Help or hinder how does regulation affect innovation

Help or hinder: how does regulation affect innovation?

Mehreen Yusuf

Mehreen Yusuf | Marketing Advisor, London | 17 March 2020

For years, fast-paced technological developments have gone unregulated. Many industries have innovated without any guiding principles, and some have come under fire for crossing ethical and social boundaries.

From hacking and data breaches to political cover-ups and monopolies, there seems to be no end to the negative press. Some of the larger tech companies have already seen how a lack of regulations can land them in hot water. With the speed at which technological developments are happening, it’s no surprise that the regulators have a hard time keeping up.

As privacy, liability and safety concerns continue to emerge, it’s time to embrace regulations for what they can do.

They can birth whole new industries. They can help companies feel confident in new markets. And they can help oil and gas assets tackle cybersecurity concerns as they become more digitally connected. What’s more, the right regulations can encourage innovation while also protecting the rights of individuals and the wider economy - and they can lead to overall growth.

The challenge however, will be for governments and technological bodies to work together to shape those regulations, and to remain agile in the face of change.

Where regulations inspire new ideas

Regulations can help guide new ideas as we strive to meet them faster. According to Laith Amin, Senior Vice President at Advisian Digital, many safety and environmental technologies rely on government regulations to even have a market. And often, the more stringent the regulations the better.

"And, better regulations around cybersecurity will not only allow companies to confidently go digital, they will also lead to whole new industries coming forward to meet these requirements."

“If there weren’t regulations addressing the concerns around methane emissions for operators to adhere to, we would have never come up with the idea to find ways to detect and monitor them more efficiently and accurately,” explains Amin. “If we didn’t have to meet high safety standards in our industry, innovations around predictive analytics for safety reporting wouldn’t have been thought of.”

But it’s not just creating news ideas that regulation can help with. It’s technology adoption, too.

“Some of the challenges associated with new technological developments are around customization,” explains Amin. “The more standardized the requirements, the more we can develop technologies that require less customization, ultimately lowering cost and increasing adoption.”

But the more we innovate, the more cybersecurity becomes a concern

When it comes to cybersecurity, a lack of guiding regulations can lead to less innovation, with companies fearful that embracing new technologies will leave them open to cyber-attacks.

“The more digital transformation that happens at our client’s facilities, the more they’re exposed to vulnerabilities that can compromise the security of their plant,” says Amin. “This is leading some companies to avoid innovation or technology at the risk of being exposed to potential threats.”

And, better regulations around cybersecurity will not only allow companies to confidently go digital, they will also lead to whole new industries coming forward to meet these requirements.

"Collaboration between the public and private sectors might be the solution to make the regulatory environment faster, more responsive and more relevant to technological developments."

The increased importance around cybersecurity continues to fuel the growth of an industry specifically around the protection of digital assets. Worldwide spending on cybersecurity services is forecast to reach $103.1 billion in 2019, an increase of 9.4 percent from 2018. And this pace of growth is expected to rise as industries continue to invest in cybersecurity solutions.

“It’s imperative that there are sufficient regulations in place for operators to protect their assets,” explains Amin. “This can also lend cybersecurity experts the ability to innovate new products to meet those regulatory needs.”

Collaboration results in fluid regulations that can be adapted

It hasn’t always been plain sailing though. Collaboration between the public and private sectors might be the solution to make the regulatory environment faster, more responsive and more relevant to technological developments.

“A good example of how collaboration between regulators and industry works is in the way oil and gas standards are developed in North America,” explains Amin. “Often an organization takes the lead to develop a new industry standard. As part of the developmental process, the organization consults a range of stakeholders from governments to other private sector customers, suppliers and manufacturers for their input. The resulting standard is accepted by the industry that created it, and the regulatory environment can point to that standard and mandate that it be met.”

The American Petroleum Institute draws up many of the standards used in the oil and gas industry today. To do this, they assemble a range of subject matter experts and collectively they establish and distribute standards. Having this third-party accreditation means that there’s often greater acceptance by the professionals who use these standards on a day-to-day basis, and by regulators who rely on standards to maintain good practice.

“Quite often these standards will be updated and changed to recognize new industry technologies relatively quickly,” Amin adds. “The regulation will continue to point to the standard but the standard itself will evolve with technology.”

Working together to drive adoption

Another good example is AdditiveNow, Advisian Digital’s and Aurora Labs’ additive manufacturing business. AdditiveNow is currently working with regulators to create a set of standards for additive manufacturing in the oil and gas industry to break down barriers to adoption.

“To use almost any part in an oil and gas facility, it must be certified to a code. That’s why setting standards for additive manufactured parts can’t be under estimated when considering the adoption of 3D printing technology in the energy industry,” says John Bolto, General Manager at AdditiveNow. “Once these additive manufacturing standards are set, operators can be confident that their 3D printed parts meet global and industry-recognized regulations.”

Getting the job done isn’t enough; regulations must get the best out of innovation

In heavily regulated industries like energy, chemicals and resources, regulation can help innovation.

“It’s a mistake to characterize the regulatory environment as something that’s entirely negative for technology and innovation, or something that is a barrier or a constraint on development,” says Amin.

“What we’re seeing is a mismatch between the system for regulatory development because we’ve largely been living in a tech-free world.

“As we move more into the digital realm, industry must lead and come together with governments to adapt the regulatory framework to the pace of change.”


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Laith Amin

Laith Amin

Senior Vice President, Advisian Digital

Laith Amin leads leads the Advisian Digital group for Worley in North America and Europe, which delivers asset transformation by helping clients build and leverage their operational data environments. Laith’s broad cross-functional range of international experience includes support to asset owners across all areas of digital twinning and implementation of technology innovation including strategy and implementation. Laith earned a degree in Economics from the UK’s Leicester University in 1993, and later went on to graduate from Henley Management College with an MBA in 2004. Laith is based in Chicago and in his spare time enjoys spending time with his family, running, cooking and takes a keen interest in world political and economic events.