By: Ryan Ayers
In theory, most of us like the idea (or at least see the necessity) of regulations. Just look at a recent survey from Pew, that shows 74% of Americans think “the country should do whatever it takes to protect the environment.”
We’d like to believe goals like this would just happen through self-regulation, but they don’t: regulations are necessary. They reduce the number of unjust and dangerous occurrences in the world, and they keep companies away from unethical business practices (most of the time). Even with regulations, not everyone is protected. There are still unsafe conditions in many industries: chemical exposure is the 8th leading cause of death in the United States, with 32 million workers exposed to unsafe chemicals every year. Other regulations are outdated or impractical, yet businesses must follow them.
Regulations exist for a reason, even if we don’t always understand or like them. Unfortunately, they don’t always coexist well with innovation—even if innovation is positive, it tends to “break the rules” on a regular basis. So how can companies that want to be innovative overcome regulatory obstacles in an ethical way? Is it even possible?
Innovation Leaps Ahead of Regulations
In a perfect world, innovation would run in tandem to regulations. Unfortunately, that almost never happens—innovation is the hare; regulation is the tortoise. Many companies forge on ahead with innovations that don’t technically have any applicable regulations, but definitely fall into a gray area. A good example of this is the cryptocurrency bitcoin, which emerged in 2008. About 10 years later, lawmakers are finally starting to consider how best to regulate the booming bitcoin market. Similarly, internet privacy and technology are moving faster than they can be regulated.
Now, cybercrime is a major issue, but police departments don’t know how to prosecute it. Sometimes self-regulation works—when ethical people are involved. Other times, it doesn’t. Other times, unexpected consequences arise. That’s just the nature of innovation—it breaks the rules and leaves them behind.
Industries with Strict Regulations
When we think of industries with strict regulations, healthcare, finance, and automobile manufacturing typically come to mind. While these are all heavily regulated, some don’t make it into the top ten most heavily-regulated industries. The only portion of the healthcare sector to crack into this list is pharmaceutical regulation at number 9. Petroleum and coal products manufacturing is the most heavily-regulated industry, with 25,482 rules applying to it. Some of these industries have little need for innovation, but others definitely do—and if you’re in one of the heavily-regulated industries, you’ll need the help of a legal team to ensure you’re compliant.
One of the most well-known regulations to protect consumers is HIPAA (Health Insurance Portability and Accountability Act), which protects patient data and requires that certain data storage and management protocols be followed. High-profile non-compliance cases have resulted in fines of hundreds of thousands to millions of dollars. Understandably, while we all want our healthcare data to be secure, our treatments to be safe, and our healthcare providers to be regulated, we have to realize that some industries with strict regulations do tend to be slower to adopt new technology that could be beneficial.
Approaching Innovation Within Regulation
Yes, you do have to follow your industry’s regulations. You can’t take the stance that the rules don’t apply to you because your company is doing important, innovative work. The first step to working within regulation is fully understanding the rules and the logic behind them. There’s some room for innovation within many regulations, and you should ensure you have a couple of open-minded and innovation-friendly faces on your legal team to help you wade through the rules. It’s their job to question and play devil’s advocate when you’re considering new ideas that may challenge regulations. If you can, get to know your lawmakers. Work with them instead of trying to sneak around them. Communicate the value of your company’s initiative to everyone—lawmakers, your legal team, the general public. Educate and familiarize people with your organization’s innovative ideas—the more they hear about it, the more comfortable they’ll become.
It’s your job to discuss, repeat, and communicate the value of your organization’s innovations. This isn’t easy. It takes a long time and will test your patience. There will be setbacks, and maybe even courtroom battles, in some cases. Be patient, but be persistent. It’s your lawyer’s job to make sure you adhere to the rules and regulations of your industry. It’s your job to find out how to work within them for ethical innovation. Sound challenging? It is. But if you want to stay competitive, you need to stay in the innovation game.
By Ryan Ayers
About the author
Ryan Ayers has consulted a number of companies within multiple industries including information technology and big data. After earning his MBA in 2010, Ayers also began working with start-up companies and aspiring entrepreneurs, with a keen focus on data collection and analysis.
Featured image via Yayimages.