to tell you where I invest. That's all secret. And at the end, you get your money back, or maybe not. You know, it's at risk. No one knows. And Let's speak in 5 years' time. Can I have my money, please?

Niels Brabandt EMBA MBA MSc

And then you would probably say, look, I'm not investing in this because this is shady as hell. And exactly it is. I'm not investing a single penny of my money into non-regulated assets. I simply work too hard for my money to care so little about it. Of course, when you say, hey, I inherited money, I never know where to spend it, I can't spend it reasonably, then of course you can go into any kind of unregulated industry. However, when you say, oh, it's always a bit of risk like in a casino, let's say you go into a casino and you want to play roulette. But you do not know what the numbers and the colors are.

Niels Brabandt EMBA MBA MSc

Somewhere in the back room says, oh yeah, this is black and this number, and this is red and this number, but I'm not, I'm not, I'm not gonna show you. You have to trust me. Regulation even regulates gambling, so the game becomes— I don't want to call it fair, but at least fairer. It's for entertainment anyway, so it's your choice to do or not do that. And very important is, in theory The regulation is in place to make everything better for everyone participating in the regulation or being affected by the regulation. However, here comes the problem. In practice, they often do it too much.

Niels Brabandt EMBA MBA MSc

I give you a very simple aspect which we just had last week. In Germany, Uber now faced another loss of a lawsuit and faces more regulation. You know, when you take Uber, and of course when you say I prefer taxis, go for it. I'm in London right now. I use black cabs as well. However, I also sometimes use Uber because they are sometimes even more present than black cabs, especially late at night when I go out, I go to electronic music clubs. Black cabs are far less available compared to Uber, so I take Uber then.

Niels Brabandt EMBA MBA MSc

And Uber goes point to point, so you can go from point A to point B, then from B to point C, and no matter where they stand, they pick someone up. We even have Uber Share. Uber Share, especially popular by young people, it means that people can share a ride on the way and the ride becomes a lot cheaper by doing so. And of course, Uber can make more money because they can pick up people on the way. That's a very important part of the business model. And by the way, when you say, oh, they're taking clients and customers away from the black cab tax in London, they don't. Young people, when going out, never took black cabs to get home.

Niels Brabandt EMBA MBA MSc

When nothing was going and no night bus was around, the option was the illegal driver standing in front of the clubs. And they were all lounging in front of clubs, one car next to another, driving you somewhere for cash in the hand for £10 to £20. And of course, numerous things happened during that path because you never knew if they were honest or it's another shady driver who actually wants to rob you. So in theory, regulation is good. But in practice now, we have the situation that in Germany, due to the laws, they now decide that Uber has to go back to their base after they did the tour.

Niels Brabandt EMBA MBA MSc

Let that sink in. So you have a certain base, you drive someone somewhere, then you have to return to the base. That's not the business model. That's not the business model. And they say, oh, it's like a rental car. And when it's like a rental car, it has to return to the base. That's just the regulation.

Niels Brabandt EMBA MBA MSc

And we just put it in there on Uber as well. That now, of course, will make any kind of tour with Uber tremendously expensive. And when you now say again, oh, they need to be as expensive as taxis because otherwise anyone is going to walk away from taxis. Maybe people walked away from taxis because service wasn't great. Staff there was rude, they were not knowledgeable about the routes, the cars weren't great. And on top of that, maybe the state needs to reconsider their level of taxation for these enterprises and what the costs are of running a taxi company before blaming a disruptor into the market. Of course, certain rules make sense. I

Niels Brabandt EMBA MBA MSc

give you an example. When I do Airbnb— and just to be fully transparent here, I go with hotels for a very simple reason: I travel a lot. And no matter where I go, I want to have a certain level of quality guaranteed. I work with different hotel chains, I have partner contracts with them, framework contracts with them, and that works tremendously well. I did Airbnb a couple of times, wasn't great. Maybe I was just unlucky. It's just not for me.

