Compliance Evangelist

Today we celebrate Hank Aaron’s record-breaking home run number 715 hit on this day in 1974. According to This Day in History, “a crowd of 53,775 people, the largest in the history of Atlanta-Fulton County Stadium, was with Aaron that night to cheer when he hit a 4th inning pitch off the Los Angeles Dodgers’ Al Downing. However, as Aaron was an African American who had received death threats and racist hate mail during his pursuit of one of baseball’s most distinguished records, the achievement was bittersweet.”

Perhaps, fortunately, we did not know just how bittersweet the achievement was until years later. Not only was Aaron vilified by white supremacists for his chase and breaking of Ruth’s record but his daughter was impacted as she had full time FBI bodyguards while in college because of threats against her life. However, Aaron came through like the person he had always been and achieved what many thought was exceeding an unbreakable record.

Aaron’s success informs our final look at the article in, entitled “Innovation Starts with Defining the Right Constraints. Authors Fiona Murray and Elsbeth Johnson believe that what drives big, breakthrough innovations are often constraints or “limitations that force designers to rethink the whole problem and come up with something completely new to address it.” They advocate a new set of restraints beyond the traditional restraints of risk and budget by constraining your development teams time and outcome. Over this short blog posts series, I have been exploring their article from the compliance perspective. Initially, we considered how the traditional constraints of budget and risk are no longer sufficient to help drive innovation. I next  discussed the alternative constraints of outcome and time and why they are so critical to innovation in compliance. Today, I conclude with some new or at least different skill sets that a Chief Compliance Officer (CCO) should bring to the process of innovation in compliance. I have adapted them for the compliance perspective.

How can CCOs make this approach work for them and their compliance teams? Start by considering your own working style. Making decisions around outcomes/time rather than budget/risk requires leaders to shift to how they use their own resources so that they become more future-focused. A CCO need to spend more time with technical, operational, and future-focused people both inside and outside of the organization, in other words be curious. To do so CCOs “need to reallocate time away from controlling risks or budgets within the business. That is likely to require a fundamental redesign of their planning and budgeting cycle.”

To think about setting effective outcomes, CCO must develop a perspective about the veiled future or risk management may unfold. The authors related, “Leaders we’ve worked with who develop this often start their strategic narratives with, “Because we believe [fill in the blank] about the future, we will be targeting this particular technology, market, or customer segment.” Within this context, they then develop clear hypotheses — each mapped to these target outcomes — with which to test and refine their initial point of view.”  It can be as straight-forward as looking at technological advances which have led to greater innovation in compliance. It could also be a deeper analysis where you “first envisions several possible futures where science or technology can address an unmet need. Then choose the one you want to pursue first by trading off the likelihood of reaching it against the likely impact of doing so. Having chosen the priority to pursue, the paths to reach it are then developed and tried out.”

To shape better outcome-oriented decisions, CCOs need to develop and reward scenario-building skills, while recognizing that these are different from “planning” skills. The authors caution that “Too often, future-focused scenarios are insufficiently different from the current state of a market or operation, largely because the people shaping these scenarios are “planners” rather than “futurists.” This may mean you need to hire in specialist consultants for this part of the process, but it’s worth it if it generates some truly different scenarios.”

Next is in the area of data but it is tied to a wider CCO-needed trait, creating a safe environment where someone can raise their hand and speak up. One skill is to understand the difference between data and noise. Regarding institutional fairness required from a CCO, the authors warn, “because the trend data will always be contradictory, with little obvious distinction between what is signal and what is noise, teams must be able to thrash out their points of view without fear or embarrassment. That requires teams to have built sufficient psychological safety so they can have productive fights about what the conflicting data tells them and which of the myriad options they should pursue.”

One skill that every CCO must have is the courage of their own convictions because as the authors note, “To impose effective deadlines requires bravery. In particular, leaders must be prepared to potentially waste investment on the development of multiple ideas because too much time spent developing or polishing ideas at the start reduces the time you have to get your idea to market. Time is finite, so trade-offs will have to be managed.”

The authors conclude their piece by noting, “We believe that by adopting two different constraints — outcomes and time — organizations can become more innovative. They can then afford to be less constraining of both budget and risk — the traditional constraints — largely because the clear imposition of outcome and time-bound constraints helps deliver more valuable innovation (the objective of a budget constraint, after all) and at lower risk. As the people working in your innovation teams will tell you, that’s very good news for genuine innovation.” From the compliance perspective I can only say it is more so.

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