Many leaders are concerned about the impact of government regulations on their businesses. They view government-imposed rules as the biggest obstacle to their company’s growth.
But I’d like to challenge that notion. Entrepreneurial leaders shouldn’t worry about the regulatory environment as a threat. Rather, they should look forward to using any upcoming changes to create a competitive advantage in the marketplace.
Let me explain what I mean.
The Pace of Change
I’ve written about pace layers, a concept popularized by Stewart Brand and Paul Sappho of Stanford University.
The core idea is that different parts of society change at different rates. For instance, companies, technology, fashion, and social customs change faster than governments and religion.
By contrast, entrepreneurs drive speedboats. No matter how the rules change, we have an opportunity in our businesses to outmaneuver whatever changes are happening in the regulatory environment.
Every time the tax laws promise to change, entrepreneurs deploy armies of attorneys and CPAs to figure out the implications and then move quickly to help their businesses adapt to the new tax environment.
Another example would be when laws related to privacy and security in software change. We’ve seen this kind of thing many times in recent years. And what happens when these laws change? Companies move quickly to modify their agreements and practices, which has little or no effect on the business. In some, it drives real growth.
The point is that when the battleship starts sending signals that it will move, you can get ahead of any changes if you’re driving a speedboat. You might experience a few choppy waves that will slow down your business. But it’s not permanent. Regardless of what the government does, you can always rely on your speed to get you out of danger.
An Equal Opportunity Challenge
My message to CEOs who see regulation change as the biggest constraint in their business is that they need to recognize that the regulatory environment is like rain. It impacts everyone in the same way. Whatever impact a new law or regulation might have on your business will generate an equal or perhaps more significant jolt for your competitors.
Now, think about this scenario differently. Which companies do you think came out better than others? The ones who saw the regulation coming and pivoted to making investments in alternatives to chlorofluorocarbon-based products? Or the companies who complained and relied on their lawyers to stall and wait things out–hoping the new regulations would disappear?
The same applies to every regulated situation, such as how stock options are handled, environmental regulations, and self-driving cars. In each case, some companies viewed the change as a risk and others as an opportunity. While the regulations impacted everyone equally, some grasped the change and used it to grow.
The answer is obvious. Those companies that saw the battleship turning used their speed to get ahead of it, giving them a competitive advantage in the marketplace. In the aftermath of those new regulations, those companies that moved faster emerged more robust than ever, while the laggards went out of business altogether.
Getting Ahead of the Curve
If you operate in an industry that can be impacted by government regulation, spend less time worrying about it. Instead, invest more time anticipating how you can get ahead of it and turn that insight into an advantage you can deploy against your competition.
Remember, you’re driving a speedboat and not a battleship. Use your speed to your advantage–or face the consequences when your competitors use that advantage against you.
