I continue my innovation themed blog week, overlaid with a Sherlock Holmes premise. Today I use The Adventure of the Speckled Band to introduce the topic of the Chief Compliance Officer (CCO) as a data translator. This Holmes tale is a particularly grim tale of patricide by a step-father against his two step-daughters who will inherit their deceased mother’s fortune when they marry. The story takes place some two years after the older sister died on her wedding night, her last gasping words being the speckled band. Now her younger sister is betroved and will marry soon. Her step-father moves her into the room in which her older sister died, which is one of the clues Holmes finds “suggestive”.

When it comes to the physical clues present in the room, Holmes initially deduces that there is a dummy bell cord hanging just above her bed and a ventilator which opens into the adjacent room, which he says, “They seem to have been of a most interesting character — dummy bell-ropes, and ventilators which do not ventilate.” At the end of the story, Holmes explains, “My attention was speedily drawn, as I have already remarked to you, to this ventilator, and to the bell-rope which hung down to the bed. The discovery that this was a dummy, and that the bed was clamped to the floor, instantly gave rise to the suspicion that the rope was there as a bridge for something passing through the hole and coming to the bed. The idea of a snake instantly occurred to me, and when I coupled it with my knowledge that the doctor was furnished with a supply of creatures from India, I felt that I was probably on the right track.”

All of this demonstrates Holmes ability of a data translator. In a Sloan MIT Management Review article, entitled “Why Your Company Needs Data Translators, authors Chris Brady, Mike Forde and Simon Chadwick explore this issue. The authors find a “persistent cultural divide between the decision makers on the field and the data analysts who crunch numbers off of it.” They suggest various strategies to overcome this divide, which they call “the interpretation gap”. However, I found their analysis, prescient for the CCO or compliance practitioner as their remedies speak directly to many of the strategies a CCO or compliance practitioner could employ.

The first is data hubris and while this is not something that most CCOs or compliance practitioners necessarily engage in, the underlying causes do often afflict compliance professionals. The authors refer to a 2014 Science article by David Lazer and co-authors, who described it as the “implicit assumption that big data are a substitute for, rather than a supplement to, traditional data collection and analysis.” To overcome it, compliance professionals need to understand what R. C. Buford, the General Manager (GM) of the San Antonio Spurs, calls the “alignment of multivariable—the eyes, the ears and the numbers.” In other words, it is not just about the data but the human interpretation and then use of the data.

Next is decision-making biases. The authors identify two: the overconfidence bias and the emotional bias. The first occurs when you believe your process will help you to make the decision. This is most clearly seen in talent evaluation for pro-sports teams. As recently as this year, the Number One pick in the National Basketball Association (NBA) cannot shoot the basketball outside the lane. It may be he was injured when drafted, had a mental block or simply lost his ability to shoot the ball. It really does not matter but all the prognosticators on the Philadelphia 76ers who pushed to trade up to draft him in the first slot were wrong. Emotional bias occurs “when the decision maker lets the outside noise influence his decisions.” Whatever that noise is, the decision maker needs to silence it.

The next obstacle a compliance professional must overcome is to speak the language of data or at least data analysts. This language must then be translated for senior management so they understand the compliance risks involved. Here the authors suggest “replace[ing] standard reporting techniques with approaches that bring otherwise dry information to life. These approaches include data visualization, process simulation, text and voice analytics, and social media analysis.” The authors noted, “There’s more to effective translation than simply rendering scientific language in plain terms. The best translators also frame the information in a way those receiving the translation will find useful. In the plainest language, a translator must ask one blunt question: How does this data help the person I’m speaking to?”

The authors then posed a list of skills they believe a data translator needs in today’s business environment. I have adapted the list for the CCO or compliance practitioner.

  1. Sufficient knowledge of the business side to pass the “street cred” test with executive decision makers. This means more than simply being able to read a spreadsheet but understanding your organizations business processes;
  2. Sufficient analytics knowledge – or a willingness and ability to acquire it – to communicate effectively with the organization’s data scientists. As data analytics are not taught or even valued in law school education, if you are a lawyer, you will have to work on this going forward;
  3. The confidence to speak the truth to executives, peers, and subordinates. Hopefully your organization values and respects your voice as a CCO. If not, you certainly have larger problems than poor data translations;
  4. A willingness to search for deeper knowledge about everything. Look at any great CCO and you will find someone who is infinitely curious;
  5. The drive to create both questions and answers in a form which others in your organization find accessible and, most importantly, useful;
  6. An extremely high sense of quality standards and attention to detail. This is probably a defining quality of most lawyers; and
  7. The ability to engage at team or organizational meetings without being asked for input. As a CCO or compliance professional, you have to be willing to speak up if something has gone off track.

The authors end with two techniques which lend themselves to greater CCO communication skills. The first is to connect with decision makers through questions and not assertions. It is a developed skill to use data to set up questions which allow senior management to “come up with the answer, ostensibly by themselves.” The final insight is to use the data to create stories. Storytelling in compliance is a favored technique which I hope will improve your overall corporate compliance program.

By using some or all of these techniques, a CCO or compliance practitioner should be able to bridge the gap often seen between data and the final decision. One of the clear themes of this week-long exploration of the intersection of innovation and compliance (overlain by Sherlock Holmes) is the need for the human experience with technological innovations. The same is true with data, its analysis and translation.

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 tfox@tfoxlaw.com.

© Thomas R. Fox, 2018