Meeting the Challenge of Innovation in a Highly Regulated Industry

Microscope and hand holding a glass container with liquid.
Innovation strategy in a highly regulated industry presents specific challenges.

Innovations are derived from new ideas, but what if your industry puts limits and constraints on the ideas you’re allowed to pursue? This is where innovation strategy gets dicey, but don’t let it discourage you.

All fields need innovation — not only to move forward but to stay relevant. To just keep soldiering on, doing what you’re doing, is to die a slow death. 

The challenge is that many innovation strategies encourage sharing all ideas — no matter how outlandish — in the brainstorming and exploratory stages. After all, putting confines on thoughts isn’t innovative, is it?

However, it’s often necessary, and it’s not as problematic as you might think. Restrictions prevent employees from getting wrapped up and wasting time with an idea that can’t work. 

The Rules of Innovation

We often think of innovation as the mother of invention. The Wright brothers and Alexander Graham Bell probably took a lot of flak when they were working on inventing the airplane and the telephone. People probably jeered, telling them it was impossible, but they proved it wasn’t.

However, if they didn’t have the money to conduct the experiments, it would have been impossible. If either inventor had tried to make their prototypes during wartime, when metals and other products were rationed, it would also have been unworkable.

If your company has a budget for innovation and an employee has an idea that will cost five times that to implement, it’s not going to happen. Some may see life and all its practicalities as obstacles to innovation, but if truly anything were possible, innovation would be easy. The hard part is doing the job with the tools you have available to you.

Thus, when your company works in a highly regulated industry such as healthcare or banking, you have some extra hoops to jump through. It’s best to consider that not so much a hindrance, but as par for the course. The game of innovation has rules; without them, it would be chaos.

Glass building with news tickers.
While you must abide by regulations, with pressure, they can change and loosen over time.

Make Friends with the Perceived Enemy

Any industry with rules has a group of people charged with ensuring that the rules are followed: gatekeepers, regulators, referees, policers, umpires. You must decide early on how to interact with the arbiters. 

Many people choose to try to avoid regulators, hoping to fly under their radar. An article in the Harvard Business Review recommends the opposite. It suggests befriending the regulators. Looping them in on your plans and progress can work in your favor in many ways. 

First, regulators can help guide you by explaining precisely what you can and cannot do. They can reveal gray areas where you might have some leeway. They may even tell you about prior innovations that didn’t work and why. 

All this can save you time and money. Think of regulators as people with flashlights who can help illuminate the way on a dark road.

Changing the Regulations Is Innovative

While you don’t want to count on it, it’s always possible that your team will be the one that changes the regulation to make your idea possible. Think of what used to be outlawed but isn’t anymore: alcohol, marijuana, interracial relationships, doing business on a Sunday, abortion. Things change. Maybe you can change them.

Your competitors may choose to avoid innovation in favor of a more conservative approach. Gently balancing pushing the boundaries with maintaining regulatory compliance can, therefore, give you a competitive advantage. 

IdeaScale Can Help

It’s true that innovation strategy in a highly regulated industry is harder. That’s why success is so much sweeter. As they are fond of saying at Swarthmore College, “Anywhere else, it would have been an A.” You must rise to the challenge. 

Rely on IdeaScale for help with innovation strategy in highly regulated industries. Learn more about crowdsourcing in finance or download our Crowdsourcing and Healthcare white paper.

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