At some point, nearly every company, from a brand-new startup to a corporate behemoth like Amazon or Walmart, will look to shape the policy and regulatory environment around them.
Whether for a small change to an esoteric rule or a multinational lobbying campaign, an effective regulatory strategy is key to long-term growth.
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The key point missed by many companies attempting to influence a regulatory environment: When forming a team, stakeholders must align on a common mission so individual priorities aren’t elevated over the mission of the company.
The solution rests on three pillars:
- First, there must be clear ownership of decisions regarding regulatory strategy. Policy, legal and operations (and other) perspectives should all be considered, but there must be a central decision-maker responsible for making the final call and moving forward. This helps not only resolve internal disagreement, but provides consistency in approach as well.
Second, incentives for individuals involved in regulatory strategy (including performance evaluation, compensation and advancement) should focus on whether the individual is maximizing company interests. They should not be centered around whether the employee accomplished the preferred outcome from their team’s perspective. Regulatory success requires trade-offs among legal, political and business factors. Employees should be put in a position to clearly see the incentives to collaborate and make those trade-offs.
- Third, incentivizing employees to maximize the company’s interests is only effective if there’s shared understanding of what those interests are. Accordingly, company leadership should set a clear framework for acceptable — and unacceptable — risk, as well as a hierarchy of regulatory objectives. The goal of this effort is to let teams know what are redlines vs. nice-to-haves when negotiating and making trade-offs. This allows policy, legal and operations (and other) teams on the ground to not only align on objectives and strategy, but justify their actions and explain why a risky deal was taken — or walked away from.
Fundamentally, building teams in the regulatory space is about empowering teams and employees to take short-term defeats in order to avoid greater longer-term pain and risk. It should come as no surprise that individuals are more open, creative, collaborative and deferential to company objectives when they aren’t concerned that doing so may lead to negative professional outcomes for them personally.
Spencer Hawes is the co-founder of Runway Strategies, a Washington, D.C-based firm that provides regulatory and policy strategies to companies. Hawes specializes in the intersection of law, technology, cross-border regulatory development, and public policy.
Illustration: Dom Guzman
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