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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

We ask: Who could have saved the hoverboard?

Back to the Future predicted we’d have hoverboards in 2015, and it happened. But in the same year, the hoverboard industry crashed and burned. Was this an industrial catastrophe that Compliance 2.0 could have foreseen and prevented?

Mike Scher wrote here in 2015 that compliance officers should be seen as subject matter experts. His brilliant idea was to use Compliance 2.0 to avoid disasters like hoverboards — a product that brings its own risks because it’s “lawful but new or novel.”

“Often these risks aren’t acknowledged,” Mike said. “No one owns them. I believe compliance officers should be subject matter experts for some of these lawful but new and novel situations, as they already are for scenarios that are lawful but awful.”

Last year, hoverboards — two-wheeled, self-balancing scooters — became one of the most viral consumer products in history. Everyone wanted one, or wanted to give one to someone else. Enter China, the world’s factory.

“Manufacturers and exporters in Shenzhen, where most of the world’s consumer electronics are made, caught on to the trend and cranked them out in droves. More than 400,000 boards shipped out from Shenzhen in October alone,” Josh Horwitz wrote in Quartz.

But previously hidden risks started to surface. Sellers in the West made competing claims to the intellectual property, spooking retailers afraid of the legal crossfire. The lithium batteries powering hoverboards exploded and burned, causing some airlines to ban them from all flights. YouTube videos showed people falling off the boards. Broken elbows and cracked heads became part of the story, and part of the liability worry for retailers.

In the UK, Amazon stopped selling hoverboards. In the U.S., the retailer severely restricted sales and offered a full refund to anyone who bought a hoverboard through its online store.

The industry collapsed. Sellers were ruined. Work at the mega-factories in Shenzhen stopped, and tens of thousands of jobs disappeared. The wreckage piled up.

Who should have seen the risks ahead with hoverboards?

Executives at the sellers were too busy scrambling for supplies of hoverboards, and their lawyers were rushing to stake the IP turf. In Shenzhen, the mega-factories tried to meet demand by assembling ad hoc (fly-by-night) supply chains. Even identifying who made the defective batteries became nearly impossible, meaning there was no easy or quick fix for the problem.

Josh Horwitz concluded his story in Quartz this way:

This is the modern economy in a nutshell — viral trends, massive manufacturing hubs, IP disputes, weak regulation, immensely powerful businesses, and global ripple effects. That, rather than its distinctly underwhelming technology, is what made the hoverboard a device of the future — and perhaps just as quickly, and to most people’s relief, a thing of the past.

Horwitz sees a dreary version of the future, with repeating hoverboard-style debacles. But there’s another way.

Mike Scher saw something better. He described it this way,

“Chief compliance officers in the C-suite, working for and reporting to the board, overseeing compliance officers who are executives and subject matter experts, can help companies respond to the challenges of change. It’s called Compliance 2.0. And it’s the future.”

We like Mike’s version of the future a lot more.


 Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. I'm with Mike Scher, I'm a long time supporter of implementation of this ideal corporate structure. Thanks folks.

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