By Joanna Belbey, Social Media and Compliance Specialist, Actiance
Unicorn startups are praised for revolutionizing regulated industries with new technologies, but does disruption come with a cost? When companies, especially those in controlled industries like financial services, healthcare, pharmaceuticals and the public sector, challenge the status quo, they risk facing the consequences of not complying with legal regulations.
The classic example is that of Uber and Lyft. These ridesharing apps disrupted the taxi and transportation industries and caught lawmakers off guard as they worked to either stifle or accommodate the innovative technology. Historically, the taxi industry has been highly regulated to protect both drivers and passengers. When Uber and Lyft shook up the industry, they chose to act first and rapidly roll out their technology, then ask for forgiveness later from regulating bodies. Uber had to hire more than 250 lobbyists to overcome industry opposition and navigate local laws long after their application and services became wildly popular.
While there is an ongoing debate over whether or not this risky approach is the most effective strategy, it’s clear that that course of action is not the ideal choice for companies that don’t have the resources to turn themselves into lobbying machines.
At SXSW 2016, Arika Pierce, seasoned government relations professional and principal at Gide, a public affairs consulting firm, outlined how emerging technology companies can best navigate the intersection of government regulations and technology. In her session, “Government vs. Innovation: Breaking Tech Barriers,” she laid out best practices for how companies can align with government agencies to push innovation forward.
If you’re facing regulatory uncertainty, here are four things you should do to ensure compliance doesn’t hinder your growth.
Think about all the ways government regulations will impact you.
Consider when and how government will intersect with the work you are doing. Will you need to work with regulators, pay attention to changing legislation, forge a partnership with government agencies or consider government bodies as consumers of your service? Imagine all of the possibilities, and then decide from the beginning and as a team how you are going to approach each relationship.
Build a government relations plan that complements business and growth goals.
If you are in the regulated space, government regulations will eventually catch up with you—especially, if you don’t keep abreast of all the regulatory changes. Take a proactive approach and build out a solid government-relations plan. If you are speaking to investors, factor this into your pitch deck. Investors will be impressed that you thought through how government will impact your business.
Take part in the process.
Building an advocacy network that expands beyond your customer base is paramount for understanding regulatory processes. Identify whom your biggest supporters and detractors are and build relationships with them. Most entrepreneurs make the mistake of avoiding government officials. Don’t fall into that trap and miss out on the opportunity to discuss issues openly with them and potentially find a government official that is a champion for your cause.
Know when to get help.
Startups need to know when to bring in outside expertise. Rather than place government relations under your general counsel’s list of responsibilities, consider working with someone who knows specifically how to strategize about government relations. When regulatory red flags start to pop up, you can turn to government experts for the best plan of action.
To be compliant and innovative, companies must be proactive. For emerging technology companies in regulated industries, compliance uncertainty and government regulations can be the roadblocks to growth. However, the tension between technologies and government regulations will only continue. Rather than wait until the opportunity is lost, take a proactive approach to government relations.