Regulation vs Innovation
My father used to tell me that a socialist is someone who loves humanity but hates people. I think of that line sometimes as I hear of the increasing predominance of regulation in our society. In the last few weeks I have heard of the coming regulation of farmers in Ontario that may consign Niagara’s family owned fruit-stands to history, of a hospital laying off nurses and a hiring director of marketing and of mandated changes in mutual funds forms, not to protect the public, but to increase the efficiency with which financial advisors can be prosecuted. At a conference several years ago an employee of the Institute of Chartered Accountants expressed the concern that accountants and boards of directors are now so absorbed in the rigors of keeping businesses compliant with burgeoning regulations that they no longer have time to think or plan strategically. That’s bad news and it’s lost in the news of stock markets in chaos, baby boomers retirement plans in shreds, unemployment between 9 and 19 per cent depending on the measuring stick and bankrupt governments trying to solve complex questions in an international financial system where greed is rewarded with power.
Family businesses are not immune to the trials and complexities of doing business today, but they have a competitive advantage due to the extra effort and energy of their people. It comes from belonging to the business and belonging to the family. Pay cheques are cut when necessary, or lent back to the business. Relationships with customers are typically deeper and personal, the same with non-family employees. Successful business families take time to meet, communicate and yes think of the future. They undertake strategic planning, often with the help of professional advisors retained specifically for that purpose. It is in these organizations that innovation flourishes as they consider what their market will look like 5 and 10 years from now. Innovation, found largely in family businesses, built North America into an economic powerhouse, it is the wealth derived from that economic strength that has allowed bureaucracy to grow and it is bureaucracy now that is sapping the strength from the economy.
If allowed, innovation in family businesses will contribute substantially to a return to vibrant economic growth, for that to happen we need to find some way to regulate the regulators. Most people are good and caring. I know many good financial advisors, they do not need excessive regulation to protect their clients; it is their job and training to do so. I know many farmers, here in Niagara, proud of the land to which they belong and the food they produce for all of us, people don’t need bureaucratic protection from these people. What people need is assurance of the opportunity for quality of life for themselves and their descendants. Opportunity that grows from innovation not regulation.