DM Note #1–7 learnings from our regulatory innovation work on the ground
Introducing the DM Notes
This is the first in a series of DM notes that we will write about the insights from our work on the ground, which follows internal learning sessions called the DM Downloads that are organized every two weeks or so. The aim is to make our practice more legible, for us as well as for you.
DM Note #1 is a preview of our international portfolio of experiments around governance and regulatory innovation as well as some of the learnings that are coming out of it.
Why regulatory innovation?
We find ourselves at the forefront of some of the greatest challenges humanity has faced. The multiple crises of our time (climate break- down; rising inequality; declining trust; runaway technology; populism and nationalism in politics) are in many ways entangled in our here and now. And the trajectories of these risks are being intensified rather than limited or mitigated by our existing governance models.
We therefore need to find new paradigms for exploring issues, discovering solution pathways, and making decisions, together. This requires governance innovation, which in turn necessitates regulatory updates. To keep up with the pace of change we urgently need to transition towards a collaborative (meaning public, private and fundamentally civic) and agile model of designing, delivering and updating the rules:
the game is (constantly) changing,
the rules need to keep changing as well.
Yet the prevailing logic of regulatory innovation is too often driven by corporate demands. This tends to reduce it from a fundamental and
inclusive discussion about public value(s) to a narrow concept of ‘unburdening’ business and unleashing the disruptive power of unicorn companies — rather than responding to more diverse sources of demand for change.
After putting together The Network of Governance & Regulatory Experimentation and organizing two meet-ups in Amsterdam (2018) and Toronto (2019) on these questions, we at Dark Matter Labs produced a Provocation Playbook, in collaboration with the Community of Federal Regulators in Canada, the McConnell Foundation and MaRS, and called for the implementation of a network of regulatory experimentation (RegX, for short) labs in Canada though Legitimacities, among other activities detailed in the diagram below.
We are now developing parts of the answers with partners in various places around the world, including Madrid, Amsterdam, Seoul and Montreal.
Quick overview
Madrid — Mission-Oriented Regulatory Sandbox
In Madrid, there is high level political support for the idea of a regulatory sandbox as an innovation instrument in the economic motor of Spain. The City Council has recently released its Roadmap Towards Climate Neutrality in 2050. This roadmap includes measures relating to existing and new building, use of energy, changes to mobility and leveraging nature based solutions to achieve the mission set up by the City. There is a recognition that key regulations need to be revised, inter alia, to take account of including (but not limited to) the need to be more agile in an age of rapid climate breakdown.
The key lever of change addressed here is the facilitation of regulatory innovation processes focused on the decarbonization of the City of Madrid, particularly through ‘sandboxes’ — controlled experimentation spaces (delimited in time and space) that allow the testing of and learning from regulatory innovation, in a collaborative way, across by, for example, public administration, private developers, civic entities, union groups, and professional associations. In particular, this experiment seeks to, among others: establish a permanent capacity in the Madrid City Council to act as a key enabler of mission-driven regulatory change, with a holistic view of regulation, analyze and identify the regulatory barriers and gaps that hinder sustainable approaches (such as circular economy and renewable energy) in urban projects, and experiment with next generation carbon- neutral innovations in urban projects, both in new development and the existing city as a whole.
Main partners: City of Madrid, Climate KIC, ITD at Madrid Polytechnic University, Arup, and Democratic Society.
Amsterdam — Activating law and regulation for a circular city
Amsterdam aims to be a fully circular city by 2050. During the development of the Amsterdam circular strategy 2020–2025, it was concluded that projects and measures were often of a facilitating and stimulating nature and that the full spectrum of policy instruments had not yet been used. An important reason that the public law instruments are not yet being used optimally is that there is currently insufficient knowledge about the possibilities that Amsterdam as a local government has or would like to have. We are therefore focusing on the development of a digital dynamic tool, that “unlocks” the difficult to understand and static legislative system, connects laws, law areas, and law techniques to the circular aims/principles and makes an unruly world accessible in a new way.
In the regulatory domain there are a lot of “islands”, while everything is connected to everything. This should also be represented in the legislative system. Often within law & regulation areas are so specialized that there is not really an overview. If you want to change the system, for example transition towards a circular economy, you have to change multiple parts of the system, find the levers. Innovation in just one specific part of the system will most likely not change the entire system. But how to visualise or get an overview of this system? We found that only through a combination of bottom up and top down system mapping did we get any closer to a categorisation of the regulatory domain and an overview. This we only achieved by using a multidisciplinary approach and co-creation with the city. Creating this overview has already opened up lots of space for innovation and opportunities. We are continuously working on building the tools to navigate complexity and enabling innovation and transition.
Main partners: City of Amsterdam and Climate-KIC
Seoul — Sandbox Innovation for Civic Experimentation
In November 2018, Dark Matter Labs prototyped a hypothetical experiment called “Street trading licence design” during the Unusual Suspects Festival SEOUL. Participants received: 1) a series of hypothetical scenarios and 2) an overview of technological trends on the era of the Fourth Industrial Revolution, enabling them to create a set of speculative regulatory futures.
