ALUMNI | Hanzo Van Beusekom HKSEE 2005 (pictured above) flips through a series of projected slides detailing the process that helped transform the Authority for the Financial Markets (AFM) into a more effective organization. Van Beusekom is telling his story to students in Harvard Kennedy School Professor Malcolm Sparrow’s course “Strategic Management of Regulatory and Enforcement Agencies,” four years after he attended the course himself.
Van Beusekom explains how he applied the course’s principles. “It was a difficult organization to manage,” he says of the Dutch financial regulatory agency when he arrived there, almost seven years ago. He describes its structure as broken into silos, with AFM regulators monitoring financial activity by institution.
But the system wasn’t working, he says. “There were one or two urgent issues that had already surfaced, and we knew they couldn’t be dealt with within the existing structure.” Familiar with Sparrow’s work in the strategic management of agencies similar to AFM, he decided to attend the executive education class.
Created by Sparrow in 1997, the course helps senior-level regulators, managers, and enforcement officials better match their methods to different parts of their regulatory mission. It also emphasizes a new management approach that shifts an organization’s focus from process-based to problem-based or risk-based. Regulators organize their work around problems that may involve multiple institutions they oversee, instead of dealing with institutions one by one. Offered in the fall and spring, the popular course has trained more than 900 individuals.
For Van Beusekom, the course’s emphasis, finding specific problems and fixing them, appeared simple enough in theory yet was extremely difficult to execute. As a middle manager at AFM, he found that convincing his superiors upon returning to the Netherlands was his first challenge. “You’re back in the old system and you’re the one with the new ideas and the one who needs to convince the others. It’s difficult.”
He outlines his process: First he brought his bosses on board; then he identified the groups to be reorganized; next they identified problems; and finally they defined and measured the impact they wanted. He describes one early success: the agency’s effort to reduce the sale of teakwood, a $700 million industry in the Netherlands that, while legal, was unscrupulously marketing a very high-risk investment. Using the problem-solving approach Van Beusekom had learned in class, the agency succeeded, through a creative mix of methods, in dramatically decreasing the exposure of Dutch investors to risk.
Today, with the restructuring almost complete, Van Beusekom believes the AFM is headed in the right direction. Almost 70 percent of the financial supervision division’s time is spent on problem-solving work. If the change is to succeed, Van Beusekom emphasizes, recruiting creative, ambitious individuals who work well within a less conventional management structure is critical.
AFM’s success, says Sparrow, was the result of Van Beusekom’s solid grasp of the course’s core concepts and his ability to convey those concepts to his superiors. The agency also showed courage, he says, in experimenting with fundamental methodology. And finally, he says, the agency placed a strong emphasis on recruiting analytical and creative staffers with the personal and social skills to work effectively in a fluid environment consisting of multiple project teams.
Looking back, Van Beusekom is candid about missteps along the way: too many problems identified, not enough staff training, inadequate attention to metrics. If you think about your own organization, he warns, the changes should be “big enough not to be too trivial,” but “don’t do it all at once.”