Why Regulatory Compliance is aTop Skill for Product Managers to Master in 2021
The high-growth industries of 2021 will demand experts in the regulatory environment.
Cannabis. Solar Energy. Online Therapy. What do industries have in common? For starters, they all saw massive growth in 2020. Second, they all are projected to continue outpacing other industry sectors in the coming years. One more thing, they all exist in regulation-heavy environments. The regulatory environment as a whole will become a more important part of many industries in 2021 and beyond.
There are so many pieces written about the skills a product manager must acquire in order to be successful. These skills could be anything from learning about user psychology, understanding business models, or even programming. What is often left out but is increasingly important, is the ability to quickly understand the rules of their market and find competitive advantages within. There are many reasons, a few of which I’ll outline in this article, that learning about regulatory compliance is the most important skill a product manager can work to develop in 2021.
Big Data, Bad data
For starters, people are becoming more aware of the value of their data and are increasingly concerned with their lack of privacy. Over the last few years, the New York Times has run a series called the Privacy Project which outlines many of the worst ways that privacy is being eroded through our increasing adoption of technology. The series represents top-notch journalism because it takes technology common to data scientists and machine learning programmers and translates it for a mass audience.
The Privacy Project and other similar reporting has had the effect of raising consciousness around shrinking privacy and the ways in which mountains of data are being used to drive consumer behavior; and many people are uncomfortable about this. According to the Pew Research Center, 79% of adults said they were at least somewhat concerned about how companies were using the data collected about them. As they should be. Additionally, surveyed Americans stated that they see more risks than benefits regarding the data collected about them; 72% reported benefiting very little or not at all from the data companies collect.
We’ve all had the experience of talking about something to a friend and seeing an ad related to our conversation appear on our phones or browser. As distrust of technology companies continues to rise among the average consumer, we would expect a growing sentiment for government regulation around personal data and how it is used. Which is exactly what we are seeing.
Broad Political Support
According to the International Association of Privacy Professionals (IAPP), the situations of 2021 make it the best year for the US to pass privacy legislation. Californias passage in November of the California Privacy Rights Act is set to regulate in a similar way to GDPR, the ways that Californian’s data is collected and used. We can expect that much like auto regulations, the California standards will become the norm for other states as well.
Additionally the IAPP points to two proposals to come out of congress in the last year: The American Framework to Ensure Data Access, Transparency, and Accountability Act, and the Consumer Online Privacy Rights Act.
What is interesting about these pieces of legislation is that they are bipartisan. The first is sponsored by Mississippi Republican Roger Wicker, the second by Washington Democrat Maria Cantwell. At a time where political parties can’t seem to agree about topics as seemingly simple as “are masks good in a pandemic” or “should votes determine the outcome of elections”, we have somehow found common ground on the need to regulate how data is collected and used by technology companies.
Another area where common ground can be found in American politics is around antitrust; the unlikely teamup between Elizabeth Warren and Bill Barr. Just in the last few months we’ve seen three antitrust cases brought against Google and two brought against Facebook. If you’ve ever paid the 30% vig to Apple to distribute in the Apple marketplace because there is no other way to distribute to Apple phones, you know that antitrust cases against Apple are likely to follow. That’s to say nothing of Lord Bezos and his realm of Amazon Cloud Services.
You need to know the rules of the system before you can hope for success within the system.
The effects of these cases most definitely will be tighter regulation around the practices of technology companies. While regulating the biggest technology companies will create space for more competition in the industry, it will also necessitate professionals who can navigate the regulations. As Product Managers, we are the team members best situated to understanding any new regulations, writing acceptance criteria to ensure compliance, and identifying competitive advantages within the regulatory environment. You need to know the rules of the system before you can hope for success within the system.
