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Push Past Obstacles: Innovation in an Age of Regulation

The world of today is so full of regulations that often, the only way to do something new, to create something great, to prosper is to simply ignore rules.

Moments before SpaceX launched its rocket, the government told the company that its launch would violate the terms of its license. Undeterred by this setback, Elon Musk and his team at SpaceX went ahead with their plan anyway. And what happened? The rocket was a success!

This article will explore disruptive innovation in an age where regulation is all too common.

Throughout history, disruptive innovation has posed a threat to the incumbents and has often been disruptive to society at large.

The government regulates disruptive innovation with the intent of not only preventing social havoc but also mitigating risk to society.

In today’s world, disruptive innovation often isn’t regulated as severely as disruptive innovations of the past because regulation is primarily reactive to disruptive innovations. So while disruptive innovation can be regulated, it’s regulated only after and in response to its disruption.

Examples of regulations that have attempted to inhibit disruptive innovation include: Uber being required by law to notify airport authorities whenever they pick up passengers and not being able to operate at airports. It also does not allow them to drop off passengers at airports. They also can’t use other apps like Lyft, which is a competitor – as a way of enforcing the protection requirements of the service.

The government has also tried to regulate disruptive innovation by imposing heavy fines on companies that have violated the law, such as Uber which was fined $20 million for violating state laws.

Regulators may try to restrict disruptive innovations like these in a number of ways – through regulation and punishment or encouraging competition (through antitrust). For example, the government could impose heavy fines on disruptive innovations to try and deter them from continuing.

The COVID-19 pandemic persuaded some governments.

Suddenly, it became acceptable for private companies to make virus tests as well as nurses and doctors practising in other states, for doctors to use telemedicine without obsessing about privacy laws and alcohol distilleries made hand sanitiser.

All sorts of people started doing really interesting entrepreneurial things to try to just help each other out. Other companies pivoted in the face of COVID-19, like Google who started using its engineering skills to create a medical search engine.

The disruptive innovations that have come about in recent years and decades are not just new technologies but also disruptive social norms – which can be regulated by governments as they affect society at large.

In general, regulation has been used to regulate disruptive innovation in an age where information is power.

The government regulates disruptive innovation with the intent of not only preventing social havoc but also mitigating risk to society.

In today’s world, disruptive innovation often isn’t regulated as severely as disruptive innovations of the past because regulation is primarily reactive to disruptive innovations. So while disruptive innovation can be regulated, it’s only after and in response to its disruption.

 

Disruptive innovation is disruptive for a reason.

It’s disruptive to the market, it’s disruptive to society and often times that disruption can be regulated by governments intent on preventing social havoc as well as the mitigating risk associated with disruptive innovations.

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