Hard-Boiled Compliance

Compliance - Why do you care?

As many of you already know, we're going through a massive remodel to our primary residence. Right now, we're wrapping up the installation of our hardwood floors.

As the contractors were starting on the floors, they had their best guys spend a lot of time getting the first few boards set. They used special tools and techniques, just to get the first 3 or 4 rows in. It took all day to get only a small portion of the house covered.

I thought to myself, that this process was going to take forever, however only a few days later, the whole floor was done, with a lot less tools ( and noise ), and lower grade workers. Toward the end of the floor installing phase, I asked one of the top guys about some gaps that I was noticing, and he made a comment that stayed with me. He said, "Oh, that's normal -- nothing really wrong here, it's the way the boards are beveled. You see, if there was a problem, then all these boards they installed after this point would be out of whack. That's why I spent so much time getting the floor started properly."

That's true of a lot of things, including compliance. The "start" of compliance is your motivation for why you're doing compliance in the first place. If you're concerned about compliance because you are forced to, you'll always be faced with problems. It's the wrong frame to start with. If you're concerned about compliance, because you want your company to be as great as it can be, then you're off in the right direction, and the follow-through ( processes, data systems, organizational development, etc. ) will put your company at the top of its game.

So, why do you care about compliance?

Trench Warfare

Hiding in plain sight! Brilliant!

Reminds me of some of the systems I've looked at before.

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Citi's Not Lookin' So Pretty

Looks like Citigroup's having a hard time this year ( and January's not even over yet! )

Earlier this year, they recorded their biggest quarterly loss in history, posting a whopping ( almost ) $10 Billion loss, thanks largely in part to the subprime stiffs that couldn't figure out that if you have an Adjustable Rate Mortgage, the payments actually adjust. So if interest rates go up, so does the mortgage payment.  Go figure.

Well apparently it's an epidemic, because Citigroup alone had to eat about $18 Billion because of people that didn't understand that paragraph of their mortgage documents.

Now, just in case that's not enough for the bright-eyed, bushy-tailed, new CEO on the block, Vikram Pandit, let's give him a little more to keep him up at night. Seems like Citigroup was one of the 11 banks that were playing "let's screw the little people" with ringleader Enron at the turn on the Millennium.

Oh, kharma is something else when it kicks in, isn't it?

So, the Enron Creditors Recovery Corp, the entity cleaning up the Enron mess, has settled out of court with 10 out of the 11 banks involved in the funny dealmaking ( for a total of about $1.7 Billion ). Guess which bank is the only one holding out? And because they're the last bank standing, Enron Creditors is going after Citigroup for the balance of the outstanding claims -- something to the tune of another $18 Billion!

If they win, I think Vikram is going to have a very big headache.

Wow, when it rains it pours.

Ladies and gentlemen, this is know as special cause variation :)

Are You a Tiger Woods?

Tiger crushed the competition at the Buick Invitational last Sunday in Torrey Pines, San Diego.

Crushed.

He finished up at 19 under par, a comfortable 8 stroke lead from the 2nd place finisher.

Everybody loves Tiger Woods, and so do I. I love Tiger Woods, because he doesn't care how the competition is doing, he doesn't care what people have done in the past, and he doesn't care how many titles he's already won. He goes out there and plays his best every time, and smokes the competition.

There's no "performance enhancement drugs" for golf, there's no way for him to "cheat", he's just that good.

Tiger could easily back up when he has a comfortable lead, and still win. But he won't do that. He's not playing to win, he's playing to be as great as he can be.

Although it's somewhat hard to believe at times, Tiger has the same DNA as you and me ( well, not exactly the same, but you get the point ). You need to attack your compliance efforts with the same attitude as Tiger Woods. Crush any doubt about your level of compliance -- zero tolerance.

Compliance is no joke. Too many times, I hear stakeholders tell me that they just want to do "enough to pass the audit". They're listed on the project as Project Champion, but they don't sound like a "Champion". Champions like Tiger Woods "crush", they don't just "do enough".

Are you a Tiger Woods today? What about tomorrow?

Seat Belt Un-Safety

Yesterday, my admin told me a tragic story. Her son-in-law, a young and promising citizen of Corporate America was killed in a fluke accident, when the front tire of his Lexus caught a curb, that threw him into a pole that flung him into a creek, causing the car to roll several times before landing upside-down at the bottom of the creek bed.

The actual cause of death wasn't a concussion or laceration, but ironically strangulation. Like any good law-abiding California citizen, he had his seat belt on during the crash, and while he was suspended from the bottom of his car upside-down, his seat belt strangled him to death. Luckily his wife, and daughter of only 2 years old, survived the car crash.

This is an awful and ironic story. He might have been okay, if it weren't for that seat belt. Some people might use this story to build a case against the use of seat belts, however an isolated freak incident like this doesn't make the seat belt any less safe.

I'll continue to wear my seat belt, and after every speech I give, and every newsletter write, I'll urge you to do the same.

Don't let outlier incidents like this dictate your life, and don't use stories like this to take the law into your own hands. Always follow laws and regulations, even if you don't think they make sense. Laws and regulations aren't perfect, but they're enforceable, and you will pay penalties if you're caught breaking them.

And always remember to buckle-up. I know it didn't in this case, but it could save your life.

75 Basis Points! Nice, But Not a Smart Move

So, I guess the Fed's answer to the weakening economy is a lowering the interest rate by a whopping 75 basis points! Wow, that's an interesting move. But, here's why I don't think it's a smart move.

Did you know that the fed hasn't lowered rates in this big of a move, in 20 years? This scares me. Anytime something happens that is out of the ordinary like this, it sends a message -- usually the wrong message. I don't think the fed intended to scare people, but a deep cut like this might just do that, in effect causing a reaction opposite to what they were hoping.