Niels Brabandt EMBA MBA MSc

Also, I need to have certain standards guaranteed and a support system in place, not just an empty room saying good luck from here, because I'm relying on the internet, I rely on support if anything happens. That all must be guaranteed, including receiving parcels, taking them while I'm not there, I can pick them up from reception. All of that not available for Airbnb. And probably Airbnb will say, I'm not, I'm not their customer avatar, and that's perfectly fine.

Niels Brabandt EMBA MBA MSc

However, when you compete with hotels, of course you also have to fulfill certain things. What about emergency exits, for example? What about safety and security? What about customer safety and security in case of any hazards appearing? And when you now say, oh, we should just shut down Airbnb Then just another website somewhere pops up where people will share their accommodation if you like it. And by the way, then it will be untaxed most likely and unregulated.

Niels Brabandt EMBA MBA MSc

Things go worse from there. You cannot simply say the answer to any disruptor is regulation. Regulation is good, and that's the conflict here. The conflict is regulation is good as long as it adds to especially one thing. I give you an example. When I sleep at someone else's place, meaning hotel, I want to be sure that everything is healthy. I don't want to get any kind of bed bug or anything, so it needs to be cleaned professionally. And I also need to know that everything is safe, that the place is not going to be burned down by next morning. And if something happens, that there are emergency exits and professional staff in place, anyone who can help me.

Niels Brabandt EMBA MBA MSc

So regulation adding to safety and security is a great thing. That is not negative. When I invest money into certain aspects, I do it because I know it's regulated and Dart rails are in place. Are they perfect? No. But are they useful? In many ways, yes. Not all of them, of course, but many of them. So please walk away from this, oh, regulation is always bad, because besides all of that, you can have that opinion, of course. What do you think the discussion will lead to? Do you think you step up to some department and say, oh, your regulation is all bad, and they will say, oh, thank you for telling us, we will stop doing so? Or do you think they will go into counter-aggression and regulate even more? And that's more likely the case.

Niels Brabandt EMBA MBA MSc

The problem starts when regulation kicks in. And I mean regulation, for example, even from the legal or compliance department internal in your organization. When you say we have this rule in place and the only thing it does is creating admin, we're filling out papers, no one looks at them, no one does reporting on them, nothing's decided on that. We just do the paperwork and then we walk away. Nothing ever happens with it. And that is the problem in real-world applications.

Niels Brabandt EMBA MBA MSc

Safety and security is great for everyone participating. However, as soon as administration comes in place, administration, which is nothing else than red tape, needs to be stopped at a certain level. When you find the right level, what you usually do is you institutionalize your approach to regulation. I give you a very simple approach here. When you say institutionalization and you say, oh no, that's just an additional headcount, we don't need that. And still you wonder, why do now companies have compliance department and sustainability departments? Let's take the latter. Let's take why do we have full-time positions for sustainability? And I can tell you why.

Niels Brabandt EMBA MBA MSc

We said for years we need to be more sustainable. I am now in the sustainable leadership space for decades, and many companies said, yeah, we're sustainable now. And when you then ask them Okay, so what did you do? They say, yeah, we have paper cups in the office. Okay, cool. What else? Yeah, we think about doing paper straws as well. And you think, okay, that's great. What about the more impactful things? Did you step away from, for example, in a small country such as Germany, did you step away from flying within the country to going by train? No, no, no. It's too slow. It's too slow.

Niels Brabandt EMBA MBA MSc

Then you do the math and show them that from point to point, for example, when you fly Hamburg-Cologne, you are quicker by train, even with Deutsche Bahn delays, compared to point to point, because airports are not where you want to go. And it's really, especially short haul, it's, it's, it's all Hamburg-Frankfurt, 3 hours by train. You can show up 2 minutes before departure and you arrive safe in Frankfurt. All of that takes way longer by plane. And oh no, it's too inconvenient. There we are. So when did then suddenly organizations become more sustainable and started to have departments for it? I can tell you when. When it became credit relevant.

