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Here’s how gatekeepers choke out innovation

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Innovation in any industry is often met with initial shock and rejection by industry gatekeepers such as policy makers, financiers, and sometimes the media. This staunch resistance to change often comes at the expense of those who would benefit most from the innovation. In my daily trials of negotiating financing for my clients who want to build Contabode container homes, banks often reject the applications with a shared response of saying it’s a high risk loan because “container homes are moveable structures” even though they are foundation-fixed.


Why does everyone want to buy a shipping container home?


Now, in my hunger for all that is logical and sane to prevail, I cannot understand how a bank has no problem financing the purchase of a R1m car which can be wrapped around a tree or a wall or a pole and in flames by sundown, when Beelzebub is on form, and depreciates in value by the hour; but that same bank insists it is risky to provide a loan for a container home designed and built by accredited teams of experienced professionals.

When every car had to have 3 operatorsvintage motor car

Looking back in time, I notice that gatekeepers’ allergy to innovation is nothing new. It seems we never learn. The year is 1865. The development of the internal combustion engine has ushered in the era of a self-propelled vehicle: the automobile, to be later called the car. Naturally, with innovation comes regulation, and the United Kingdom government wasted no time placing laws restricting the use of this technology.

The Locomotive Act/Red Flag Act of 1865 stated: “At least three persons shall be employed to drive or conduct an automobile (a driver, a stoker to keep the engine on, and a mechanic), one of such persons shall constantly be ahead of such vehicle on foot by not less than sixty yards, and shall carry a red flag constantly displayed, and shall warn the riders and drivers of horses of the approach of such automobile”. Only the wealthiest of individuals could afford to employ the three vehicle operators required by this law, which resulted in the extremely delayed adoption of the automobile as a viable means of transportation. Well hey, unemployment must have been at an all-time low because people were hired to hold flags in front of cars (insert sarcastic sneer here). As if these regulations weren’t absurdly restrictive enough, in the United States a bill was passed to state legislature in Pennsylvania, 1896, where legislators unanimously voted that “all motorists piloting their ‘horseless carriages’ upon chance encounters with cattle or livestock have to (1) ‘immediately stop the vehicle’, (2) ‘immediately and as rapidly as possible… disassemble the vehicle’”… excuse me while I have myself a good chuckle here, “and (3) ‘conceal the various components out of sight, behind nearby bushes’ until equestrian or livestock is sufficiently pacified”.

Regulating innovationred tape

Every so often an industry experiences moments of great innovations that achieve familiar tasks better, faster and cheaper than the status quo of that era. And every time this happens, like clockwork, Uncle Regulator and his legion of gatekeepers step in to ensure that the interests of the status quo are kept well intact, at the expense of said innovation and more grotesquely at the expense of the end user that would benefit most from the innovation proposed. As a result, the cost of access to the innovative product or service is kept high because high-volume demand has not yet driven the prices down, making adoption accessible only to the wealthy few, often leaving the people who need the innovation the most out in the cold.

Other modern examples of this case is the competition between subsidised fossil fuel energy sources (crude oil and gas) and unsubsidised clean energy solutions (solar and wind), where gatekeepers argue that the generation and distribution of oil-based energy is cheaper than solar energy but forget to account for the $4tn spent, in the past decade alone, on funding US wars in the Middle East for access to that oil to begin with, and also neglect to account for the billions in government subsidies that will soon prove unsustainable.


Why are banks missing out on the container home loans market?


I digress. The point is, we need to have an embracive culture towards early-stage innovation, especially in South Africa as we pursue first-world status and all the benefits thereof.


Written by Tshepo Machethe

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Tshepo Machethe is a 24-year old business communication practitioner by profession, and a serial entrepreneur by passion. Over the years he has started several companies that form the Statik Corp Group. He is the founder of Contabode, one of the first premium container housing companies in South Africa. Tshepo is an avid reader, passionate writer and, above all, a chess addict.

 

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david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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