In the course of his research on business strategy and the environment, Michael Porter noticed a peculiar pattern: Businesses seemed to be profiting from regulation
He also discovered that the stricter regulations were prompting more innovation than the weaker ones
The Dutch flower industry provides an illustration
For many years, the companies producing Holland’s world-renowned tulips and other cut flowers were also contaminating the country’s water and soil with fertilizers and pesticides
In 1991, the Dutch government adopted a policy designed to cut pesticide use in half by 2000 ― a goal they ultimately achieved
Facing increasingly strict regulation, greenhouse growers realized they had to develop new methods if they were going to maintain product quality with fewer pesticides
In response, they shifted to a cultivation method that circulates water in closed-loop systems and grows flowers in a rock wool substrate
The new system not only reduced the pollution released into the environment; it also increased profits by giving companies greater control over growing conditions