The hyperloop is a new mode of transport to be watched, as it promises better, faster and more sustainable mobility. As development of the technology is ready to test, we have to think about the introduction of this new modality into the existing infrastructure and society. This requires, among other things, the development of cross border infrastructure, compliance to international technological standards, new (inter) national legislation and of course huge investments. Big challenges which can only be met when both public and private parties are aligned.
Traditionally, technological development and innovation is usually driven by business: first movers in terms of knowledge, expertise and capital are often private actors. However, given the requirements mentioned above, governments are logical and essential partners for successful introduction of the hyperloop as a new mode of transport. Luckily, the potential of the hyperloop to provide sustainable transport provides a clear interest for the government to play a role in supporting its introduction. Business and governments both have much to gain from collaboration. By joining forces, the parties can share and reduce risks, combine funding and diminish costs. Successful collaboration between the two is, however, not self-evident. In our experience, both governments and private companies find it very difficult to work with the other party. This article focusses on why and how tech-companies should try to involve governments as early as possible with regards to the introduction of the hyperloop. [1] After looking at challenges which are important to overcome, we will provide some advice for approaching trajectories which can further the goal of successful introduction of the hyperloop as a new mode of transport.
The role of the government – essential but problematic for tech-companies
If a government wants to contribute to a technological paradigm shift, which the hyperloop essentially is, it should initially play a visionary and framework setting role. Early participation in important aspects of innovation, such as knowledge development and diffusion, guidance of the research and resource mobilization is recommended. Governments should keep an eye on disruptive developments, in order to recognize governance issues with technological developments in an early stadium. This enables governments to realize legislation and regulations efficiently instead of changing rules afterwards.
As the maturity of the technology increases, the role of the government will become more important. The urgency for changing legislation will increase and governments will have to decide on allocation space for the hyperloop. In Western Europe, full-scale commercial introduction of the hyperloop will mean that a lot of effort will have to go in expropriating private home- and land owners, as there is not enough open space available in this highly urbanized part of the world. This will lead to high costs and public discontent.
The government will have to decide whether the obvious benefits of the hyperloop negate both costs and discontent. Probably the government will not only have to provide the necessary space but it may also be expected by companies to partly pay for it as well. This means cooperation of governments with the introduction of the hyperloop is by no means certain.
This seems to be a blind spot for the private companies working on and heavily investing in the development of the hyperloop (within and outside of Europe). Tech companies tend to be strongly focused on the technical possibilities and benefits of an innovation, with limited regard for what it takes to get the technology actually introduced into the real world. This especially applies for technologies that have a large societal impact, such as the hyperloop. This causes certain aspects, essential for the implementation of a new mode of transport, to be neglected. Not only do tech-companies seem to overlook the essential role of the government, they also cannot comprehend why a government would possibly be against their technological innovation. This means tech-companies will involve governments only when it’s really necessary, which is too late.
How to overcome this stalemate?
This may seem a bleak message for the hyperloop in Western Europe. Nevertheless, we think that governments and tech-companies can still successfully work together on the introduction of the hyperloop. This will require tech-companies to engage in an early stadium in a dialogue with the government on issues connected to the introduction of the hyperloop that will likely be far from their minds at that stage. We are thinking about issues like urban development, infrastructure and governance.
Starting early with discussing those issues, that do concern governments, will benefit both government and tech-company. For the government, this dialogue has the benefit that it may help prevent possible governance issues or challenges to public goals which may arise with technological development. The upside for companies is that they might get public and political support, swifter adaptation of necessary legislation, help with issues that may arise with other governments (e.g. municipalities or the EU), subsidies, use of infrastructural data and knowledge and public space for testing new technology. Dialogue may develop to an actual partnership where both company and government together take a stake in the introduction of the hyperloop.
Some questions government and tech-companies should together address in an early stadium are:
- Who invests in the infrastructure?
– If both public and private money is used, how do we make sure both public and private investors get return on investment (even if return on investment may be a public instead of a financial gain)? - Do we regulate exploitation of the hyperloop? And if so, how?
– How do we ensure competition / prevent a monopoly? (necessary with regards to EU law)
– How do we deal with intellectual property rights? - How do we prepare the public for introduction of the hyperloop?
– In terms of the large government spending it may require, in terms of discomfort the development of infrastructure may cause and with regards to the change this will bring to the landscape. - What is the potential impact of the hyperloop on the rest of the mobility system, including other public infrastructures? How can we introduce the hyperloop in a way that sustains and strengthens other public modes of transport?
There are many more questions we might think of. The good news is that we see that dialogue on these kind of issues has already started in Western Europe. This helps to build trust and mutual understanding, which is a great step towards a working public-private partnership which has as goal the successful introduction of the hyperloop.
When both governments and private companies work closely together, they can build on each other’s strengths: companies offer technology, innovation, clout and investments while government shapes beneficial preconditions and also financially contributes. Both companies and government can contribute to get closer to this mutually beneficial way of working together. We conclude with some general advice for companies and governments who want to start improving relations with their counterparts on the other side of the public-private divide.
Some advice for tech-companies that want to successfully work with the government on the introduction of the hyperloop:
- Develop an understanding for government processes and interests and try to involve governments from an early stage.
- Involvement and support of stakeholders and governments must be actively sought. Even while the concept is still developing. A strategy for stakeholder involvement needs to be formulated and deployed.
- Additionally, clear communication and marketing of the technology can help achieve societal support and thereby government support.
- Do not demand exclusivity when cooperating with governments, especially not in the earlier stadia of development. Governments will want to keep their options open, both for political and legal reasons.
Some advice for governments that want to successfully work with tech-companies on the introduction of the hyperloop:
- Governments need to understand what companies require : return on investment. This may mean government may need to search for legitimate ways to compensate companies for their investment of both time and money, while upholding laws on competition and state-funding.
- Provide space for business to innovate, in terms of physical space for test tracks as well as room in laws and regulations to try out new modes of transport that do not yet fit existing regulation.
Some advice for both:
- Promising innovations with large-scale societal benefits such as the hyperloop can only be successfully implemented by joining forces. This means working together in public-private partnerships.
- Start off by agreeing on the potential benefits introduction of the hyperloop may have on society.
- Engage in an early stadium in a (permanent) dialogue on difficult issues which will inevitably come up once the technology progresses towards implementation.
- Understand each other’s interests, both the commonly shared ones as well as the differing ones.
By Wouter Metzlar and Niek Overgaauw, consultants at Berenschot, June 2019
Wouter Metzlar and Niek Overgaauw are consultants at Berenschot, a management consultancy based in the Netherlands, who advise companies and governments in the mobility-sector on strategy, governance and public private partnerships.
[1] We focus on the national government, from a western European perspective. In (western) Europe, urban development and development and exploitation of new infrastructure are strongly regulated and to lesser or greater extent also publicly funded. This provides both a challenge and a potential benefit for successful introduction of the hyperloop. Other countries, such as Australia, the US, India and China, deal differently with urban development and development of infrastructure.
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