A introduction to how tech innovations and public policy interact.

1. ©Inline Policy
Politics, Policy and Regulation
HOW THEY HELP OR RUIN THE TECH ENTREPRENEUR
Olaf Cramme, Managing Partner

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3. Why does public policy matter?
From healthTech and unmanned aviation to the on-demand or sharing economy, tech entrepreneurs
face a number of critical questions:
1. What kind of regulatory environment is most conducive to the development of innovative products and
services?
2. How far can you push the boundaries when operating outside established policy frameworks?
3. To what extent can or should Government support the development of technological innovations? What
are the opportunities; what are the risks?
4. What role does politics play in the process of innovations and how is this affected by public opinion?
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Tech innovations: the basic role of Government
Drive and apply innovative
applications within the public
sector/in partnership with the private
sector, using joint research, trials,
testbeds and procurement processes.
Mitigate the emerging risks and
respond to the public concerns, as
well as expectations, that tech
innovations generate.
Create the legal framework, policies
and institutions that stimulate tech
innovations in the private sector.
The world’s most innovative
countries - a mere coincidence?
1 South Korea
2 Sweden
3 Singapore
4 Germany
5 Switzerland
6 Japan
7 Finland
8 Denmark
9 France
10 Israel
Source: Bloomberg’s Innovation Index, 2018
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Tech rules beyond the nation state
EUROPEAN UNION
• Digital Single Market agenda
(2015-2020)
• Far-reaching regulations on data
protection (GDPR) and ePrivacy
• Significant interventions affecting
online platforms
• Policy frameworks for emerging
technologies (IoT, AI, UAVs)
GLOBAL
• Standard-setting bodies bringing
together industry and national
regulators
• UN-sponsored agencies and
working groups defining shared
policies and technical regulations
• Development of principles and
norms through respected
international institutions
Most relevant where tech innovations
‘disrupt’ traditional sectors
Set to influence tech innovations
regardless of Brexit

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The regulation conundrum
At what point is it sensible
for Government to intervene
and/or regulate tech
innovations?
Do new technologies
inevitably end up being
regulated under old,
outdated policy frameworks
and instruments?
Are services/platforms
proving harder to regulate
than physical components?

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The risk of ‘bad’ regulation
CASE STUDY
THE FUTURE OF DRONES
• Fast-moving market with new models
of drones and drone applications
constantly emerging.
• Huge innovation capacity:
autonomous drones (BVLOS); taxi
drones; delivery drones.
• Standards and rules being developed
at local, national & international level,
often in conflict with each other.
• Risk of curtailing certain use cases in
order to integrate drones into an
increasingly congested airspace.
• Challenge to achieve policy goals
while remaining (drone) technology-
neutral.
New regulation that is insufficiently ‘future-proofed’ and
therefore prone to frequent alterations
Conflicting set of sectoral rules between (new) digital
and (old) analogue
Misguided standard-setting that inhibits continuous
innovation in a particular area
Government interventions that skew the market towards a
single model or one type of application

8. Government can find tech innovations difficult to handle…
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Mismatch of knowledge
and technical/commercial
expertise
(asymmetric information
challenge)
Differences in operating
speed and decision-
making processes
Concerns about a
potential conflict
between
public and private
interests
Difficulty of putting
a ‘value’ – monetary,
societal, environmental – on
tech innovations
Possible clash with
short-term time horizons
driven by the
electoral cycle
Risk of falling between
administrative lines
and capacities

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…but there are many interested parties in Government…
Plus many others: sector
departments, executive agencies, etc.

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…that have a number of tools and levers at their disposal
Early Intervention Market Framing Adoption & Integration
Catalyst
Analyse value chains and market
potential to identify technologies that
present opportunities
Regulator
Ensure regulation is sufficiently agile
and permissive
Intelligent Customer
Develop an innovation-friendly
procurement framework
Innovation Facilitator
Create test beds for developers to try
out applications in real-world settings
Standard Setter
Use insights from “living labs” to set
UK standards capable of influencing
global standards
Platform Provider
Scale up deployment of proven
technologies in national infrastructure
and public services
Skills Planner
Prepare for growing demand for
workers with technical skills and
mitigate impact of new tech
Fiscal Incentiviser
Deploy financial and other mechanisms
to stimulate innovation and market
growth
Source: Technology and Innovation Futures 2017, Government Office for Science

