Does your business need a public affairs agency?
by David Abrahams on 28 Aug 2018
Innovation in the tech sector is moving at a rapid pace, and the companies driving these innovations are increasingly facing political and regulatory hurdles. Business leaders are at risk of being affected by outdated laws and hastily introduced regulations that negatively impact on their operations and growth prospects.
If you are an innovative business, you may have already faced a threat from a change in regulation that could seriously disrupt your business. Perhaps your plans to launch a new product or service have fallen foul of an existing policy. Or regulators, facing pressure from incumbents, quickly introduced a new statute that made it harder to enter a new market. One thing for sure is that as your business continues to grow, the more likely you are to come face-to-face with these challenges.
Where technology leads, regulation follows
Over the last decade, technology is the common thread running through every industry and solving problems around the globe. Drones are being used across sectors from infrastructure to agriculture, companies such as Lyft, Google, and numerous startups are investing in autonomous vehicles research, and there is a growing adoption of sharing economy-based business models.
This rapid pace of innovation underpinned by technology is driving the agenda, and many organisations have faced their fair share of regulatory hurdles in their endeavours to break away from the competition.
Uber has become the archetype of a technology company disrupting a highly regulated industry, facing regulatory hurdles in many of the cities in which the company operates. Uber has changed tack significantly since the revelation of a major security breach and Transport for London’s (TfL) threat to withdraw their licence to operate. However, the reputation for disruption has led to many new regulations being introduced, such as those in Denmark which led to Uber closing down in the country in 2017.
Airbnb, as the pioneer and largest of the many short-term rental platforms, has also faced regulatory hurdles. The sharing economy-based accommodation rental sector has come under fire for almost everything including causing inflation in the housing market, enabling anti-social behaviour, and failing to prevent racial discrimination on their platforms.
In October 2016, the City of New York issued a new law prohibiting companies from advertising or listing an entire unoccupied property for less than 30 days. In Spain, the city authorities of Palma de Mallorca have banned short-term rentals entirely and city of Valencia has introduced stringent restrictions. The sector has faced similar challenges in many other countries across the globe.
There is a clear pattern: tech sector disruptor launches as consumer-centric innovator but then runs into political and regulatory problems as it scales-up. This pattern will continue to be repeated. Even when tech innovation is not actually disrupting another market, it will often face a similar pattern of political and regulatory issues emerging as the company or sector grows and becomes mainstream. Commercial and consumer drones, autonomous vehicles, virtual and augmented reality, and artificial intelligence are all examples of emerging innovative sectors which will have to deal with a range of political and regulatory issues as they develop. Companies in these sectors will need to be prepared to address these issues head-on if they are going to win the arguments for sensible, commercially-viable regulatory frameworks.
A proactive approach to politics and regulation
By taking a proactive approach and keeping an ear to the ground on the trends in policy making and regulation, companies can anticipate risks to their business before they become a problem.
Conducting in-depth, up-to-the-minute research enables you to identify worldwide trends in your sector. But you need the right political expertise and connections so you can draw out crucial information on upcoming policy changes and regulations, and how they might impact you. Moreover, by engaging with policy makers and regulators, a company can seek to prevent potential threats to their business, as well as rally for a drive on new policies that will benefit them.
By lobbying decision makers, businesses can have a strong impact on politics and regulation. The most successful organisations are certainly not shy in attempting to influence decision-makers to serve in their best interests. The biggest names in technology, including Google, Amazon, and Apple, have become the biggest lobbying spenders in the US and, increasingly, the EU. These companies have made the strategic decision to invest in lobbying.
Hiring a public affairs agency
Developing a strategy for engaging with politics and regulation can be difficult without the know-how or the capability of a dedicated in-house function. How do you monitor developments in policy and regulation? How do you analyse what it means for your business? How do you even begin to engage with and influence policy makers and regulators?
For this very reason, companies often choose to hire a public affairs agency or political consultancy. These organisations provide companies with up-to-date political and regulatory trends, analyse how they could impact their business, and use their network in the policy community to help them engage with decision makers.
A public affairs agency tends to work with a business on an ongoing basis, meaning you can focus fully on other priorities with the knowledge they will be there as a trusted and consistent advisor. However, employing a third-party does not come without some management requirements; as with any consultancy relationship you will need to ensure they understand your business priorities and maintain a high quality level of work and service.
As a business leader in the tech sector, keeping track of policy and regulatory changes that could negatively impact your profitability and growth need to be a priority. Equally, having an understanding of regulatory developments and policy making can help you spot new opportunities that could benefit your business.
If you are just starting the process of engagement with politics and regulation then you may not be ready to recruit a permanent advisor into your business. Using an agency can help you identify the strategies that will deliver your business objectives whilst providing a flexible and adaptable level of support. Finding an agency with the right culture is critical if you are going to get the most out of your investment.
Written by David Abrahams
David’s is an experienced public affairs practitioner with a background in competition regulation and a particular focus on technology, mobility, telecoms and internet infrastructure. He leads Inline's mobility practice.