Compliance lessons from the Universal classic monster movies...
A. The Original Mummy
Equifax and Dust in the Wind
I am back with my celebration of the classic Universal Picture’s monster movies as lessons for the compliance practitioner. I am returning to the roots, with one of Universal’s original greats The Mummy. Over series, I will be going through the five Universal movies featuring the creature returned to life through the desecration of his tomb of eternal damnation.
The first appearance was appropriately entitled, The Mummy, and was released in 1932, starring Boris Karloff. In many ways I found this to be the most hauntingly filmed of the classic monster movies. Perhaps this was due to the director Karl Freund, who was in his directorial debut for this film. He is probably best known as Universal’s top cameraman and the person who set up some of the great shots for the gamut of Universal pictures in the 1930s. His use of shadings in the black and white era added an aura of mystery that is not present in today’s films. This original movie in the Mummy series, is probably the best visual feast of all the classic Universal Picture horror films.
One cannot see the movie, or indeed write about it, without talking about the makeup artist, Jack Pierce, one of the truly greatest makeup artists of any era. He headed Universal’s Makeup Department until 1948 and personally created the makeup for all of the classic Universal Pictures monsters. While most people think of Frankenstein’s monster as Pierce’s greatest creation, I agree with his self-assessment that The Mummy was his true masterwork. The application of the makeup was arduous, taking up to eight hours of work on Karloff to complete the 3,000 year old look for the Mummy.
For me, most haunting scene is one which occurs quite early in the movie. After a spell is read aloud, bringing Karloff as the Mummy to life, the casket which houses the Mummy is left open allowing the Mummy to escape into the present-day world. One of the young archeologists sees the Mummy walk out of the room and immediately goes insane. I can hear his haunting scream in my head to this day. But here is the key to making this scene so powerful, we never see the Mummy; the only thing we see is some of the rags trailing from his body as he walks out of the room. Too bad today’s gore-fest directors have forgotten what real terror can be.
The basic story line is that Imhotep, the High Priest of Egypt, was mummified after the Pharaoh found out he had fallen in love with the Pharaoh’s wife Princess Anck-es-en-Amonand. As a Mummy, Imhotep was condemned to eternal damnation and his soul would never to go the afterlife. After he is released from this curse in the 20th Century with the reading of the spell, Imhotep searches for the reincarnation of the Princess. He finds her in modern day London, as Helen Grosvenor, played by the alluring Zita Johann; the Mummy tries to convince her she is the reincarnated Princess Anck-es-en-Amonand and to join him in an eternal love affair. Grosvenor prays to the goddess Isis who sends a ray into Imhotep which turns him into dust.
So, the compliance angle here? It is the dust in wind that Equifax created from its statements over the past week and actions which led to the massive data breach in the first place. The former head of the company, Richard Smith, testified before Congress that the entire breach was the fault of one lone employee. Yes, you read that right, the rogue employee myth lives. Admitting that the company had received the security warning that part of its security software, Apache Struts, had a deficiency and needed an upgrade to install a patch. A Memo was sent to the IT Department and Smith literally testified before Congress that one Equifax employee ‘didn’t read the memo’ and did not install the patch. Of course, all this happened in March some three months before the breach occurred. Equifax either did not verify the update was installed or could not do so. Further none of the company’s internal controls or other redundant back-ups picked up this mis-adventure.
Another interesting compliance angle and one which may be even more instructive than former Chief Executive Officer (CEO) Smith’s inane defense were the actions of the company’s General Counsel (GC), John J. Kelley. While most reports have focused on Kelley’s role in allowing senior executives to dump their stock before the public announcement of the security breach, thereby saving them millions; I was more interested in Kelley’s multiple roles in the organization. In addition to be GC, he was also Chief Compliance Officer (CCO) and a host of other roles. According to the Equifax website, Kelley was responsible for “legal services, global sourcing, security and compliance, government and legislative relations and more.” The head of security reported to him. As I have previously noted, law schools simply do not prepare lawyers for the compliance role and certainly not all the roles that Kelley took on.
Another clear sign that Equifax was headed for a massive crash in the dust is also found in the company’s Board committee charters and the make-up of its Board of Directors. It should not surprise many reader that Equifax did not have a Compliance Committee on the Board. More troubling, for a company which is in the specific business of buying and selling data, it did not even have a data governance or other similar committee.
While the Board did have two members who are retired CEOs of technology companies; the Board did not have any compliance expertise on the Board. Just as Wells Fargo and Uber demonstrated, when you do not have a commitment to compliance, extending up to the Board; a company cannot adequately prevent, detect and remediate a significant issue; let alone respond in an adequate manner.
Just as Imhotep literally turns to dust to end the movie, Equifax’s claims are dust in the wind. One thing I forgot to mention is that as it is a 1932 production, it is pre-Code. So be on the lookout for some interesting ladies garments. As I said, a visual feast for all.
