AI governance as a competitive advantage

Discover how AI deregulation allows companies to create tailored governance frameworks for innovation and competitive advantage.

In brief

• The White House’s deregulation of AI presents opportunities for companies to develop tailored governance frameworks that address specific operational risks.
• Organizations that establish sector-specific governance can foster innovation, enhance competitive advantage and lead standard development in their industries.
• Effective governance is a strategic asset, enabling companies to thrive in an uncertain economic landscape while adapting to global regulatory variations.

The strategic opportunity lies in the space that deregulation creates for building tailored governance frameworks that address organization-specific challenges while enabling innovation.

What emerges is not a governance vacuum but a governance opportunity. Companies that move quickly to establish sector-aligned frameworks will set the standards others must follow, turning the absence of federal mandates into opportunities in an increasingly fragmented global landscape.

The deregulation dividend: why federal restraint represents strategic opportunity

The White House’s decision to eliminate broad federal AI regulations represents strategic opportunity, particularly given the mounting geopolitical and global economic tensions. Generic federal frameworks would have to address the vastly different AI applications across healthcare, financial services, manufacturing and other sectors. By taking a step back, the guidance allows for the development of sector-specific governance that can be more effective.

Market data validates this approach. Organizations achieving the highest returns from AI investments succeed through tailored governance frameworks that address their specific operational realities. A pharmaceutical company using AI for drug discovery faces fundamentally different challenges than a bank deploying AI for fraud detection. The absence of broad federal regulation allows each company to develop a framework that meets its unique needs.

This deregulation dividend allows companies to build governance capabilities as competitive differentiators rather than compliance checkboxes. Leaders who understand this distinction will capture value while others waste resources on ineffective broad-stroke compliance.

From compliance theater to strategic capability

The administration’s infrastructure focus — data centers, energy grids, semiconductor fabrications — provides the foundation, but the real opportunity lies in what companies build on top. Without prescriptive federal mandates, organizations can develop governance frameworks specific to their organizational needs.

This shift from compliance to capability transforms governance from cost center to strategic asset. Companies need robust frameworks for managing AI risks, safeguarding ethical deployment and maintaining stakeholder trust. But these frameworks must align with specific business models, risk profiles and competitive dynamics.

Consider the knowledge infrastructure challenge. As companies urgently build knowledge assets and capture unique knowledge for agentic AI deployment, sector-specific governance frameworks can accelerate rather than impede this process. Healthcare organizations can focus on patient privacy and clinical validation, with third parties such as the EY organization allowing for the codification and rapid dissemination of undifferentiating yet critical sector-specific governance. Financial services can prioritize algorithmic fairness and systemic risk. Manufacturing can emphasize safety and quality control. Each sector creates frameworks to manage their relevant risks.

The global arbitrage: turning fragmentation into opportunity

As legislators worldwide develop distinctly different approaches to AI regulation, American companies with sector-specific governance capabilities gain unique advantages. Rather than being constrained by the lowest common denominator of global regulations, they can build modular frameworks with agility and resilience to adapt to various jurisdictions while maintaining operational efficiency. A more relaxed regulatory environment allows American companies the opportunity to decide which markets they operate in rather than meeting multiple strict regulations.

Therefore, companies with sophisticated sector-aligned governance can operate globally, meeting varied requirements through flexible frameworks rather than rigid compliance structures.

Innovation acceleration through targeted governance

The dilemma of choosing between innovation and governance dissolves when governance becomes sector-specific rather than federally mandated. Companies can now build frameworks that actively enable innovation by addressing real risks rather than hypothetical concerns embedded in broad regulations.

This targeted approach to governance accelerates deployment. When governance frameworks align with actual operational risks, companies can move faster with greater confidence. They understand their specific risk profiles and build mitigation strategies accordingly.

The geopolitical context reinforces this advantage. In an environment of heightened uncertainty, companies need adaptive governance frameworks that can evolve with changing conditions. Sector-specific approaches provide this flexibility.

Five actions companies should consider now

The deregulation of AI creates a critical window for companies to establish sector-leading governance frameworks. Those that move decisively will shape standards rather than follow them:

1. Build sector-specific governance frameworks

Collaborate with industry peers to develop governance standards that address operational risks in your sector. These frameworks should be sophisticated enough to manage complex risks and flexible enough to enable innovation. Focus on creating competitive advantage through governance excellence rather than minimum compliance.

2. Lead standard development in your sector

With federal standards absent by design, industry leaders must fill the gap with frameworks that work. Engage with sector associations, key customers and global stakeholders to develop standards that become the de facto requirements. Companies leading this process will shape market access for years to come.

3. Prepare for global governance leadership

Build capabilities to not just meet but shape global standards. With strong sector-specific frameworks, American companies can lead international standard-setting rather than merely comply with requirements set elsewhere. This positions governance as a tool for market expansion rather than limitation.

4. Invest in adaptive governance infrastructure

Allocate resources to build resilient governance capabilities that can evolve with your AI applications. This includes not just policies and procedures but the organizational capabilities to implement them effectively. Target at least 5% of AI investment toward governance infrastructure that enhances rather than constrains deployment.

5. Create innovation-enabling risk frameworks

Develop technology-enabled risk management approaches that accelerate rather than impede AI deployment. This means understanding your specific risk profile and building targeted mitigation strategies rather than broad defensive measures. Make governance a tool for confident innovation rather than cautious compliance.

The strategic imperative: governance as a competitive weapon

The White House AI Action Plan’s deregulation approach creates a unique generational opportunity. By avoiding broad-stroke regulations, the administration has enabled something far more powerful: sector-specific governance frameworks that drive real competitive advantage.

As global economic growth faces headwinds amid mounting uncertainty, companies that build sophisticated governance capabilities will thrive while others struggle with either no governance or ineffective compliance frameworks. The winners will be those who seize the opportunity to build effective governance for their organization.

The lack of federal AI regulations should not be viewed as a void but rather as an opportunity for development and guidance. Companies that develop compelling governance frameworks will find themselves not constrained but enabled, not followers but leaders, not compliant but competitive. In the new AI economy, the question is not whether to govern AI, but whether your governance framework will set the standard or follow someone else’s. The choice — and the opportunity — is yours.