Sometimes, as a leader it is important to say something numerous times, to repeat your message so that it will come through loud and clear. For any Chief Executive Officer (CEO) it is incumbent to continually reinforce your message of doing business ethically. The same is true for any Chief Compliance Officer (CCO) but I think the message should be more tailored to doing compliance. I thought about these ideas when I read a recent Corner Office column in the New York Times (NYT) by Adam Bryant where he featured John Lilly, a partner at Greylock Partners, which is a Silicon Valley venture capital firm. I thought Lilly had some interesting insights which the CCO or indeed any compliance practitioner could use going forward.
Compliance is about people
Lilly was an Air Force brat whose father was a tinkerer. Once when the family needed a new television, instead of simply purchasing one, his father bought a kit and they constructed it. Lilly obtained a very interesting insight from this experience and said, “in retrospect, it taught me that everything is made by people. We look at our technology now, like iPhones, and I think a lot of people see them as magical obelisks from the mountains that Steve Jobs bestows on us.”
An insight that is rarely discussed is that as much as compliance revolves around policies and procedures, including internal controls, at the end of the day compliance is about people. Your employee base must understand that your company will only tolerate those who do business without breaking laws; whether those laws be prohibiting the opening of fraudulent bank accounts or paying bribes to make sales. Certainly having a detection prong is a part of any best practices compliance program but the lead prong, which is prevent, will aid in keeping corporate blood pressure at a much lower.
Keep your message simple
Lilly next turned to messaging itself. He noted an early leadership lesson was “the role of simplicity and messaging early on. One of the things that happened at one of my start-ups was that I would get bored saying the same thing every day. So I decided to change it up a little bit. But then everybody had a different idea of what I thought because I was mixing it up.” So his takeaway was “the importance of a simple message, and saying it the same way over and over. If you’re going to change it, change it in a big way, and make sure everyone knows it’s a change. Otherwise keep it static.”
For both the CEO and the CCO, this is a very critical insight. While ‘stay on message’ has become a catch-phrase for any politician who wants to avoid answering a question posed to him by a reporter, there is a larger point which can be drawn from Lilly’s insights. Another way to phrase it might be to Keep It Simple Sir (KISS). Keep your message of doing compliance simple and straight forward.
What are you missing?
Another interesting insight for the CCO comes from Lilly’s role as a venture capitalist (VC). He said, “The one thing that’s profoundly different about being a V.C. compared to an operator is that V.C.s talk a lot about FOMO — fear of missing out. You turn things down all the time, and you worry, what did I miss and what did I get wrong? As an operator, you focus 100 percent on what you’re doing. As a V.C., you wonder what you’re not doing. It’s a difference in perspective.” This is similar to a CCO because the things you worry the most about are those which you know nothing about or those you know the least about.
To overcome this Lilly asks most individuals who seek funding from him about their leadership style and the culture of their organization. He explained that on one level it is “who is this person and how do they behave? The other is a contextual assessment, which is, am I any good for this person? There are some amazing C.E.O.s who I just don’t know how to interact with because of stylistic differences.” Yet, on a deeper level, it is because “You have to have both because you want to make good investments, but you also want to make good investments where you can work with the person. I ask a lot of questions, but I almost don’t care what the questions are.”
He uses this type of discussion to determine both style and substance but also how someone reacts when things might get close to the edge. Lilly stated, “You start to expand the scope of the questions to try to see two things. One is the quality of their thought process. And the other is how they interact with you. Do they become defensive? Do they become aggressive? Are they listening? You’re trying to get a sense of whether, in a complicated situation with a lot of things going on, can they be honest and candid and still get to a productive place. Sometimes you get honest and candid, and sometimes you get antagonistic or defensive.”
The insights Lilly provides are useful for every CCO and companies which seek to do business with others through a variety of business forms and arrangements such as joint ventures (JVs), teaming agreements, traditional third party relationships or any other form of business relationships. Do the people you are going into the relationship with have a style you can work with and does their culture mesh with your culture? You can ask some of the basic questions Lilly puts forward to help determine the answer to both.
Of course if you are looking to enter into such a relationship, it is obviously easier to do so if you have that type of ethical culture that is committed to doing business in compliance with laws and norms. Going into business with another party requires just as much from the company seeking the funding. If you have such compliance programs in place, it would certainly go a long way demonstrating your commitment to doing business the right way. If a VC like Lilly comes along, you would be able to demonstrate your commitment.
This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at firstname.lastname@example.org.
© Thomas R. Fox, 2016