What Happens When Innovation Collides with Regulation?

The past couple of truly innovative start-ups such as Airbnb and Uber did not arrive quietly or smoothly. In fact, nearly nine years after Uber’s founding, the company still makes regular headlines as local governments try to control the company’s growth and operation. The latest emerging innovative force, the electric scooter, is trying desperately to avoid Uber’s fate. And they might just succeed…

We live in an era where people are continually working towards creating the next innovative technology or service. Some call this “disruption,” although in reality, the only thing that many of these innovations disrupt is government regulation. The emergence of ride-sharing electric scooters may challenge this pattern. Described by Bloomberg as being, “One of the biggest stories in technology this year,” electric scooters have been popping up in large fleets across the globe. According to Travis VanderZanden, the founder of an electric scooter brand dominating the space called Bird, his electric scooters are “intended to steer students away from driving to reduce traffic for short travel gaps.”

Located and rented through a smartphone app, the scooters are affordable, accessible, and easy to use. As a result, use of ride-sharing scooters have expanded well beyond college campuses to congested cities like LA and New York, and are now popular in France, Israel and China. Sounds like an innovative, environmentally-friendly way to battle the gridlock of overcrowded cities. Yet due to a combination of factors like outdated transportation laws and safety concerns, some local municipalities, and even civilians, disagree.

Following the lead of other “disruptive” companies like Uber and Airbnb, electric scooter companies like Bird and Lime opted for the “‘ask for forgiveness, not permission’ strategy.” The result has been an array of varying regulation measures including, “cease-and-desist orders…requiring permits, limiting the number of vehicles, awarding exclusive franchises and allowing scooters to be parked only in designated areas.” However, despite the fact that “the scooter industry is experiencing some of the same problems as ride-hailing, with aggressive startups butting heads with local governments,” they possess one major edge over the ride-sharing vehicle industry: scooters do not face entrenched, competing industries such as taxis and black cars. If handled smartly, this fact means that scooters can enjoy the rare ability to create, dictate and shape industry norms, rather than be curbed by them.

The Wall Street Journal explains, “While regulators in many cities are still reluctant to give the green light, Lime, Bird and more than a dozen competitors—including Razor and Scoot—are in many cases trying to outdo one another with new ways to appease local regulators.” Furthermore, “They’re letting the cities know exactly where scooters are in near real time, redistributing those scooters according to the desires of local governments, including to low-income areas, and more.” This accountability is what innovative tech in the future must prioritize if they hope to survive.

Cooperation and accountability do not just apply to ride-sharing, but to every emerging innovation that will inevitably face regulation, whether it be at the local, state, national or global level. Innovation necessitates the creation of a corresponding set of norms. Access to Airbnbs and Ubers are now a fact of life. Electric scooters, which are still a novelty, will likely join the ranks of Airbnb and Uber, but will have done so in a more strategic, less noisy way. Tech companies that wish to garner support and sensible regulation from local governments should take note of the electric scootering industry and be proactive and responsible. Listen:

“Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”—William Pollard

What do you think?