Most times, regulatory changes are just a burden for organizations. In some rare situations, however, a smart organization can “ride” a regulatory wave to seize a new opportunity in the market, effectively turning what would otherwise be a burden into a competitive advantage.
This usually happens when the regulatory change is just the second-order effect of broader cultural shifts: the regulator uses the cultural shift as a platform for the new regulation (see Innovation needs a platform), and the wise leader, in turn, uses the regulation as a platform to create competitive advantage.
A good example of this is the Ecodesign for Sustainable Products Regulation (ESPR), introduced by the EU in July 2024. Among other things, the ESPR mandates that all new consumer products manufactured or imported into the EU ship with a Digital Product Passport (DPP). The DPP must contain information about the product’s supply chain for traceability purposes.
While this may seem like a regulatory burden at first, a well-positioned brand may ride this regulatory change to position themselves ahead of the curve, introducing DPPs before everyone else, augmenting them with custom functionality that drives higher engagement, and using this as a key value proposition compared to the competitors.