The Great Horse Manure Crisis of 1894 goes something like this. By the late 1800s, streets in cities around the world were filling with horse manure. In 1894, The Times newspaper supposedly predicted that in 50 years, every street in London would be buried under nine feet of manure. The crisis was discussed at the world’s first international urban planning conference, which ended early because there did not seem to be any solution.
Yet, by the early 1900s, the problem had disappeared. Vehicles replaced horses as the primary mode of transportation and new problems emerged. Concerns like preventing horses from becoming frightened by vehicles made their way into regulation. An Act to regulate the speed and operation of Motor Vehicles on Highways in British Columbia limited the speed of vehicles in cities to ten miles an hour.
The point of this example is not just a lesson in problem-solving and innovation. It shows that policy and regulation tend to reflect what we already know, rather than what is about to emerge. But the world is never going to move as slowly as it does now. The historical process of carefully crafted legislation that remain unchanged for long periods of time is challenged in an environment of constant change.
The speed, scaling, and iterative development of today’s products and services can result in markets that appear – and disappear – before existing regulations can even be applied. Who, for example, has jurisdiction over an autonomous ride-sharing vehicle that delivers food? Who is responsible for a crash?
Regulations are important to protect the public and promote fair markets, particularly where the public is vulnerable to new risks, but a stranglehold can stifle progress and result in unwanted consequences. Regulations need to keep up and, fortunately, there are options for flexible approaches.
- Deregulate based on data and respond based on risk
Regulations are generally created in response to market conditions or an event that highlights regulatory gaps. Months and years can go into drafting and, once in place, are rarely readjusted, even as circumstances change. But what if a data-driven, risk-based approach can be implemented so that businesses can go through a predictable process based on providing key information to its regulators?
Instead of costly and false positive exercises to detect problematic players, regulators can focus on understanding and predicting issues before they arise. Based on analyzed data, risks, and expected outcomes, businesses can provide the information needed to accelerate through regulatory processes, which ultimately benefits the public through faster access to better products.
- Create sandboxes for integrity and outcome-based solutions
Compliance and enforcement is necessary for regulatory frameworks, but also assumes that threats are necessary for positive outcomes. Most people make bad choices, however, not because they are bad people, but because the right thing can be hard to do. It can be too expensive, time-consuming, confusing, or any number of other reasons. One way that regulators can remove barriers for doing the right thing is to shift the focus to outcomes instead of prescriptive requirements. For example, a requirement that an amusement ride “must not exceed 15 km per hour” will be complied with differently than a requirement that the ride “must not be operated in a way that endangers the passenger.” Enabling industry to develop guidelines for approval within a “sandbox” of safe experimentation allows for freedom and innovation in meeting regulatory objectives.
- Simplify, harmonize, and collaborate
Regulations impact every aspect of our lives, including the food we eat, the energy we consume, and the transportation that we use. But few individuals report regulations that are easy to understand and navigate. It almost goes without saying that where regulations are needed, the goal should be to avoid undue restrictions and support a simple, consistent legal environment. After all, we would not want to one day be a history lesson in being up to our eyeballs in – manure.