Niels Brabandt EMBA MBA MSc

As soon as companies knew my interest rate is relying on me being more or less sustainable— by the way, that applies only for companies in Germany from a certain size onwards— suddenly they institutionalized it. When did compliance departments pop up? They usually popped up after the public prosecutor stood at their doorstep and said, I think we found something here and it's going to be really bad from here. Or people spoke up and said, look, we have people dying on construction sites, no one is showing up for work anymore. So if we cannot have a safety and health and safety inspector around, no one is going to work in the future. And by the way, the building we've built so far, we're going to burn that down by tomorrow. Suddenly there was someone available. Institutionalization leads to having a proper approach. However,

Niels Brabandt EMBA MBA MSc

again,. It needs to add to everyone's safety, not just create unnecessary admin and being a public nuisance. Of course, regulations can be annoying because we usually say, I really got different things to do, mate. I have something else to do than this. However, whichever person shows up, they usually have the best interest at heart. Also, they have a huge advantage. Let's say a new law comes into place and you wonder, okay, I need to implement this law. How do I actually do that?

Niels Brabandt EMBA MBA MSc

Usually your department where regulators are in, they know how to interpret laws and they say, look, we have this law, these parts don't apply to us, these parts do apply to us, and that means for our real-world practice we need to put in place A, B, C, D, E. So they are able to put into real-world practice what you need to do. And this, what you need to do, is a huge, huge advantage instead of just running into errors and then paying fines or even harming people.

Niels Brabandt EMBA MBA MSc

Of course, when you now combine the implementation of laws with the people's practice and you focus on adding benefits for every single person, you can challenge regulation anytime when you see with a valid point that it doesn't create value. Challenge it, and then you have a discussion, and usually you find a good solution for that. However, when you see something that adds to safety and security, then you can say That's our best practice approach. And when you find this law to practice best practice approach, then your handling of regulation will be beneficial for everyone in your organization.

Niels Brabandt EMBA MBA MSc

I wish you all the best implementing this in your organization by hopefully tomorrow. And when you now say, mm, I think I have a couple of questions here, feel free to contact me anytime. So

Niels Brabandt EMBA MBA MSc

first, of course, feel free to leave a like here when you just watch me on YouTube. When you now probably are on YouTube, just subscribe to my channel or leave a comment here. I'm always happy to discuss with you. And of course, when you now listen to Apple Podcasts or Spotify, feel free to leave a review there, 5 stars. Thank you very much. We invest a lot of time and effort into this to do it proper with proper content, not just motivational, inspirational chumba wumba. We offer all of that for free. So we're very happy when you give us a positive review here.

Niels Brabandt EMBA MBA MSc

On top of that, I recommend that— by the way, when you recommend this channel, feel free to do so online, offline, social media, friends, colleagues, anywhere. We love to have more of an audience. At the moment, the ranks are doing very well, but we can always grow more. Thank you very much for doing so as well. We always recommend one more thing.

Niels Brabandt EMBA MBA MSc

On YouTube, we have something which we only have on YouTube, and that is called the so-called YouTube Shorts. I promised beginning of the year that I will offer leadership tips, one tip per day minimum. We are way ahead of plan. It's not only me, but also external experts. For example, we have a Cambridge professor interviewed who is going to talk about the future of AI and regulation as well. On the English channel where you are right now, you can see it. It's just the interview before this episode. So the YouTube Shorts are where you find the best bits in there. So feel free to actually use the YouTube Shorts. They are, as the name says, only on YouTube.

Niels Brabandt EMBA MBA MSc

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Niels Brabandt EMBA MBA MSc

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Niels Brabandt EMBA MBA MSc

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Niels Brabandt EMBA MBA MSc

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Niels Brabandt EMBA MBA MSc

However, the most important bit is always what I say last. Apply, apply, apply what you heard, because only when you apply what you heard, you will see the positive aspect that you obviously want to see in your organization. I wish you all the best doing so. Feel free to contact me anytime. I answer every single message on any platform within 24 hours or less. So I'm looking forward to hearing from you there.

Niels Brabandt EMBA MBA MSc

And at the end of this podcast, as well as at the end of this videocast, there's only one thing left for me to say. Thank you very much. For your time.