Tackling change in heavily regulated industries - Part 1
Tackling change in heavily regulated industries - Part 1
This is the first in our two part series to prompt discussion on how to tackle change within heavily regulated industries. Specifically, we will look at the impending changes within the North American road safety industry. This industry is about to go through its greatest change since 2009. The changes will lead to significant improvement in safety and transparency, however the changes also present a period of uncertainty for manufacturers and regulators. It’s fine to change the rules, but what will the changes mean in practice? We’ve decided to share our thoughts and experiences of previous periods of change to see if we can offer some answers.
The caution of change
The one constant feature of the world today is change. It is pointless trying to avoid it. As new technologies emerge, products can be improved and new levels of performance can be achieved. Additionally, new information can challenge assumptions about how things work. Consequently the regulators of high risk industries periodically update legislation to improve safety and reflect currently achievable performance levels. As an example, consider the humble seatbelt which went from an optional extra to a mandatory feature as its benefits were proven. Further examples include the eradication of asbestos or the removal of lead from petrol. In each case, new information led to major changes as regulators did their best to keep us all safe.
Understandably, significant change within heavily regulated industries is approached with a high degree of caution. The risk-averse nature of these industries leads to a need for certainty and predictability: two qualities in short demand during a period of change. By its very nature, change is uncertain/unproven and introduces an element of risk. As such, change is restricted, throttled back and often viewed as negative. This is a crying shame, as our experience shows that change can provide great opportunity.
Tackling change with innovation
A risk averse industry undergoing significant change right now is road safety. NCHRP350 has reached the end of its life, the stance on the adoption of MASH is strengthening and the Federal Highways Association is clarifying and updating their process. This has raised concerns from those currently in the industry and those new entrants looking to establish themselves; questions such as:
1. How can I develop new or existing products that will meet with strict validation requirements, yet still differentiate and remain competitive?
2. The results of compliance testing are so variable. With the increased testing requirements, how can I justify investment in new product development when there is so much uncertainty?
3. With more and more conservatism, how can I get new products approved with such large barriers to market entry?
When considering these questions, the answers can actually come from change itself. History has shown that significant change often comes hand in hand with a period in which companies innovate, establish new markets, develop new methods, and introduce new products. One need look no further than the device you are reading this on for evidence of the impact of technological change and the opportunity it provided for the Gates, Jobs and Zuckerbergs of this world. Quite simply, change provides the stimulus to innovate. In contrast consider the already well documented fall of market leaders such as Nokia and Kodak who failed to keep up with the pace of change; their reluctance to embrace change led to their demise. Alternatively, consider the changes to auto industry over the last century or so. From horseless carriages, to modern automobiles, to electric cars, and now to driverless cars. Each a major shift in the industry, and those who led and embraced the change are the ones who profited (ok, it’s a bit early to tell on the driverless cars!).
As a product development company we are privileged to work with clients who understand the importance of innovating through periods of change. Specific examples of products developed in various heavily regulated industries are provided below. In each case, there was a shift in the market that led to demand for new products. ·
- Transport Industry: Changes to performance evaluation standards led to development of Ingal EZY guard, one of the first generation of weak post system with no blockout.
- Amusement Industry: Introduction of new dedicated guidelines and standards for the recreation climbing and adventure tourism industry coincides with the development of the Trublue and zipSTOP.
- Building and Construction Industry: Safety in the workplace is becoming an increasingly important issue. In particular height safety has been under intense scrutiny. Humpty’s Fallbreaker saw a gap in the market and offered an innovative solution to a common problem.
The shared theme for all these firms is that they saw opportunity in a period of uncertainty and, with the right attitude and a strong process, were able to successfully tackle change, head-on, through innovation. As firms begin to grapple with changes in the road safety market it will be telling to see who succeeds and who fails. We suggest those with the right attitude and process will come out on top.
Want to know more? Click on the Part 2 link to read how the right process can help companies realise the value of innovation while mitigating risk and maximising return. For futher information, feel free to contact Ben Poulter (+64 27 522 3691 or firstname.lastname@example.org) for a confidential discussion on the themes described above.
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