Start-ups should not fear being public policy upstarts - TechCentral

Start-ups should not fear being public policy upstarts

Public policy engagements have traditionally been seen as the realm of well-established businesses. Start-ups — and tech start-ups in particular — need to start engaging sooner because the possibility of going from small to big in a short timeframe means there may not be time to “figure it out later”, and even if your business does not follow an exponential growth trajectory, it will help to futureproof it. An effective approach to public affairs should be an important part of your overall impact plan.

Being a participant in public policy early on is a smart strategy, as the legislative and regulatory environment impacts the entire emerging technology landscape. It is difficult to conceive of a business that it is immune from public policy issues. The short-term accommodation market is confronted with its impact on local housing; crowd-work platforms must consider how to classify workers as employees or contractors, and the host of labour policy issues that arise from that decision, further any platform collecting and using customer data must consider a host of privacy questions. It may also be that your innovation displaces incumbents and workers along with it — will you have to confront industry bodies or unions, and what is the plan if you do?

Public relations and public affairs are often confused, but they are not the same thing. While they can be executed by the same individual or business unit, it is important to understand that they represent unique strategies. Their methods and tools often overlap, but the salient differentiator is the goal — whereas PR is concerned primarily with promoting the company (its brand, products and services), PA is concerned mainly with the company as a public stakeholder shaping ideas and conversations that impact public policy. Inherently, most companies will be interested in conversations and public policy that has the most immediate impact on their business. Typically, as a business grows, the areas of public policy that have a bearing on your business grow too.

Approaches to engaging policymakers and stakeholders

Not every start-up needs to engage with the same intensity. There are different approaches to public affairs and policy engagement adopted by start-ups.

  • Hide: “We had hoped that if we don’t talk to them maybe they won’t notice we exist.” These were the words of a talented entrepreneur at the last Blockchain Africa conference when asked why the industry had largely waited to respond to regulator guidelines instead of proactively making proposals.
  • Find a workaround: Existing laws must of course be adhered to, but it need not come at the expense of advocating for current rules to be enhanced, amended or erased where the growth of the market depends on it.
  • Rather ask for forgiveness than permission: Where the rules are uncertain some take the route of do it and rather ask for forgiveness later.
  • Work with them: This does not require obsequiousness either. It just means find out what the priorities are.
  • Change them: If you can’t work around the rules, it’s too risky to ignore potential infringements, and if there is alignment of priorities then it is not impossible to change them.

Whatever the approach, even if it is to “hide”, it should be adopted by intent not negligence.

Ostensibly, businesses are regulated to ensure standards are met and that consumers are not harmed, and that if they are, there is legal recourse. Therefore, it makes sense that some of the most heavily regulated industries include healthcare, education and finance and those deemed vital to the economy such as agriculture and mining.

Some of the most heavily regulated or government-centric industries are also where the greatest opportunity lies.

The author, Gwen Ngwenya, argues that an effective approach to public affairs should be an important part of a start-ups overall impact plan

The public sector is ripe for disruption

Due to shortcomings in government-provided services such as safety and security, healthcare, education, and transport, the potential for disruption in traditionally public, tax-funded service areas is enormous. Innovative private enterprises are uniquely positioned to step in to provide faster, cheaper, and more reliable services.

In 2016, there were almost 1.1 million pupils in grade 10 and only 400 761 passed matric in 2018 — a pass rate of 37.6%. There are 1 966 independent schools in South Africa compared to 23 796 public schools, a ratio that is set to continue to grow as parents look for better educational opportunities for their children. Furthermore, private education is no longer the preserve of the wealthiest; relatively low barriers to entry and private investors eager to cater to different segments of the market means that low income households can look forward to an increasing number of competitively priced schools.

In 2016, active registered security officers numbered 488 666, while sworn in police officers numbered 151 834. In healthcare, when people older than 15 were asked in 2014 where their last visit had taken place in the year before, 41.5% indicated the private sector. One sector where South Africans turn in the majority to the private sector is for their transport needs. Commercially self-sustaining minibus taxis account for 68% of public transport trips to work.

Private service providers also open up opportunities for a host of other innovative companies in the value chain who may have found it difficult to navigate the public procurement system or found the public sector more resistant to experimentation and change.

Things to consider

Just because the opportunity exists does not mean existing policy allows it to be easily exploited. E-health start-up ConnectMed, states on its website that it is not yet operational in South Africa due to restrictions on telehealth by the Health Professions Council of South Africa.

The government as a critical stakeholder in service delivery will not be replaced entirely, nor is that necessarily the big opportunity — even where a public sector operator remains there are opportunities for start-ups to tackle issues such as enrolment automation, identity management and registry maintenance across a wide range of social services.

These are some of the things to consider in building or executing on a public affairs strategy:

  • Align your strategy: It is easier to build relationships when you communicate how you help them achieve their goals. The public sector and the private sector are not worlds apart — just like in business, it is much easier to get people to do something if it is part of how they will be assessed. If you can find out what the performance indicators are for that person or department, then tick those for them — your initiative has a higher chance of success.
  • Educate: Public policy is shaped by a wide range of stakeholders, so it is important that you educate not only your customers but other stakeholders who may be affected by what you do or how you do it.
  • Build a citizen army as activists: Start-ups globally, particularly at the local level, have succeeded in mobilising loyal customers to voice their opinions on policies and regulations. The ability to mobilise consumers requires an effective public engagement strategy.
  • Join an industry group: Industry associations or representative bodies can be an effective way of ensuring that your public policy interests are being taken care of. However, this does not absolve the need for a public affairs strategy: it is not possible to monitor whether you are getting value from a representative body if you do not have a public affairs strategy to track their impact against.
  • Venture capital firms might look to ensure that their portfolio companies have access to expertise to navigate laws affecting their businesses and foster contacts with policy makers, regulators and investors.
  • Gwen Ngwenya is a public policy expert working on innovating the public policy process for emerging technologies and is founder and CEO of Techpol

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