Platt Perspective on Business and Technology

Reexamining business school fundamentals (reconsidered) 12: business law in a rapidly changing collaborative and competitive context

Posted in reexamining the fundamentals by Timothy Platt on March 17, 2017

This is my 12th installment to a series of brief, single issue sketches in which I reconsider each of a set of core issues that I first addressed in this format in a 2010 series. See Section II of my directory: Reexamining the Fundamentals for that earlier related series, and in particular see my earlier same-name counterpart posting to this one as included there: Reexamining Business School Fundamentals – business law in a rapidly changing collaborative and competitive context.

One of the core elements of that posting and its line of discussion can be effectively summarized in a conceptual approach that I identified there as Platt’s Innovation Driver Conjecture (as I take both credit and blame for it):

• In a closed innovation society where businesses in effect exist as islands of expertise and performance in the market spaces they carve out to compete in, proprietary protection of intellectual property equates directly with strength in securing and maintaining market position. This becomes essential for offering a unique value proposition needed for long term success.
• In an open innovation society where businesses are surrounded by valid and important sources of business intelligence and other information of monetizable value, and where organizations need to connect strongly into supply chains and larger value chains to succeed and thrive, free exchange of business intelligence and particularly of enabling information becomes crucial to success.

I initially offered this in the context of how business intelligence, and both as carefully gathered raw data, and as organized and processed knowledge would be benchmarked for value, and monetized as a source of business assets. This here-conjecture and the issues that it raises become even more important when barriers and limitations to the proprietary holding of information, or to its strategically planned sharing are imposed from the outside. I write this series and this posting in it at a time when governmental political forces and sociopolitical forces that both drive them and are shaped by them have come to create such barriers and limitations and both within nations and their economies and between them.

As I have been discussing in earlier installments to this series, we have entered a period of profound uncertainty and increased risk – and with the two closely connected. One consequence of this that we have to consider at the very least as being more likely now, is increased pressure for businesses to in effect pull in more, towards taking a more closed innovation approach. This does not necessarily mean ending or even slowing down on the development and elaboration of supply chain systems, or of larger value chain systems though that might happen; it does mean increased pressures to manage these collaborative networks more conservatively, and with both the possibilities of reduced here-and-now value and increased risk potential in mind, and with greater awareness of potential longer-term complications – and particularly as they might be imposed from the outside by new legal restrictions or in the case of a Donald Trump US presidency, by sudden and unexpected executive order. And in that and in the current climate in the United States as I write this, “longer-term” there does not necessarily mean all that far away.

I made note of law of contracts and agreements, and intellectual property law in my same-topic area 2010 posting as cited above. And I continue this posting from this point on in it by considering a third area of law that I had not delved into in any detail when I initially wrote my August 1, 2010 posting, but that I have written about in a progression of postings and series since then: regulatory law. See for example: Considering a Cost-Benefits Analysis of Economic Regulatory Rules (as can be found at Outsourcing and Globalization as its postings 23-37), and Making Regulation Work (as can be found at Macroeconomics and Business, postings 118-130.)

And I address this complex of issues here from the perspective of how the societal conversation and our capacity to communicate meaningfully across political divides has been all but shattered in the United States in our current political climate, with alt-right and related, and liberal and progressive for all intent and purpose living as if on different planets now. As a critical reference for my approach to understanding that and as necessary background for putting this posting into perspective, I cite a recent entry to this blog that I offered leading up to the still-recent 2016 presidential elections in the United States: Thinking Through the Words We Use in Our Political Monologs. Our political and I add our economic thought and understanding have become splintered off into separate and disconnected epistemic bubbles, to cite the term I use there, and by what I can only refer to as the cognitive dissonance and blindness of what have now come to be called “alternative facts.”

What does “regulatory law” even mean now? That depends on who you ask. Ever since the pre-Trump, George W Bush era US Congress, and for many on the “ultra-right” from before that, this term has meant legal barriers and restrictions only – and particularly where they are deemed as not being justified or even justifiable in a “business value creating sense.” So what do we see from a legal and a business-facing law perspective as I write this posting and series? An emerging climate in which wrinkles and barriers to open collaboration between businesses and economies and across socio-economic systems are proliferating, and a climate in which borders are becoming more and more restrictive as far as international travel is concerned, and with that based on national origin, religion and other factors that in a more open societal context would be considered overtly discriminatory.