And make no mistake, when regulation happens, being the first company that is in compliance becomes a competitive advantage. Regulatory expertise therefore becomes a tool in the PM’s toolbelt. I would even argue that regulatory expertise is even more necessary than other PM skills. You can hire a good UX designer, Business Analyst, or marketing manager — but it is the Product Manager who sits in the best place to strategically determine the direction of the product within a highly-regulated space.
In the same way that GDPR regulations in Europe caused American companies doing business in the EU to comply, expect the regulatory landscape to have effects outside of just strictly data companies. Whether it is how data is collected and used to the competitive business practices or risk of unintended consequences, the biggest growth industries are all in areas ripe for regulation.
As an example, consider the following high-growth areas and the possible regulatory arguments.
2020 saw huge changes to healthcare. As less people could go to the doctor, more visits moved online creating an enormous opportunity for telemedicine. Additionally, mental health got a lot more attention this last year…..for some unexplained reason. These are both areas where sensitive data is collected by the user. This data collected anywhere else would be covered under HIPAA guidelines but when it’s online, it becomes a grey area. Expect to see regulations about what data is collected, how it is stored, how it can be shared, and how it can be accessed by the user.
Expected to grow to $305 billion in the next four years, FinTech will most definitely see further regulation in 2021 and the coming years. One big area of concern is around the use of “e-scores”. Traditional lending uses FICO scores which have regulations around what can affect the score. These regulations have mostly been put into place to protect against the discrimination of poor and traditionally excluded minority borrowers. E-scores have no regulations and can be calculated from any number of data points.
As author Cathy O-Neil, outlines in her book Weapons of Math Destruction, something as simple as working in a “bad” part of town or having friends who have been arrested can negatively affect an e-score; resulting in higher lending rates. Systemic racist practices such as redlining and the war on drugs mean that minority groups are penalized with lower e-scores, a practice that would be illegal were the lending companies using traditional FICO scores.
E-scores are just one example of an area that is likely to face further scrutiny. Financial Industries are highly-regulated. Expect FinTech to move in a similar direction in the coming years.
Speaking of the war on drugs, cannabis is becoming more available each year as more states vote to decriminalize or even legalize. Retail sales of cannabis in the US are expected to have passed $15 billion in 2020, representing an increase of over 40% for the year (no idea why people would turn to mind altering substances in 2020).
The cannabis industry, like tobacco or alcohol, sits in a regulated space. Companies looking to grow, supply, or sell will already be familiar with regulations. As the taboo around smoking is lessened, expect further innovation in products containing cannabis as well as around the methods for sale and distribution and consumption.
Unlike MedTech and FinTech, GovTech is an area that already has pretty established regulations. As this sector continues to grow and modernize, expect a bigger demand for Product Managers who can quickly learn regulatory requirements and develop products that comply.
What it means
The list goes on and on. Drones, facial recognition, predictive law enforcement, cryptocurrency, and AI ethics could each be topics of their own articles. The point is that technology has existed in a vacuum, devoid of the negative consequences of advances in the products and services a business can technically provide.
Those industries most prime for taking advantage of technology and big data are also those that could pose the most harm if done incorrectly. At the same time, consumers are becoming more familiar with technology in general and are recognizing not just the convenience but also cases of where technology companies need to be reigned in.
Bipartisan support for regulating big technology companies will most certainly lead to a new era of legislation, specifically in the data market. Any changes to the rules affecting Google, Facebook, Apple, and Amazon will most certainly create massive ripples that will require a PM to understand the changes and adjust the product accordingly. This creates a massive opportunity for the PM that can develop the skills in regulatory compliance and a massive competitive advantage for companies employing these product managers.
What do you think? Are we likely to ride the energy of Antitust into 2021 or will lobbying interests stave off the advancement of regulation? Is regulation even necessary if companies can self-regulate? Is self-regulation even a real thing? If you’re in a regulated-industry, how have you worked to learn about the laws effecting your business?
One of my goals for 2021 will be to continue to learn more about regulatory compliance and write about what I find. Follow me if you want to take this journey with me.