B. Tom Tyler Takes Over in The Mummy’s Hand
A Risk-Based Approach at the Board Level
Next we consider the 1940’s film, The Mummy’s Hand as the second installment in Universal Pictures series featuring this creature. Boris Karloff departed the role and it was taken over for one film by Tom Tyler, who was better known for his cowboy roles and his stint as Captain Marvel in the 1940 serial bearing the same name.
The film begins with the Egyptian, Andoheb traveling to the Hill of the Seven Jackals in answer to the royal summons of the High Priest of Karnak. The dying priest of the sect explains the story of The Mummy, named Kharis. The tale closely parallels that of the original film, except that Kharis steals the sacred tana leaves in the hope of restoring life to the dead Princess Ananka. His penalty upon being discovered is to be buried alive, without a tongue, and the tana leaves are buried with him.
The leaves are the secret to Kharis’ continued existence. During the cycle of the full moon, the fluid from the brew of three tana leaves is to be administered to the creature to keep him alive. Should despoilers enter the tomb of the Princess, a fluid of nine leaves will restore movement to the monster. Some down on their luck American archaeologists find a vase which they believe contains clues to the location of the Princess Ananka’s tomb. Of course, it does and after securing funding from a rich ex-pat they are off to the desert to find the tomb, along with the funder’s beautiful daughter.
In the final scene, The Mummy attempts to drink a brew of the tana leaves. He is prevented and the lead American explorer overturns a brazier onto the monster, engulfing it in flames. The ending has the members of the expedition heading happily back to the United States with the mummy of Ananka, and the spoils of her tomb. It all sets up the next sequel.
I thought about all of this when considering a recent visit I had with Gerry Czarnecki, founder of the National Leadership Institute. He is a well-known thought leader in leadership and corporate governance. He called himself a “corporate governance fanatic” which he went on to define as believing in the incredibly important role Boards of Directors in corporate governance, tempered with the fact that he believes a Board’s role is oversight not management of the organization. One of the things that intrigued me was that Czarnecki suggested a risk based approach to corporate governance at the Board level.
One consistent issue almost every Board of Director struggles with is how to engage in oversight without stepping over the line into management. Czarnecki believes this issue exists in most Boardrooms across the country. They are worried about how much they drill down “and management’s fret over their drilling down so far that they get into the operating management function.”
He said it all starts with the most powerful tool a Board of Director has in place - that of inquiry or as he termed it the “capacity for inquiry the capacity to ask questions.” He provided an example around the Board’s role in cybersecurity, noting when you look at cybersecurity and technology, Board members should know enough about the subject matter that they are focused on to ask questions that enlighten them. He said, “I walk into a boardroom for my first board meeting and I say I’d like to know a little bit more about what our cybersecurity plan is all about. Could you give me a quick update on what how do we protect what it is we want to protect? Someone will start going into the type of security software the company has in place. But the real questions is “what data we decide that we have to protect what are the pieces of data. What do we think we are our crown jewels? If we lose control over that data we are putting our business at risk or we’re putting our customers at risk?”
Czarnecki went on to note such an inquiry alone would be enough to generate a discussion with management about what were the company’s crown jewels. But the key, for a Board member, is to ask that question because the management team has not thought about it. This will stimulate an important discussion within the management team about what should they spend their money on, which is of course the type of business question that management should be asking and answering. He emphasized that it is not a question of technology, it is a business question.
If you think about this approach, it is a risk-based approach. Czarnecki is asking management to assess its risks of the crown jewels of data being breached. If so what would be the cost? From there, management should then determine the best risk management strategy to employ. This parallels the approach of the former Chief Technology Officer (CTO) of Coca-Cola who once told me that there was one thing that was the most important to the company which he had to protect at all costs. Both the good guys and the bad guys knew what it was, the formula to Coca-Cola.
This example also powers how a Chief Compliance Officer (CCO) should think about their approach to the Board. Former Department of Justice (DOJ) Compliance Counsel Hui Chen has said the Evaluation of Corporate Compliance Program (Evaluation) document is designed to get compliance professionals to think about their compliance program. I believe a CCO should try and get the Board to think about compliance by using a risk based strategy laid out by Czarnecki. What are your highest compliance risks? What would be the costs to your company if those risks were breached? From there you can begin to see how to budget for your highest risks.
So how about the American archaeologists in The Mummy’s Hand, did they use a risk based approach? I would suggest you check out the movie to find out.
C. Lon Chaney Jr. Takes Over in From the Mummy’s Tomb and the Mummy’s Ghost
Professional Development for the Compliance Practitioner
For this installment, I combine two installments in the 1940s reimaging of the 1932 classic; The Mummy’s Tomb and The Mummy’s Ghost, as they follow, both chronologically and thematically the original sequel, The Mummy’s Hand.
