By: Jeanette M. Shaw
What do “old economy” and “new economy” companies increasingly have in common? Government scrutiny as well as legislative and regulatory challenges. What do these companies often NOT have in common? Awareness or acknowledgement of potential regulatory consequences that can stifle invention, prevent or slow market entry and impede investment and growth. When a new economy company innovates and disrupts incumbent industries, it in turn disrupts legal, legislative and regulatory regimes.
Companies can sit on the sidelines and let government officials guess how public policy will affect their businesses and customers. Or they can be proactive and work with policy makers and regulators to ensure that laws and regulations best serve business and customer interests.
It is no longer viable for new economy C-suites to ignore regulatory issues or hope they will "just go away.” They won’t despite the fact technology solutions may be bettering the world, increasing efficiency, and/or enabling a “shared” economy. C-suite executives must understand the legislative and regulatory environment in which they operate and how it will affect their businesses and operational investments.
As my colleague Nate Garvis, Target’s former vice president for government affairs, once said, “When legislatures and regulatory bodies are making policy decisions, if you are aren’t at the table, then you are probably on the menu.”
Effective public policy efforts must begin inside the company, where local, state and federal legislative and regulatory policies are researched and understood, strategies set and tactics devised.
Government relations literature is filled with examples of companies such as Google, Microsoft, and Wal-Mart, thinking they could ignore local, state and federal public policy early in their development.
Wal-Mart once believed it didn’t need a significant legislative or regulatory presence. Then it began facing negative state campaigns. This drove more active engagement at the state level and later a bigger federal presence. Both Google and Microsoft (and many throughout Silicon Valley) recognized late in the game how policy makers and regulators have the power to cause significant business damage.
As Michael Watkins, Mickey Edwards and Usha Thakrar note in their book, Winning the Influence Game: “The bottom line is that in spheres ranging from privacy issues to labor laws to industry deregulation, government can affect any company’s well-being. Working with government will not always achieve the desired results, but it is better to anticipate and work to shape the impact of government actions than to struggle to respond to them after the fact.”
Don’t be on the menu; Be Proactive