13 Dec What Uber Can Teach Us About When Innovation Moves Faster Than Legislation
The Australian government pours billions of dollars into innovation. But are its own legislation holding it back? What happens when innovation moves at a faster pace than legislation?
And all around the world – from France to Italy to New York – Uber have battled taxi lobbies and archaic government policies.
The same is true here in Australia.
In 2015 our government announced a new plan to foster innovation.
Costing over $1 billion, the National Innovation and Science Agenda (NISA) aims to boost innovation in all areas of the economy.
The initiative’s wider goals seem noble enough. The government wants to use the scheme to create a culture of innovation in the country. It hopes to incentivise investors to dedicate more of their capital to start-ups.
Plus, it aims to develop new talent to ensure Australia has generations of innovators to come.
The government also aims to hold itself up as an example for the rest of the country. Innovation within government should inspire innovation elsewhere.
But is it really working?
It’s possible that the government’s own legacy systems and legislation may hold it back. All of the money in the world doesn’t mean anything if you’re getting hit with roadblocks at the other end.
What does this mean for the Uber’s of tomorrow? How will this slow-moving legislation prevent you from disrupting an entire industry?
I’m going to look at that in more detail.
The Issues in Action From The Viewpoint Of The Entrepreneur
I’m currently working with a company in the real estate space. They’re introducing a technology platform that’s going to disrupt the entire industry in much the same way that Uber disrupted transport. It’s geographically agnostic, which means everyone in Australia should be able to use it.
Now a landlord will love the idea of this platform, especially if they have properties in different states. Instead of getting tons of reports from different managers, they have a platform that gives them everything they need in a neat package.
But like Uber, it’s facing a lot of issues borne from old legislation. Each state requires different handling of trust accounting and each has a different licensing regime. That’s all stuff that the platform creators have to manage behind the scenes.
Worse yet, this is all legislation that was written years before such a platform became viable. And therein lies the problem. This legacy legislation doesn’t take into account the disruptive technologies that bring change to entire industries.
Everyone agrees that this new platform is a boon for landlords. It’s more efficient and transparent. It increases visibility and has a host of benefits.
But nobody’s doing anything to change the legislation that’s holding it back. The pace of the innovation’s outstripping the evolution of the legislation.
The same thing happened with Uber. It provides a more convenient and better solution than taxi services. Yet it’s bogged down by legislation that’s not structured to handle an innovation at this scale.
And that’s where something like NISA may fall down. It’s providing the funds that entrepreneurs need to drive innovation. But it’s doing nothing about the legacy legislation that’s preventing that innovation from reaching its full potential.
The Legislative Issues That Hamstring the Policy
It all comes down to risk.
While the government makes bold statements about embracing risk, its own legislation prevents it from doing so.
Generally speaking, the public sector is still risk-averse. And it’s understandable. Mistakes cause the downfall of careers in politics. It’s better to avoid the possibility of making a mistake than it is to take the risk.
The Australian National Audit Office’s own Better Practice Guide highlights this. For all of the talk about embracing risk, this guide recommends avoiding it at every turn.
This risk aversion also operates on multiple levels. An individual within the public sector may feel willing to take a risk. But will the person above them share that same viewpoint? In the end, many public servants avoid risk rather than opening a dialogue with ministers.
Of course, there are also issues at higher levels.
The VANguard system debacle highlights this problem perfectly. The Department of Industry, Tourism, and Resources introduced the notion of using the system. They argued it would allow for more secure transactions between businesses and government.
And they achieved funding for it.
However, that funding soon got withdrawn. A savings exercise identified it as too much of a risk to continue exploring.
That’s the problem. Parliamentary process focuses too much on the potential for failure and not the many benefits that would come with success.
What’s worse is that these processes draw attention to the potential failures. Instead of highlighting successful initiatives, they point out when things go wrong.
That creates an even more risk-averse government. And that hamstrings any innovation policy that it puts forth.
What Are the Solutions?
This focus on risk at the legislative level presents problems. Innovation outpaces the processes that the government puts in place.
But what can the government do about it?
Creating better lines of communication between public servants and elected officials seems to be a good first step. There are suggestions that any sign of risk prevents those in the public sector from presenting new ideas. Perhaps we need a new structure that doesn’t punish the ideas that don’t work out.
That would make more people confident enough to come forward with new ideas. Plus, it meshes with the NISA’s ambition of improving collaboration.
It’s also clear that current processes need to shift their focus. Constantly looking at risk makes it almost impossible to foster innovation. After all, innovation will always come with an element of risk. You’re introducing a new idea and you can’t guarantee that it will take off.
The situation with VANGuard shows how damaging this focus on risk can be. An innovative project that would increase cost-effectiveness and security got shelved. And it happened because the government thought it was too much of a public spending risk.
Perhaps most importantly, the government needs to see how others perceive these actions. You can’t foster innovation when you don’t innovate yourself. Every refusal based on risk is just another indication that you’re favouring the old way of doing things.
They’re leading by example, but not in the way they intended.
This isn’t to say that innovators shouldn’t consider risk. It’s just that we need to look at new projects under the lens of the benefits they bring. Right now, we’re too focused on the risks that they present.
Of course, all of this takes both a time and monetary commitment.
You could do what Uber did instead. Just launch. Get the disruptive platform out there and show why it’s such an important innovation. This may force legislation to catch up to the innovation, rather than allowing legacy systems to hinder new ideas.
The Final Word
The government may not be the best example to look to if you want to innovate. Its own processes prevent it from taking the big leaps.
Hopefully, that will change. The sooner the government practices what it preaches with NISA, the sooner we’ll see wide-scale innovation.
The problem right now is that we have a system that funds new ideas but doesn’t support them at the back end. You can create something great with NISA funding, only to get told that you can’t do it because of legislation that’s almost irrelevant in the modern age.
It’s a difficult problem that doesn’t have a simple solution. Lobbying the government to make changes will help, but it’s costly and exhausting. Perhaps the best option is to get the innovation out there and let it prove its worth. That’s what Uber did and the company’s now a multibillion dollar business.
Thankfully, there’s still plenty that you can do to create an innovative culture in your business. And I want to help you do it.
My name is Mark Falzon and I encourage you to give me an hour of your time for a business review.
During the 1 Hour Business Review Session, my aim will be to help you see hidden opportunities in your business. During the session we can discuss any aspect of your business in which you would like support, such as:
- Growth Strategies
- Sales and Distribution
- Pricing and Packaging
- Merger/Sale, Capital Raising, IPO
After 35+ years working with small and large businesses, buying, selling and growing them across a range of sectors, I can work with you on any level or area.
And it all starts with a no-obligation 1 Hour Business Review Session.