The Mummy's Tomb picks up the story thirty years after the conclusion of the previous film. It begins with Steve Banning reciting the story of Kharis to his family and evening guests one night. He relates the destruction of the creature, at the tombs back in Egypt. However, surviving their supposed demise, Andoheb explains the legend of Kharis, (now played by Lon Chaney, Jr.) to his follower, Mehemet Bey. Andoheb passes on instructions for the use of the tana leaves and assigning the task of terminating the remaining members of the Banning Expedition and their descendants. Bey and Kharis leave Egypt for the journey to the United States to fulfill their destiny, which they largely accomplish, killing nearly everyone involved in the original expedition.
The Mummy’s Ghost picks up with Andoheb, the aging High Priest, summoning Yousef Bey to the Temple of Arkam to pass on the duties of High Priest. He explains the legend of Kharis to Bey and informs Bey that Kharis still lives and that Yousef’s mission is to retrieve Kharis and the body of Ananka and return them to their rightful resting place in Egypt. Back in Mapleton, Massachusetts, where the last Mummy rampage occurred and where Kharis is located, a student, Tom Hervey, meets up with his girlfriend Amina Mansori, a beautiful woman of Egyptian descent. She will become the immortal love interest of Kharis.
Kharis senses Amina as the carrier of Ananka’s soul and kidnaps her. Tom tries to rescue her but is fought off by Kharis. Unfortunately, Amina ages to become the same vintage as Kharis as he lumbers off with her where they sink into quicksand in a swamp. Tom’s last anguished sight of Amina is that of a 3,000-year-old Egyptian Princess as Kharis and Ananka disappear under the water, united in death.
What is the connection of compliance and these two installments in the Mummy oeuvre? It is professional development (don’t worry - it will be clear by the end). Corina Manea wrote a great post on Spin Sucks, entitled “How to Build Your Professional Development Plan for Habit”, which I have purloined and adapted for the compliance professional. There are only eight working weeks left in the year. What have you achieved against the professional development goals you set in January? It is very easy to be stuck in the details of our day job.
Too often your learning goals suffer because you are too busy or too tired to even think about it. Or because you have no time and have other obligations. Yet there is no job, particularly the compliance profession, in which you can function if you do not focus and invest in your professional development now. One of the clear themes of this year’s SCCE 2017 Compliance and Ethics Institute (CEI) was the need for professional development.
1. Professional Development is a Must for Every Compliance Professional
I want you to look around…really look around you. Artificial intelligence (AI) is gaining ground and will be a part of the compliance practice in a very short time. Can you read a spreadsheet? If not, you probably will not ever be a CCO.
Blockchain has been called the new internet and will certainly be one of the most important tools in compliance down the road. Your work must be measured but you have no idea how to read the data in front of you. Professional development is a must for every compliance professional no matter how much - or how little - experience you have. Things are moving much more quickly and it is hard to keep up with technology, not to mention stay ahead of trends. Which brings me back to investing in your professional development now, as opposed to later.
2. Treat Professional Development as a Client
The key insight is that as a compliance professional, you must treat your professional development as if it were a client. This means to give it the same attention, dedication, and passion you have for your day-to-day work. In time and with hard work (there is no way around that), it will pay off. Take your career into your own hands and invest in your professional development. It starts with a plan, one that will help you create the habit. Your plan should include, at a minimum:
How much time per day you will spend learning
The top five publications, blogs, or online magazines you want to read every day
Online courses you want to take in the next three months
The top three conferences you want to attend next year
Do not forget to include digital networking, as well. Once you have your plan in place, it’s time to split each goal into monthly and weekly tasks. Schedule a meeting with yourself at the end of each week - actually put it on your calendar - to review your progress, see what worked and what did not work for your development and adjust for the following week. Apply the same strategy at the end of each month and quarter. Write down your weekly and monthly results and progress. There is no bigger motivator than getting results from your efforts. Do not treat it lightly; write it down; all of it and then commit to it.
How can you achieve all of this? A good way to start would be to join me next week for my inaugural Doing Compliance Master Class Series. You a trusted partner who delivers relevant content, which can be used to solve a wide variety of issues, even those outside the anti-corruption compliance space. This series delivers timely topical information you can trust, is relevant to the compliance business function, and comes at a reasonable cost. As the Compliance Evangelist, I bring a unique insight into what many companies have done right and many have done not so well over the years. This professional experience enables me to put together a unique training program for any professional who wants to succeed in compliance. For more information, check out Doing Compliance Master Class Series.
The lesson from the two Mummy movies that opened this piece are that lifelong learning is something you must engage in as a compliance practitioner. The compliance world will not sit still and neither should you. Manea was right, you must treat your professional development with the same seriousness that you treat your internal customers and clients; i.e. your employees. Set out a plan, follow it, measure your actual progress against the plan and adjust as needed.