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Regulatory innovation in action:
the Financial Conduct Authority
Trialling a regulatory “sandbox” approach, allowing
firms to test innovative products, services and
business models in a live market environment, while
ensuring that appropriate safeguards are in place.
Results from the first year of the trial, Regulatory
Lessons Learned Report, FCA, October 2017

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Tech innovations increasingly adopted with
support of local authorities…
• Different local authorities have different responsibilities and
priorities.
• Funding for local authorities has fallen by 49.1% in real terms since
2010/11 and is set to fall further, posing serious public service delivery
challenges.
• Consequently, there is a trend toward consolidation of services and
adoption of innovations where efficiencies can be found.
• Beware of committees and "quasi-judicial" functions (e.g. licensing and
planning committees).

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…but considerable divergences in
performance and perception persist
• Big discrepancies between local authority leadership and public
perspective on adopting new technologies.
• Local authorities are increasingly looking for public facing solutions to
close the ‘perception gap’ and follow an open data agenda.
Bristol City Council vs Hammersmith & Fulham Borough Council
Mayor of Bristol a vocal advocate and champion Cabinet member not supportive of initial launch
Launched 300 bikes in strategic locations Initial 400 bikes removed from public paths
Operators received endorsement after 6 months Council used Highways Act 1980 (!) to remove bikes
Increased fleet number in city and suburban areas Council now in consultation with operators
Case Study: Dockless Bike-Sharing

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The politics of innovations
WHICH BENEFITS TEND TO RESONATE STRONGLY WITH POLITICIANS?
• Number and quality of jobs; economic growth; productivity gains
• Social purpose / community value
• International leadership and prestige
WHAT REAL OR PERCEIVED RISKS ARE MOST LIKELY TO CREATE A POLITICAL BACKLASH?
• Safety and security (particularly when it comes to children)
• Privacy and ethical concerns (e.g. commercialisation of public goods)
• Exacerbating inequalities; entrenching social disadvantage
• Undermining democratic principles

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A UK success story?
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• Widespread concern about the
implications of IVF treatment.
• In 1982, UK government formed a
committee to look into the issues and
conducted a wide-ranging public
consultation.
• White paper: Human Fertilisation and
Embryology: A Framework for
Legislation.
• Human Fertilisation and Embryology
Act 1990, establishing a respected
Authority.
• UK now a leader in embryonic research
– backed by political consensus, unlike
in many other European countries.

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The backlash: when politics strike back
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• Industry grown exponentially since the
arrival of Airbnb and the popularisation
of the sharing economy.
• Legalised in London, without need for
planning permission (Deregulation Bill,
2015).
• But increasingly blamed for housing
shortages and disrupting
neighbourhoods.
• Polarised debate already leading to
punitive measures in cities such as
Amsterdam, Palma de Mallorca and
Barcelona.
• Will there be similar repercussions in the
UK too?
In a number of countries around the world, local
authorities have started to push back against the
widespread use of digital platforms that provide private
short-term rental accommodation.

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Innovations and public concerns
PRIMARY FACTORS INFLUENCING
PUBLIC OPINION
• The level of technological
obscurity
• The level of trust in the
producers and/or the users of the
technology
• The perceived (societal) value of
the technology
Source: ITIF, The Privacy Cycle, A Guide to Public
Fears About New Technologies, Sept 2015

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The current state of public perceptions?
Behavioural
advertising
Identity recognition
E-Health
Gene sequencing
Sharing economy
Artificial intelligence
Internet of Things
Robotics and
automation
Driverless vehicles
LevelofPublicConcern
Maturity of Innovation

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Gradually developing alongside proportionate regulation – not in opposition to it,
totally outside of it or in complete subjugation
When or how do tech innovations succeed?
Looking at purposeful applications in both the private and the public sectors (where
possible)
Identifying positive trends in public perception that can be embraced and
appropriated
Having advocates in Government who recognise the opportunities and understand the
actual (as opposed to merely perceived) risks
Benefitting from regulatory flexibility that facilitates early stage experimentation outside
established and inappropriate frameworks

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Thank you!
IF YOU WOULD LIKE TO DISCUSS THIS FURTHER, PLEASE GET IN TOUCH
Olaf Cramme
(e) olaf.cramme@inlinepolicy.com
@olafcramme
For more information on how innovative companies can navigate policy and regulation,
visit www.inlinepolicy.com