Regulation Can Change the Way You Innovate
Following oil spills like the Exxon Valdez, new environmental regulations drove the fastest changes in oil tanker design the industry had ever seen.
A historical analysis of the maritime sector has shown how tough environmental regulations triggered a shift from an internally focused and gradual approach to change, to an approach led by environmental innovation and collaboration.
For a century up to the 1990’s, tanker design changed little. ‘Bigger’ and ‘faster’ were the long-standing buzz words; innovation was incremental and in-house. Disasters such as the 1989 Exxon Valdez oil spill
led to stricter regulations, exposing the industry to reputational damage. Environmental innovation became “the most powerful driver of innovation in the oil tanker industry,” according to researchers.
Zoran Perunović and Jelena Vidić- Perunović, both from the Technical University of Denmark, were interested in how innovation dynamics had evolved in response to these events. They reviewed historical archival data such as media publications, company records, and other official documents.
They found that new environmental regulations, such as requirements for double hulled tankers and new cleaning techniques, left many firms racing to keep up. Ship designers, builders, and operators had to change the way they innovated to stay competitive.
The industry shifted from an enclosed model, with firms acting alone, to one using collaborative networks based on environmental innovation. A network based model relies on firms working with stakeholders both within and outside the maritime industry to meet the new demands and technical challenges.
Eventually, this new approach paid off in the form of reduced costs and time it took to get new products to market.
A NBS report on Innovation for Sustainability
highlights key stages in the development of an innovation strategy. Below, we apply reformulate the stages as steps that can be applied to individual products, product lines, or entire businesses:
Improve the efficiency of existing processes, for example by reducing packaging or using renewable energy.
Develop new products, services or business models, such as shifting from selling a product to leasing it.
Collaborate with other firms, for instance by using waste materials from a manufacturer as aggregate in construction projects.