Curse of The Mummy and of Continuing a Failing Strategy
In this final post for October 2017’s classic monster movie month, I want to round out the original Universal Picture series by focusing on 1944’s second offering of The Mummy, in The Curse of the Mummy. In this film, Lon Chaney, Jr. makes his final appearance as Kharis, The Mummy. He is in search of his long-lost love over the ages, the Princess Ananka. For reasons unexplained, Kharis is now in Louisiana. Princess Ananka, who in present life is awakened and found lying unconscious on a road. Although apparently suffering from amnesia, she has incredible knowledge of ancient Egypt. Kharis tracks her down and in the final scene he pins a traitorous priest of the cult in a room with him and literally brings the roof down on the both of them.
Perhaps Kharis was always doomed to destruction. He certainly did not appear again in a Universal picture until the pathetic Tom Cruise effort from the summer of 2017. It was so poorly received that the movie single handedly managed to kill off the projected new Universal monster movie series. All I can say is thanks, it would have been horrible. However, one thing Universal Pictures did recognize was to stop on its failing strategy. Unfortunately, this is something usually not well done in the corporate world. When it comes to the compliance function, it is better to recognize such a situation sooner, rather than later.
In a recent Harvard Business Review (HBR) article, Freek Vermeullen and Niro Sivanathan explored this phenomenon in their piece “Stop Doubling Down on Your Failing Strategy”. There are numerous reasons why failing strategies continue, which the authors dub the “escalation of commitment.” They include some of the following:
The sunk cost fallacy – where when making investment decisions, people often factor in costs they have already incurred. The hope is that if the project continues, the costs can be recouped, while the rational decision maker will look only at future costs, not at past ones.
Loss aversion – in this scenario, withdrawal from a course of action implies certain and immediate losses, decision makers often prefer to allocate more resources to continue with it—despite low expected returns—if they see any chance of turning the situation around.
The illusion of control – here senior managers notoriously overestimate their ability to control the future. Unfortunately, a prior success (or two) tends to amplify the illusion; people are quick to take credit for the outcomes of decisions and confuse having correctly predicted the future with having made it happen.
Preference for completion – people have an inherent bias toward completing tasks—whether that means finishing a plate of food or seeing a project through.
Pluralistic ignorance – people often remain silent because they believe they are the only dissenters and of course, everyone else interprets their silence as agreement. This can lead to all persons’ agreeing to a decision that no one believes in.
Personal identification – often employee’s identities and social status are tied to their commitments and withdrawal from a commitment may result in a perceived loss of status or a threat to one’s identity. Conversely, no executive likes to admit that a decision was wrong, because the ability to make smart decisions is part of what defines a good executive.
The best way to overcome these biases is through a robust procedure in your decision-making process. Always begin with a set of rules. Start with an objective criteria and if that cannot be used because there is not sufficient data, agree upon the non-numerical rules. Next is to pay attention to the voting rules, whether you vote conjunctively or disjunctively. This means you consider looking at the criteria separately rather than simply tallying people’s overall judgments. You must also provide protection for dissenters by making it safe for them to raise their concerns. This can be done by allowing anonymous feedback, increasing the diversity of those giving opinions and senior management modeling doubt to demonstrate it is an acceptable practice.
Another method is to expressly consider other options to frame the decision as more than one of simply binary alternatives. Consider bringing in a new team to implement a decision, separate and apart from the team which developed the solution, as this second team will not have the emotional investment in the initial decision and can more easily see if it is not working. Finally the authors suggest, “reinforcing the anticipation of regret” by two different methods. The first is to take a “temporal perspective” of considering what might go wrong with the decision or strategy. Another way to view this is “prospective hindsight” where you ask employees how something might fail. Another approach is to ask employees to take emotion out of the equation and step outside of themselves by putting themselves in different roles.
The authors conclude by stating “By its nature, an escalation of commitment is difficult to detect.” Kharis would seem to be the perfect example of doomed love over the ages, never realizing he cannot be reunited with Princess Ananka, rather like “overcommitted executives are prone to ignore signs of their company’s imminent collapse. That is precisely why companies need to establish organizational processes and practices of the kind we’ve laid out—to encourage managers at all levels to make decisions more objectively and explicitly consider alternative strategies and perspectives.”
By putting a process in place to test, check and then recheck the findings as a project progresses; you can place your organization in a better position to change things that are not working. The Department of Justice’s (DOJ’s) Evaluation of Corporate Compliance Programs would seem to echo that approach. It is more than simply what is the data and what does it show. It is how are you using the data? Have you incorporated it back into your compliance program to not simply test effectiveness but more critically improve effectiveness. This may be the final lesson from this year’s classic Mummy monster movie series.