Teenagers hands playing tug-of-war with used rope   In last week’s blog post, I talked about the importance of achieving cultural alignment within an organisation to support innovation adoption.  The focus of that discussion was on how innovation and culture interact within an organisation, but there was a post on Forbes this week that highlights that this interaction occurs at a number of levels.  And it’s no less important to the success of innovations in the market place.

The blog that highlighted this issue for me was entitled “VC/DC: The Accident-Prone Intersection of Innovation and Policy“.  In that blog, Larry Downes highlights that Silicon Valley regularly ignores the impact of lawmakers in the development of innovations, leading to clashes between policy makers and innovators.

In my last post I pointed out that cultural change at the level of entire economies is an important factor affecting the transition from one type of technology to another.  That is, innovations are usually part of a much broader ecosystem, including individuals, firms and institutions and policy makers and their attitudes to technological innovations can have a significant impact on the success of a new idea in the marketplace.

As Larry points out in his post, this is an issue that technology companies should be thinking about, but probably aren’t.  This comes across in a lot of the language used by innovators when they come up against regulatory barriers.  The regulator either doesn’t understand the (obvious!) significance of the innovation, or they cling to outdated models and ideas by denying the innovation suitable changes to regulatory regimes.  It’s an issue that companies like Uber are coming up against again and again as they expand their business around the world.

Generally speaking though, regulation reflects society’s view of what constitutes acceptable and unacceptable behavior in the marketplace.  Changes to regulation therefore take place at much the same speed as more general attitudes in society; that is, pretty slowly.  Perhaps the only thing that leads to rapid policy change are issues that are either catastrophic or abhorrent to the general public (for example, the global shift in policy on nuclear energy in the wake of the Fukushima Daiichi nuclear disaster).  Even significant issues like climate change only result in a slow change to the policy landscape.  So what hopes does an innovator have when asking for regulatory changes to support their idea?

Instead of railing against the injustice of current laws, innovators can influence the process by getting involved with policy makers early and often, as Uber is now doing in Washington.  That can be difficult in a start up phase where resources are limited, but the long term payoffs can be significant.  But it still takes time, and innovators shouldn’t expect rapid accommodation of their needs in policy instruments.  And even if the regulator accepts the case for change, any alteration will reflect a negotiated position which lies somewhere between the extremes of what parities to the negotiation might like (though more likely at the end of the scale preferred by the regulator!).

This is all a consequence of the fact that technology evolves faster than social attitudes and expectation do.  And when an innovation relies on social attitudes and expectation to change to support adoption, then the innovator has a problem.  The best course of action is to understand these influences early in the development process  and map out ways to deal with them – either through influencing the direction of development, by changing the innovation so it avoids the problem, or choosing markets where a different set of cultural forces help rather than hinder adoption.  Or a combination of all three.

If more entrepreneurs and innovators took this approach, then the intersection of innovation and policy might not be as accident prone as it seems at the moment. 




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