This can happen in an audit situation also, especially an external audit. When findings are uncovered, there might be a tendency to over-correct, perhaps with a huge-budget and highly public effort to squash any concerns. This can actually backfire, sending a message that you're scared of something bigger.

So next time you're in an audit situation, and findings show up, just remain calm and do what everybody else does -- remediate in a normal fashion. It's obvious that you shouldn't under-respond, however not so obvious that you also shouldn't over-respond.

Why Knowledge Transfer is a Bad Idea

I've been in, and heard of, too many situations where knowledge transfer ended up being a pointless waste of time. I actually believe knowledge transfer on any project, including a compliance project, is a bad idea.

No, I'm not trying to setup the classic consultant trap, where they have to keep calling me back because nobody else knows the system or the process. Actually, my goal is always to leave a company in a place where they can continue on without me.

So, my point is this. If you're involved in a knowledge transfer, that probably means that there's a specific deliverable called "Knowledge Transfer", that may be broken down into a set of sessions or activities, and a milestone at the end called "Knowledge Transfer Complete". This "deliverable" is usually scheduled at the tail end of a project, and the intent is to transfer the knowledge out of the project team, and into the business and support team.

The problem with this approach, is that time that's allocated for "Knowledge Transfer", in almost every case, is too short. You'll basically have the project team "dumping" information on people that cannot receive the information that fast. Everybody's in a hurry. The project team is in a hurry, because they want to close the project up, and the business and support teams are in a hurry, because they have other things to do. In the end, the project team takes off with all the knowledge, and the continuing organization is stuck with a bunch of notes that barely make sense. Sound familiar?

Here's a better way.

Understand that in the beginning, there is a business team and a support team. When a project comes along, there are three teams; business, support, and project. In the end ( after the project is done ), we are back where we started with a business team and support team.  Knowing this, your core project team ( the people actually doing the work ) should include at least one person from the business and one person from the support team. These people will be involved in any and all task-related activities, just like the rest of the project team members.

As the project executes, you will have business and support representatives undergoing a continual knowledge transfer. They will be as intimate with the product under development, as the project team. When the project disbands, there will be no need for a "knowledge transfer", the knowledge will already be there.

Try this on your next compliance project. I guarantee you will be in good hands when the project disbands.

SAP and Business Objects Address Compliance

Last week, SAP and Business Objects finally started giving us an idea of how the recent merger will materialize into product offerings. Although we don't have a lot of details yet, we do know that they are working on nine joint product packages, that both companies will sell through their respective global sales teams.

Of all the mega-mergers, I feel this one has the most promise. Business Objects has always been my favorite front-end tool, and I've always held a high degree of respect for SAP as an ERP. Mergers and acquisitions always make me nervous, but I really think this merger will produce something valuable.

I don't know exactly what they're planning yet with the new product packages, but they did mention something about helping companies ensure compliance. I'm excited to see what they come up with.

I'm certainly keeping my eye on this, and I think you should also.

Computer Dog Bark Interpreter?

In Hungary, computer scientists are currently working on software that supposedly, can help us understand our dogs! They claim that 43 percent of the time, the computer can "accurately" categorize the emotional state of your dog, based on its barks and yelps.

So my question is, "How do they know the emotional state of the dogs they tested?"

I really think they need to re-evaluate their Measurement Plan. In my mind, there is a calibration problem here. In order to know if your gauge is reading accurately ( or to know the bias of your gauge ), you need a calibration tool that knows the "truth".

So, unless this staff of scientists includes Dr. Dolittle, I wouldn't go flying to Hungary to purchase this software!

Superfluous Grammar Has Detrimental Consequences

Yesterday, I read the blog of a well known COO for a Fortune 500 company. The content was okay, but it was so long and hard to follow, I needed a Tylenol when I was done.

I had to run this through the Bullfighter, a great tool that analyzes how much "bull" is contained in any written piece of work. It can be downloaded for free at:

http://www.fightthebull.com/

At a BCI ( Bull Composite Index ) of 6.3, it's higher than I expected ( scale of 1 to 10, 1 is poor and 10 is great ), but still not good.

The Bullfighter breaks it down a bit. The actual Bull Index of 81 ( out of 100 ) is not bad, meaning there wasn't a whole lot of nonsense corporate words in the blog. Words like "mission-critical" and "ecosystem" were overused a bit, but overall the word choice was okay.

However, the Flesch ( a readability formula ) rating of 43 ( out of 100 ) is where the problem is. Here's the diagnosis from Bullfighter:

Diagnosis: Teetering on the edge of unclear. The overall meaning remains discernible, but it becomes possible to lose oneself in corollary thoughts, which may be worth exploration, but which can also detract from the core point of the written article.

Bullfighter tells us the average sentence length on this blog was 22 words! Yikes!

What Bullfighter didn't know, is that this was supposed to be a blog, not a doctoral thesis on global warming! There were 1260 total words in the blog, and with an average sentence length of 22 words, this is way too difficult to wade through.

If these were contract terms, you'd be dead. Contract terms that are hard to comprehend are not only annoying to read, but they invite ambiguity and misinterpretation.

You need to be clear and concise in the language you choose for your contract terms.

If you need this language for your legal contract because of the lawyers that's unfortunate, but there's not much you can do. If this is the case, make sure you have an Operational Contract ( a concept introduced in my article, "5 Familiar Steps to Audit-Proof Your Important Contracts" ) that has clear and understandable language.

I also invite you to keep the Bullfighter close by. It comes in handy for more than contracts!

BTW, what's the BCI for this blog? 8.5 baby! Now that's a blog!