Driving into work recently, I was alarmed to see my all digital dashboard crash to automotive equivalent of the Blue Screen of Death, nothing to show what speed, warnings or other indicators I am used to relying on to drive safely. This got me thinking that whilst the UK like many countries has an annual vehicle roadworthiness test, this doesn’t cover one of the most critical components—the software. This gap between the legacy regulatory framework and the new fast changing world is becoming a common theme in the lives of citizens.
Rapid, technology-led change can prove a challenge for those charged with regulating new disruptive forces in society. In recent years we have seen that the traditional reactive approach to regulation is simply too slow to respond to the pace of change that marks our economies today in areas as diverse as ride-sharing, home-sharing, crowdfunding, problematic algorithms, and data privacy.
These are not anomalies. Innovators, entrepreneurs, and established businesses are fully immersed in digital technologies and while their ideas may range widely, they will all use technology to disrupt the existing order. Often not recognizing the externalities or unintended consequences of their new business models, whether this be the increase in urban delivery traffic, congestion from ridesharing cars, or parties in Airbnb rentals.
What this means for regulators is that their approach needs to evolve in order to contend with the new characteristics being brought into play by these entrepreneurs and their ideas.
Speed. Being digital means being fast. The time it takes to develop a product and roll it out is growing shorter. What’s more, as more and more companies enter various marketplaces with disruptive technologies, the pace of acceptance from the consuming public is accelerating, too. Internet use in its first decade of public accessible use grew from 16M users in 1995 to 1.018B users ten years later. Skip ahead a little more to Facebook, which has an incredible 2.2B users today. And this before the company even turns ten!
Scale. All this to say that where regulators once had decades to understand and deal with a new technology, they now have months, not years.
This is because these new technologies get big, fast. In the past, regulators may have had the luxury to study other jurisdictions to guide them as they decided what was best for their own constituencies. A system based on precedents, each of them considered for their own merits, was possible. Today, technology means that a new product or service can cover the world in a matter of months. There is no time to study other jurisdictions and no time to use precedent to shape policy.
Complexity. As regulators attempt to keep up with these disruptive technologies, they often find that more than one agency needs to have input on how best to regulate the new product or service. With Airbnb, for example, those in charge of housing or rental policy may need to connect with those managing tourism. In Toronto, Alphabet’s Sidewalk Lab, a ‘smart city’ experiment that will develop some twelve acres of former industrial land, is peaking the interests of a plethora of regulators, from transit, sanitation, and housing authorities on the municipal level, to those concerned with privacy at the provincial level. The result is a whole ecosystem of regulators, all of which will have a stake in the new technology.
Regulating via ecosystems
Because of the speed, scale, and complexity that often accompany disruptive technologies, regulators will have to adopt new approaches to doing their jobs. Projects like Sidewalk Lab, where many responsibilities are shared, mean that regulators need to connect, network, and work together to ensure that they keep pace with changes in their jurisdictions. It is not unlike a complex surgery that involves dozens of medical professionals, each with their particular specialty. And often, as in medicine, one agency will take the lead, consulting as needed with others. Knowing regulators’ concerns ahead of time serve as important guides to the disruptors, helping them shape their strategy before roll out.
And lest we forget about the citizens who use technology to make sure their concerns are heard by regulators. Engaged and connected individuals are able to alert regulators to issues as they unfold, allowing regulators to anticipate policies. They too, play a key role in this regulatory ecosystem that aims to create more dynamic frameworks to deal with today’s disruptive technologies.
Oh and by the way, when I turned the car off and on it started up just fine.
Mike is the Global Public Sector Leader at Deloitte, and sits on the Executive of our UK Consulting business. His clients have included most Government Departments and numerous local authorities. Mike is a regular speaker at conferences and events on future trends in the public sector and is regularly quoted in press and other media. He is the author of our flagship State of the State report. Mike joined Deloitte in 2005 and he has over 30 years experience working with the Public Sector in advisory roles and working directly in both Central and Local Government. At Deloitte, his role covers all of our services to the public sector, including Consulting, Financial Advisory, Tax and Audit & Risk Advisory.