Regulation & Innovation
Regulation is not simply the enemy of innovation - the relationship is more nuanced. Rules can impede innovation by adding cost, delay, and uncertainty; but they can also enable it by creating trust, standards, safety, and level playing fields. The innovation professional needs a clear-eyed view of both effects.
- →Approval processes that delay or block launch
- →Compliance costs that favour large incumbents
- →Uncertainty that deters investment
- →Rules written for old technologies that don't fit the new
- →Building trust that unlocks adoption
- →Common standards that let ecosystems form
- →Safety that makes new markets acceptable
- →Sandboxes that let innovators experiment safely
The march of progress
A recurring lesson from the permissionless view is that regulation rarely stops a genuinely transformative technology - it mostly determines where it happens. If one jurisdiction blocks a promising innovation, the trials and the economic benefits simply move somewhere more welcoming. Forward-looking policymakers increasingly recognise this, and choose to stay out of the way (while keeping existing safety and fraud laws in reserve) rather than watch progress - and jobs - relocate elsewhere.
You want to pilot a genuinely new offering, but current regulations were written before your technology existed and don't clearly permit it. What's the savviest move?
How does regulation shape innovation in your industry - as more of a barrier or an enabler? Where could engaging regulators early turn a barrier into a path?
Sources
- Thierer, A., Permissionless Innovation, Mercatus Center, 2016.
- OECD, reports on regulation and emerging-technology governance.
- Global Innovation Institute (GInI), Foundations of Innovation body of knowledge.