Innovation has long been seen as a private-sector asset, tied to strategic investments, competitive edge, and early market positioning. But today, the drivers of digital transformation are no longer just in the laboratories of large companies or on the radar of venture capital funds. They’re present in political decisions, trade agreements, geopolitical disputes, and the reorganization of the world. Public policy and innovation have started to work together to build the following big market opportunities.
Technologies such as artificial intelligence, quantum computing, and digital energy have become strategic assets of national interest. What is at stake now is efficiency, scale, security, autonomy, and global influence.
Governments are not just following innovation; they are guiding its pace. As part of a sovereignty agenda, they define priorities, direct investments, impose regulations, create incentives, and protect data. What was once a dynamic led almost exclusively by the private sector now depends on the ability to read and adapt to public policies already shaping the successive growth cycles.
This change is clear in PwC’s report on SXSW 2025. Technologies that require high investment and advanced technical knowledge are no longer just promising but are now central to national strategies. Quantum computing, AI, and advanced manufacturing are among the highest priorities for public funding. Innovation has been institutionalized.
The consequences of this shift are visible in global supply chains. Route reconfiguration, restrictions on semiconductor exports, targeted embargoes, and energy policies show that trade flows are being redesigned based on national interests. Increasingly, where technology comes from or where it goes matters as much as what it delivers.
For companies, this means reassessing partnerships, reviewing expansion plans, and considering new risk factors. Optimizing costs is no longer enough. Companies must also understand how political environments affect operational stability, the distribution of inputs, and the creation of markets.
Artificial intelligence has come onto the radar of regulators with a vengeance. The demand for algorithmic transparency, responsibility in the use of data, and compliance with local legislation has been growing in different regions of the world. Companies that work with opaque, poorly auditable models or poorly structured databases are exposed to sanctions and lost trust from customers and partners.
In a few years, more than half of the GenAI models adopted by companies will be domain-specific, reflecting a growing concern with accuracy, control, and regulatory compliance. The cycle of experimentation with generic and poorly contextualized models is being left behind.
At the same time, another structural challenge is emerging: energy infrastructure. Artificial intelligence, especially at scale, consumes an increasing amount of energy. The growth of data centers and the demand for constant processing do not match electrical systems designed decades ago. Countries modernizing their networks and investing in clean energy gain a competitive edge beyond environmental discourse. Without an efficient energy base, AI and quantum computing become promises with an expiration date.
At this point, technology once again depends directly on government decisions. Energy policies define which sectors can grow, where it is feasible to install large computing structures, and what type of innovation can be sustained in the medium term.
This scenario requires coordination. Governments, universities, and companies must work together to train talent, encourage research, and create environments where technological advancement depends not solely on specific incentives but on permanent structures. As mentioned in the report, initiatives such as quantum campuses point to possible paths. Integrated environments where the public sector finances and protects, academia researches, and companies develop applied solutions.
This is not about outsourcing innovation to the State but recognizing that it is no longer an isolated effort. The boundaries between the public and private sectors are increasingly blurred, and those who cannot navigate this intersection risk operating late, without predictability, and with high adaptation costs.
In this context, closely monitoring regulations and actively participating in public consultations or multilateral forums can be as strategic as investing in new products. Understanding how laws are evolving and affecting operations is no longer an exclusive responsibility of legal teams. The job requires business acumen, proximity to technology, and political awareness.
Many companies still see regulation as a brake. Others have already understood that, when interpreted correctly, it can be an accelerator. By anticipating requirements and aligning with local agendas, companies can access incentives, conquer more protected markets, and develop a solid reputation in increasingly monitored sectors.
At Luby, we work closely with organizations navigating this intersection of technology and regulation. Combining technical expertise with strategic insight, we help companies adapt their operations, build resilience, and stay aligned with evolving public policies across different markets.
The current scenario requires quick decisions but strategic understanding. Technology continues to be a differentiating factor, but it has become intertwined with factors beyond companies’ direct control. Those who follow these movements closely and position themselves increase their room for maneuvering to innovate consistently and resiliently.
Innovation has not disappeared from corporate priorities. It has simply shifted into a more complex environment where understanding public policy is just as important as developing new technology.
If your organization reassesses its strategy in light of these shifts, Luby can help you understand the complexity and move forward with clarity.
