Behind the wheel is Christoffer. The leather-trimmed cabin of his truck is a personal and practical mix of a dashboard, photos, switches and handwritten notes. Christoffer has been a truck driver for more than 25 years, but today is the first time he has taken a couple of curious public servants out for a spin – to demonstrate the 33-metre crane on the truck.
“The problem,” Christoffer says, shifting gear, “is that the truck crane needs to be taken out of operations for test requirements more often than trucks without cranes. Half a day quickly adds up to a revenue loss of €400 ($480).”
To confirm they are safe, Christoffer has to complete three to four different annual tests on each of his 65 trucks. In the time it takes to do them, his company suffers production losses of more than €90,000 ($108,000). Take all the trucks and truck cranes in Denmark, add up the price of the test and the estimated production losses, and you come out with yearly compliance costs of over €30 million ($36 million).
While Christoffer is happy to ensure the safety of his trucks, he points out that there are surely savings that could be made. One stands out: “Why can’t the crane be tested at the same time as the rest of the truck during the annual check?”
The need for better regulation
“Better regulation” has been on the agenda of European governments for years. Better regulation means lower compliance costs for enterprises, and is important for improving their competitiveness and growth. The first step on this path is to be able to measure the costs that regulation actually imposes on enterprises.
Since 2004, the key method for this in Denmark has been the Standard Cost Model (SCM). This is a quantitative methodology that can measure the compliance costs of laws and legislation.
One thing the SCM can’t do, though, is tell you how to improve regulations. The key issue here is how to obtain lower compliance costs without sacrificing the purpose of the regulation. To do this, you need to understand how regulation actually works in practice. In Denmark, we’ve found a compelling way to answer this question: design anthropology.
Standard Cost Model, meet design anthropology
In the spring of 2017 the Danish Business Authority and MindLab, a Danish policy lab, developed a methodology to quickly identify costly regulations and how they could be improved, by combining the SCM with design anthropology. This strategy was honed in a rapid, iterative process in the Danish road freight industry, focusing on safety regulations.
Design anthropology takes in situ interaction as the starting point for policy design. So we visited 10 hauliers to understand how safety regulations materialise in practice. We were shown around their trucks and premises, tagged along on rides and witnessed on- and off-loading. By talking and observing, we uncovered what the regulations really required, and to what extent the people living with them thought they were meaningful or could be improved. This process identified regulations that were perceived as costly. We then used the SCM framework to measure the costs of those regulations in terms of time spent, direct costs and foregone production.
The combination of SCM and design anthropology has three main strengths. Firstly, the combination makes for a cheap and fast way to identify costly regulation. Instead of laboriously mapping the costs of all relevant laws with the SCM, it specifically identifies laws that are costly in practice and could be improved. Secondly, looking at the compliance process from the company’s perspective gave us new ideas for how to improve regulation – not from a distance, but from within the context where the regulation is intended to work efficiently. And finally, the SCM let us quantify both the cost associated with a given regulation, and any potential savings an adjustment to it could make.
Our visit to Christoffer was one of 10. Altogether, we identified 15 regulatory burdens that through changes to regulations could likely be reduced. Some of these were incredibly simple – like combining numerous annual tests into one, and saving millions of euros in the process.
Add design anthropology to your toolbox
The described methodology showcases two pivotal – and potentially transformative – actions to take if civil servants are serious about designing better regulation.
First, involve end users and hire an anthropologist. Anthropology provides systematic methods and tools to understand how regulations work in practice for people and businesses – and how they could work better.
Second, set the stage for ongoing collaborative learning between policymakers and businesses. In this case, we used in situ business visits, interviews with authorities and collective cross-professional workshops where those who were affected took centre stage.
Like the annual truck tests, most regulations exist for good reasons. Simply removing them is rarely an option. That said, modifications to laws and enforcement processes have the potential to reduce costs, while at the same time respecting the underlying policy objectives. Infusing the SCM with design anthropology let us do just that. We found the potential for saving millions in the trucking industry; spread across other industries, it could save even more.
(Picture credit: Pexels)