Welcome to the return of Sherlock Holmes week. Over these posts, I have been using a Holmes story each day to illustrate a compliance lesson or issue. Today we use the Sherlock Holmes short story, The Five Orange Pips. This story is notable for Americans as it has American protagonists and the Ku Klux Klan. It is also distinguished as one of the very few times Holmes was beaten as his client is murdered in the end. Indeed, in the story, Holmes remarks that he has only been beaten four times. Finally, it is memorable for Holmes seeking vengeance on the murderers of his client. It is not clear from the story if Holmes is seeking justice or salving a bruised ego.
John Openshaw presents the following tale to Holmes: his uncle returned to England after living for years in the United States as a planter in Florida and serving as a colonel in the Confederate Army, retiring to a manor in Horsham. A letter arrived for the Colonel inscribed only “K. K. K.” with five orange pips enclosed. The Colonel’s behavior then became bizarre, either locking himself in his room and drinking or he would go shouting forth in a drunken sally with a pistol in his hand. Then he was found dead in a garden pool.
Sometime later, John’s father received a letter postmarked Dundee with the initials “K. K. K.” and instructions to leave “the papers” on the sundial. Three days later, Joseph Openshaw was found dead in a chalk-pit. The only clue with which Openshaw can furnish Holmes is a page from his uncle’s diary marked March 1869 describing orange pips having been sent to three men, of whom two fled and the third has been “visited.”
Holmes advises Openshaw to leave the diary page with a note on the garden sundial, telling of the burning of the Colonel’s papers. After Openshaw leaves, Holmes deduces from the time that has passed between the letter mailings and the deaths of Elias and his brother that the writer is on a sailing ship. Holmes also recognizes the “K. K. K.” as the Ku Klux Klan and theorizes that the Colonel stole some important papers and fled to England.
The body of John Openshaw is then found in the River Thames. Holmes checks sailing records of ships who were at both Pondicherry in January/February 1883 and at Dundee in January 1885 and identifies a Georgia-registered sailing ship named the Lone Star. Holmes then confirms that the Lone Star had docked in London immediately before John’s death. Holmes sends five orange pips to the captain of the Lone Star, and then sends a telegram to the Savannah police claiming that the captain and two mates are wanted for murder. The Lone Star never arrives in Savannah, due to a severe gale. The only trace of the boat is a ship’s sternpost marked “LS” sighted in the North Atlantic.
I use Holmes’ short story to conclude my exploration of changing corporate culture based upon the experiences of Indra K. Nooyi, former Chief Executive Officer (CEO) of PepsiCo, Inc., as reported in a Harvard Business Review (HBR) article by Nooyi and Vijay Govindarajan entitled Becoming a Better Corporate Citizen. I previously introduced the cultural change Nooyi instituted at PepsiCo, called “Performance with Purpose (PwP)”. Today we conclude what has become a three-part exploration at the key steps Nooyi and her team took and the lessons for the compliance professional.
Develop the Capabilities to Transform Your Culture
You may well need to develop new capabilities to transform your culture. This could well be capabilities in terms not just of talent but also of cultural background, gender, ethnicity, and location. You may need to bring in new team members to effectuate a culture change. One impressive development by PepsiCo was a multistep process for precisely measuring water usage and wastewater discharge in factories called ReCon. It allows the company to determine how and where they can reuse or recycle wastewater. Nooyi said, “The company has developed similar tools for greenhouse gases, solid waste, and electricity. Reducing consumption and waste has helped improve the company’s bottom line. In fact, senior executives informally call ReCon PepsiCo’s 23rd billion-dollar brand for good reason.”
Compliance Lesson: Obviously moving out senior managers and executives who either do not support the culture change or actively fight it will be important. But as a compliance professional, you will need to develop capabilities to not only transform the culture but to measure and assess it as well. This ongoing measurement and assessment could well be critical for you to demonstrate success moving forward.
Localize Execution
It is incumbent to remember that it will be the business units that implement what the home office decrees. This means you must operationalize your culture change. Even though it may start with the top, you must implement it locally. As Nooyi stated, “Although a purpose-driven strategy must be common to all countries in which the company operates, each market should have the freedom to tailor the approach to its needs: freedom within a frame. Food and taste preferences are culture-specific, and environmental problems are local.”
Compliance Lesson: For the compliance professional, this means you must operationalize your culture change. This means local champions and fully incentivizing the business units and geo-regions. If the local business units see that the implementation is not taken to heart by local management, your culture change has very little chance of succeeding. You must finally incentivize the culture you want to implement and then reward through compensation and promotions. Local operations must see these results.
Burn the Culture Change into your Company’s DNA
This final point may be the most important. As with the localization step, your culture change must be truly transformational. A cultural transformation may start out as the CCO or CEO’s passion, but it will not survive unless it is embedded in the organizational DNA. It will mandate that you employ multiple types of reinforcement, through communication, resource allocation, goal setting, and recognition and rewards. It also means your internal resource allocation, too, must be tied to your cultural transformation. At PepsiCo, this meant “we insisted on a sustainability sign-off for every capital expenditure.” It also includes goals around your culture transformation, from senior executives and country heads all the way down to midlevel managers. Such goals can be used to evaluate performance around your culture change and help determine annual bonuses.
Compliance Lesson: You will need to bring the full panoply of compliance tools to bear to implement a culture change. After the top of the organization sets the tone there must be ongoing communications and reinforcement. There must be ongoing training and incentives to make the changes. Any deviations from the new culture must not be allowed and appropriate discipline, up to termination, is levied if required. Finally, there must be continuous feedback and improvement as needed.
Nooyi ended her piece with the following, “So to anyone who doubts whether it’s possible to build such a company, I say, “We did it at PepsiCo, and you can do it too.” It’s the only way to make capitalism work for everyone.” Your organization too can make a culture change. While it may not be easy, the steps are straight-forward. Moreover, if you follow the steps laid out in this series you will have a good starting point.
[View source.]