As a matter of sharing my own partisan perspective on what regulatory law, or at least good regulatory law is, I would argue that it offers rules of the road for limiting high risk behavior on the part of businesses that in the long term at the very least limit and challenge both individual businesses – those risk-taking businesses included, and even entire economies. Yes, good regulatory law limits and restricts but very selectively. It primarily serves to reinforce and encourage good business practices that are longer-term more sustainable and that are longer-term more value creating – and for individual businesses, and for supply chain and other collaborations, and for entire industries and across entire economies as a whole.

Donald Trump and his election in the United States, and the pressures that led the United Kingdom to vote to brexit the European Union, the rise of Marie Le Pen and the far right that she leads as it rises in prominence in France in its current as of this writing political climate there, and more simply reflect a trend that was already developing, reaching a tipping point – and a tippling point over what might be agued to represent something of a cliff edge. And we can expect direct challenges to both good regulatory law and against any who would support it, to increase, and certainly through any immediate and short-term future – and with the increased pressures towards the rise of barriers and friction in our globally interconnected economy that this creates.

I end this posting by citing two recent in the news references, as benchmarks for understanding precisely where this posting is being assembled from in this March, 2017 as a matter of perspective. The first is an op-ed piece by Paul Krugman that appeared in the February 6, 2017 issue of the New York Times, discussing how president Trump has asked the Labor Department to review (and delay and repeal) its new fiduciary rule, according to which financial advisors are required by law to act in the interest of their clients – and not just of themselves and their commissions. And the second is a relevant news and analysis piece on this still breaking story. As a matter of note, the fiduciary rule in question as currently drafted and enacted is set to go into effect on April 10, 2017 but a review of the type requested by the Trump administration would most likely push that date back by at least 180 days, leaving time and room to launch a successful repeal of it.

Springtime for Scammers and
Trump Orders DOL To Review The Fiduciary Rule: The Official Memo (a February 3, 2017 Forbes article)

The full text of this memorandum as coming out of the White House as dated February 3, 2017 can be found at:

Presidential Memorandum on Fiduciary Duty Rule as officially posted online through the whitehouse.gov website.

And a second set of issues that I also make note of here moves the Trump deregulatory agenda out of the realm of simply affecting individual investors and their life savings, to consider the business world and economy as a whole, and certainly as they are to be found in the United States, with attempts to gut and repeal the whole of the Dodd-Frank financial reform: the Dodd–Frank Wall Street Reform and Consumer Protection Act as enacted in 2008 in direct response to the financial collapse leading up to and causing the Great Recession:

Trump Begins Attack on Financial Regulations with Signing of Two Executive Orders (an American Bar Association Journal piece) and
Trump Begins Assault on Dodd-Frank Financial Regulations (an MSN piece.)

The full texts of the two memorandums under discussion here as dated January 24 and February 2, 2017 respectively can be found at:

Memorandum: Implementation of Regulatory Freeze and
Memorandum: Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, Titled “Reducing Regulation and Controlling Regulatory Costs”.

And with this, I return to the 2010 posting that I am building this update from and the issue of the law being reactive. When change that the law has to allow for and adjudicate is positive, and when it has positive potential that can be thwarted and turned if not effectively addressed, reasonable people can find at least a measure to question and challenge it for its inertia. But when change amounts to chaos – disruption without any possible, realistic positive side to it, the law can become a bulwark against risk creation and its full realization. Right now, and certainly in the United States, law’s reactionism and inertia are likely to become among our strongest safeguards – and certainly as we weather this period in time – and not just for the United States.

And one of the key areas where we now need to be able to hold the law as a check on reckless, risk and challenge-only change, is in enforcing good regulatory law, and whether that means addressing the challenges to the fiduciary rule and overall regulatory reform as noted above, or protection of net neutrality, or of environmental protection – or in any other arena of law where good is under direct and immediate challenge. See:

Trump’s F.C.C. Pick Quickly Targets Net Neutrality Rules

as a recent in the news piece on how a Trump administration is actively seeking to repeal net neutrality as a Federal Communications Commission policy and practice, as a case in point of the wider breadth of this move towards across the board deregulation and regardless of how or why particular regulatory laws and mechanisms were first created or how they have performed since then.

I am going to turn in my next series installment here, to reconsider the basic issues raised in my 2010 posting: Reexamining Business School Fundamentals –negotiations across cultures. Meanwhile, you can find this and other related postings and series at Reexamining the Fundamentals, with this series offered as a new Section VII in that directory. (As a timing benchmark, I completed this posting for upload to the blog server on February 9, 2017. I note this detail here because chaos can move quickly and I fully expect that new events will arise between now and the March 17 date that this posting is scheduled to go live on, that will at the very least highlight the importance of the issues and concerns that I raise here.)

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