The “Inside the Executive Suite” article from Armada Corporate Intelligence profiled an intriguing innovation strategy example within a regulated industry.
The feature looked at JetBlue Airways and its plan to introduce an internal training program for pilots. The basis for the strategy is to parallel the typical FAA requirements for pilots flying 1,500 hours with other training on decision making, handling a flight crew, and other particulars of real world flying situations. It is also expanding the use of flight simulators in training. While meeting all the particulars of FAA regulations, JetBlue Airways hopes to demonstrate there is a faster and better way to train pilots that could lead to the 1,500 flying hour hurdle being modified at some point.
The Armada article highlights six ways to formulate innovation strategy in a regulated environment, including the approach JetBlue is taking. Here is what they had to say on the topic.
Innovation Strategy - 6 Possibilities with Regulatory Constraints
There’s Always a Possible Innovation Strategy
What can other regulated businesses learn from the JetBlue example that they can adapt?
JetBlue is pushing the envelope in its approach, but is trying to do so within existing regulations. As the Journal article states, "The fledging aviators in the JetBlue program would still have to meet this requirement (1,500 hours of flying), but by assessing students at various intervals short of 1,500 hours, the airline seeks to show that its curriculum can produce outstanding pilots who have spent fewer hours in actual aircraft."
While the JetBlue example is an actual case study in the making, don't limit your organization in thinking that's the only strategy for innovating around regulations. Here are multiple possibilities to consider:
1. A shadow innovation strategy
The JetBlue Airways pilot training innovation strategy is an example of "running a shadow operation." In these cases, an organization follows the regulations, but creates an innovative approach running parallel to the area that's regulated. The shadow operation exceeds regulatory mandates, or, at the very least, does no damage to regulatory requirements or intent. The JetBlue training program fulfills the regulations along with extra training and measurement steps designed to (JetBlue hopes) demonstrate the greater efficacy of its alternatives approach to standard training.
2. Innovating in another place, with an eye toward a regulated area
Evaluate if there's a non-regulated aspect of your business, industry, or market that's a close analogy to what's regulated. If there is, can you introduce innovation in non-regulated areas with a very deliberate path to testing and building a case for how successful innovations would translate to your regulated activities? This strategy can provide more latitude for a testing environment while still developing learning that applies to regulated activities.
3. Go underneath regulated levels
Not all regulations apply in all cases. Perhaps operations under a certain employee, revenue, or asset level are exempt from regulations targeting larger operations. Could you carve out a deliberately smaller part of your business (or perhaps create a joint venture or subsidiary) where you have more latitude to innovate? If so, your organization can introduce new ideas and get a handle on how they might need to be adapted when transferred to a regulated part of your organization.
4. Manage permissions by lobbying and negotiating
When there's an opportunity to innovate and improve what you deliver to the marketplace, but current regulations preclude it, your first step might be a lobbying and negotiating strategy with the appropriate regulatory agency to make the case for innovation. Depending on the situation, it may even be advisable to create an industry coalition to do the lobbying. While doing so might tip your hand about aspects of your innovation direction, this strategy can help establish a role as an industry leader since your organization is building the coalition and shaping the agenda for greater innovation.
5. Push boundaries and ask for forgiveness later
This is the riskiest strategy, but your best path might be to push innovation boundaries in what you view as relatively benign regulated areas and ask for forgiveness later if called on the carpet for the innovative approach. This may be advisable where there's general agreement a regulation has outlived its usefulness and is being ignored or very lightly enforced. If the potential downsides are extremely minimal for the audience you serve (no material harm is possible) and for your brand (i.e., the penalty might only be to cease and desist a business practice), the best approach may be to introduce the innovation and risk the consequences if a regulatory body swings into action to address the innovation.
6. Devising a combo strategy
Your path to innovation may involve combining multiple strategies above. For instance you may be able to take a shadow operation approach while also building the case for negotiating a new regulatory approach in the future. That seems to be the combo strategy JetBlue Airways is pursuing.
One Additional Thought on Innovation Strategy
Reading this article made me think of our change management strategy matrix. Based on the frustration JetBlue has with the status quo and the lower perceived need of the FAA for dramatically different results, the change management strategy matrix would suggest an experimental strategy. That’s exactly what JetBlue is undertaking. Glad to see the matrix working!
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