Daily Archives: November 29, 2015

Regulatory Damnation 37: Industry Associations and Standards

One would think that the regulatory damnations would stop with the ever increasing onslaught of regulations being passed around the globe that restrict the organization on:

  • raw materials,
  • production processes,
  • available labour, and
  • third party providers

that collectively cover

  • environmental regulation,
  • energy and water usage,
  • slave labour, human trafficking, and child labour,
  • oversight and documentary requirements,
  • taxation and reporting, and
  • corporate social responsibility and ethics

among a few dozen other regulatory requirements. But they don’t.

To top it all off, you have to deal with industry association standards that you have to include in your products or face becoming the next pariah. In today’s hyper-connected, mega-corporate world where a few big companies determine the fates of thousands of smaller companies who sink or swim on as a result of their boycott or their support, your company’s fate could rely on another companies whim. So if that company enthusiastically supports a standard that you don’t, that could be the end for you. But that’s just the beginning of the damnation.

Newly enacted standards could be the exact opposite of the protocols you built your product on.

For example, you could have designed your electronics product to work on DC current but the new standard for the GPS system, designed to be used in the car and on the trail, is AC with an AC to DC adapter. All of a sudden, you can’t get the Industry Association seal of approval and your product is dropped by all of the major electronics retailers.

Newly enacted standards could redefine the communications interface.

You might have spent years developing a custom communications protocol to interface with your new mobile weather data reader, but then the major software packages adopt a new standard you weren’t expecting and drop support for your standard faster than a hot tomato and your product can’t even be sold through the discount outlets because there is no support for it.

Newly enacted self-imposed regulations could prohibit the purchase of raw materials from producers expected to violate fair-wage and human rights principles.

If you already locked into a contract with a producer that has been banned, all of a sudden you could be the target of competitors negative advertising campaigns that target you as a consumer of unfairly produced goods. This could destroy your brand value if you are buying raw materials that might be harvested by child or slave labour, even if the claim has no evidence to back it up.

While industry standards are not as damning as regulatory damnations, as industrial competitors cannot seize your goods, levy fines, or press criminal charges, they are still damning as we noted above because if you fail to honour the industry association’s boycott, you could be the target of negative advertising. And the right negative advertising can considerably damage your brand, plummet your stock, and bring sales to a trickle. This damnation, that likes to hide in the shadows, doesn’t emerge often, but when it does, it’s a doozy.