Last summer the teams and the FIA agreed to a rise of 15mm in the floor edge height as part of an attempt to address porpoising.
Having tried the new spec in the wind tunnel, McLaren decided that it would be difficult to recover performance with the 2023 car with the package it was running.
Thus, in September, the team decided to take a different route, one that offered much more potential.
The call was made too late to ready the full new package for Bahrain, which is why the team is instead aiming to make a big leap when it is introduced in Baku.
"Where this happened actually is when we took the 15mm floor step," said Key.
"So we all agreed that as porpoising protection, which was very sensible given at the time last year that was still quite a major issue. It began to improve for everyone as things improved during the year.
"That sounds very small, but these floors are huge and incredibly sensitive. Look at how much downforce it generates, massive. So when we did it on our car, it actually gave us a much bigger loss than anticipated. It seems to have affected different teams in different ways.
"And to a certain extent, it seems to be related to the floor edge geometry that you're running at the time."
Key said that the change hurt McLaren more because of the aerodynamic route it had taken with last year's MCL36.
"If you look last year, there were two camps beginning to develop, one which we were in, and one which probably the majority of teams were in," he explained. "And when we took that [15mm] step, it was a really big knock for us.
"And then trying to recover with what we knew at the time, and this was probably September time, we were thinking this is not working, we've actually got to change direction entirely with these geometries.
"Which is a big change, because they're very big projects, and very complex projects.
"So I think the timing of the reg, and the fact that we took a particularly large hit, and then that it clearly wasn't going to come back easily, meant that we had to change direction quite late."
Key insists that the reason why the team didn't rush to get the complete new package to the first race in Bahrain was because it wanted to ensure that it was fully developed and understood.
"It wasn't like we were dawdling around and thinking what to do, and actually why don't we do this," he said. "It was sort of forced upon us by a recognition that the new regs weren't going to recover with what we knew from last year.
"That led to a completely refreshed and revamped approach to that area of the car. It takes a while to develop these things. We tried to get it for race one, it wasn't mature enough.
"It would have performed a bit better. But with these floors, you've got to maintain stability, good correlation and everything else to guarantee that it's going work, and it was a little bit risky for race one."
Asked by Motorsport.com if it was frustrating to have made the call so late, Key said: "Absolutely, I mean, it is frustrating because, to be honest, the route we're on now seems to be pretty prolific, it's doing what we hoped it would do. There's still some work to do.
"The development rate on that is so much higher than what we had. Had the reg been earlier or had we clocked the fact that actually you need to do a different thing with this four weeks earlier, we wouldn't be talking about it right now, to be honest.
"So it's a bit it's a bit of a shame, but we are where we are, and we're just going to recover from it."