Last year, Dark Matter Labs had opportunities to design and create civic programmes for the Seoul Metropolitan Government for one of the innovation districts in northern part of Seoul, we communicated ‘Regulatory Innovation’ (tools & possibilities) for complex urban challenges which are one of the pillars that accelerates urban reformations used in designing, and governing city space. However, the proposal was not welcomed and accepted.
In 2020, DML worked with Daegu Metropolitan City and launched ‘Sandbox Innovation’ for Civic Experimentation’ as an approach to creating equitable urban futures in the digital economy. While we were working with citizens and tech companies around 5 different urban challenges such as air pollution and illegal dumping of domestic waste, we tried to expand a vertical horizon of the solution space: not only services/products, but also regulatory regimes.
Main partners: Daegu Technopark, Korea Agency for Infrastructure Technology Advancement, Daegu Metropolitan City
Montréal — Towards a new generation of place-based regulatory sandboxing
LICER (Laboratoire d’innovation civique pour l’expérimentation / Civic and Regulatory Innovation Laboratory) is part of the collaborative governance component of Montreal’s winning bid for Canada’s Smart Cities Challenge, which aims to support innovation and citizen involvement in sustainable mobility and food security projects.
LICER is part of a series of strategies aimed at supporting municipal administrations and partner organizations in the research and implementation of governance methods adapted to the precepts of smart cities, such as the creation of bodies promoting citizen participation in decision-making, shared governance, the implementation and management of physical and technological commons, and the inclusion of social acceptability objectives in the technologies developed.
For the past year, we have worked with multiple community projects to identify regulatory challenges, prioritize common innovation themes as well as city departments to be involved in the future. Currently, we are working on a system mapping of local regulations around two local initiatives, as well as the governance system and legislation that influence them, and we are designing a series of new services, including one aimed at providing regulatory clarity and advice for innovators, as well as the prototype of a new generation of a regulatory sandbox that would be place-based and work across different sectors.
Main partners: MIS Maison de l’innovation sociale, ENAP (École Nationale d’administration Publique), LIUM (City of Montreal)
The 7 main takeaways so far
- Start small, but keep the end in mind. There is space for experimentation with other “regulatory tools” such as tender documents, standards, procedures, that may be easier to change and yet have a great impact. Starting by these, rather than harder to change municipal ordinances or national laws, may be a good way to test the hypothesis, build support with partners and have a proof of concept to convince others. However, in order to fall into a piecemeal approach, it’s always better to keep the end goal of the mission explicit throughout the process.
- Words matter. Although the sandbox idea can resonate with many people (particularly top political leadership), in our experiences sometimes the legal department might offer resistance to the idea (either for a fear that it might be perceived as a trojan horse for deregulation or too ambitious). Sometimes, we had to tone down the “regulatory” aspect to focus on identifying barriers and coming up with creative ideas to overcome them (regulatory or otherwise)
- Work together. The approach of starting with multi-partner workshops to identify barriers, build trust and a shared of understanding of why regulatory experimentation is important worked very well so far. However, even if having all the right people around the table from the beginning might prove to be a challenge, it often saves time later on.
- Trust takes time. Establishing regulatory experimentation at a more institutional level in City Hall will take time, because it requires high doses of trust that can only be built with patience and careful interactions. While we have slowly built the trust with many key partners, many more remain in order for the initiatives to become have the level of commitment to be truly transformational (i.e. Legal Departments, etc,). Personal connections and finding champions within the organization remains essential.
- Moving towards sharing risks. Regulatory experimentation can help establish a government culture that values controlled risk-taking and collective learning. However, this can be easier said than done. Involving a multitude of stakeholders allows for the sharing of potential risks, as well as ensuring a collaborative process that combines various perspectives and considerations. But risks can remain very hard to share, and some actors will be more reluctant than others given their level of risks ownership, and we should approach it accordingly.
- Push and Pull: As explained in Legitimacities 1.Q, regulatory innovation needs to be a combination of both pulling and pushing; Specific regulatory innovations based on mission led initiatives from community initiatives and process innovations that challenge how regulation is designed, monitored and adjusted. In other words: responding to change from a full range of change agents, but also inviting and supporting regulators to lead the reinvention of existing infrastructures for public benefit. This is a delicate dance that requires balance. As it disrupts traditional institutions and regulatory regimes, this transition also offers unprecedented opportunities for radical openness and inclusiveness, eliminating information and communication asymmetries, and dramatically lowering costs and raising the efficacy of regulation in a complex world.
- Legitimacy is key. Whether it is through openness, participation, accountability, fairness or effectiveness, legitimacy remains at the center. When it comes to socio-ecological regulatory missions, priorities and participants must be be carefully chosen and grounded. Otherwise, not only the public, but the participants themselves might question their legitimacy. In one city we worked with, for instance, many wondered why the housing crisis wasn’t the priority since everything else connects to it.
Get in touch
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Jonathan Lapalme
Dark Matter Labs / Laboratoire de Matière sombre — Canada
jonathan@darkmatterlabs.org
