The Business of Innovating for Compliance
An old widespread belief within companies is the distrust of increased governmental regulation, due to the likelihood of increased cost both directly and indirectly. In general, Companies do not accept the necessity of that regulation and see it as obstacles of doing business, and only very few companies voluntarily use regulation in their favor and include it within their business strategy.
It is now increasingly important for companies to accept the reality of regulation and the probability of an increment on the rules to follow, especially in the area of sustainability and compliance. And once, you acknowledge that scenario, companies can start planning a better business strategy, the business of Compliance.
Since the last 30 years, certain companies have worked proactively and strategically to be innovators regarding regulations, in order to push their competitors out of certain market segments or to receive specific benefits for themselves.
These first types of companies are normally called innovators in their area and hey have learnt how to use regulations in their favor. This method is normally considered quite expensive since it consists of changing a political climate in order to push more strictly regulation through for approval within a country. The majority of companies follow the regulation at a steady pace just until the stage when they “comply”, but not do more. The last type of companies can be considered laggards with adopting regulation and this can be a conscious decision in order to lower cost and even accepting calculated risks of potential infractions of regulation. There are examples of companies in each category, but this type of business has normally been confided for companies mainly focused on manufacturing and not much in service.
With the last years focus on an increased regulation environment in the area of compliance it is important for companies to adapt to a similar strategy and focus on innovation in favor of become their business into a “B Corporation”. There are both academic examples of benefits being innovators in compliance and real-world examples of the benefits of innovative businesses. On the academic side it is possible to use the “prisoner’s dilemma” as base for understanding; and, on the business side, sustainability and environmental regulations have been used to explain the positive side of being an innovative company.
In this modern day of fast information and rumor spreading through social media one of the biggest risks for companies are the loss of reputation. Without a good reputation for the company there is basically no trust for the company. All companies survive based on trust whether it is from direct clients or the financial market. It is time for company to embrace compliance as a part of the general strategy for doing business, doing Good business.
And the world only has space for Good Companies.