“I won the Tour, man.” With those iconic words in a post-race interview Welshman Geraint Thomas seemed to announce that it had finally hit him that he is the 2018 winner of the Tour de France, arguably the most challenging bicycle race of the year. There was uncertainty until late in this year’s Tour if last year’s winner, Chris Froome would triumph again. Thomas had been designated as a support rider (domestiqué) during Team Sky teammate’s Chris Froome’s previous four victories but he emerged as Sky’s strongest rider in this race when Froome crashed early on and could not keep up with the Tour leaders in the mountains. Here’s a tip of the cycling helmet to Thomas, the first Welshman to win the Tour, moving from domestiqué to Tour champion and for a job well done.
As Thomas rode down the Champs-Elysées, he crossed the finish line with former Tour champion Froome, who now supported Thomas. I thought about this change in status as a way to introduce the topic of the ever-quickening pace of global uncertainty, so today I consider the business leaders response to this shift. In Spring 2018 MIT Sloan Management Review article, entitled “5 Steps Leaders Must Take in the Age of Uncertainty”,Martin Reeves, Simon Levin, Johann D. Harnoss and Daichi Udea posited that corporate executives “need to move beyond managing only their company and become more active influencers within broader systems.” One need only consider what was considered de rigueurin the corporate world yesterday, a global outsourcing strategy. Now, under the Trump Administration, your company’s very existence may be at risk from its putative trade war and import duties on a wide variety of raw and finished products.
The authors believe there should be a new model to “better understand the complex interplay between companies, economies and society.” Most interestingly, the authors believe these three factors create a “nested complex adaptive system” which is “multilevel, interconnected, and dynamic” and, most assuredly, unpredictable. In the example of outsourcing, the lowest level, where raw materials are transmuted into products, moves to impact higher-level systems such as economic value, which in turn can reshape trade policy at the national and international level.
What can you do as a leader to help get through uncertainty in this prolongated season of turmoil? It begins with a broader understanding of these ecosystems, not simply the technical proficiency in operating within them. The authors laid out five steps, which I believe work for a wide variety of corporate leadership, specifically including the Chief Compliance Officer (CCO) or compliance practitioner.
- Observe and understand the broader system.Where does your business fit within the broader ecosystem including consumers, internal stakeholders, investors, business partners and employees? A leader must understand all these disparate stakeholders, “their interests and mapping out the important relationships among them.” Salesforce.com, Inc. understood their employee’s dissatisfaction with the company’s work for ICE but failed to understand that simply making a donation would suffice to correct this violation of the company’s ethical values.
- Master the art of intervening in the system. A leader must learn where to intervene in the system when a situation arises or an event occurs. This is not simply ‘thinking outside the box’ but recognizing there may be greater leverage points which may initially seem to be indirect points. This is where having a best practicescompliance program may be used to help a company if there is an ethical violation. Through a transparent response, demonstrating the company’s commitment, communicated directly to the public, it can quell what might otherwise be a disaster. Still the best example of this was the Johnson & Johnson (JNJ) response to the Tylenol poisoning scare in the 1980s. The public did not punish the company for the illegal act of one person and with the robust rejoinder by the company, it came back more profitable than ever.
- Orchestrate collaboration in the system.The authors note, “leading in a system requires striking a balance between the often-conflicting needs of companies and the broader system they constitute.” This means there must be some level of mutualism including “modeling the right behaviors by creating value for the overall system” and resolving tensions within the system. Here one might consider the response of Ulrich Grillo, the president of BDI, the German global industry association, in the aftermath of the Volkswagen (VW) emissions-testing scandal who said a key response was that compliance was the answer, urging German companies to check their “management processes, including compliance and control systems.” He suggested the question to ask should be “Are we doing everything right?” For Grillo-Werke AG , compliance was the answer.
- Foresee and manage systemwide risks. This next priority is one which every CCO and compliance practitioner should consider quite closely as it deals with the risk management process. Here the authors believe risks have expanded out to entire system risks rather than simply to individual companies. The risk to the German auto brand after the VW scandal is well-documented as it touched the entire German national brand of quality. The same is true of Takata Steel from Japan, whose fraudulent certifications scandal damaged the entire Japanese national brand around quality in products and excellence in manufacturing. The authors posit, “leaders must be able to detect potential threats to the systems health and have the courage to pre-emptively change practices to avert them.” Here one need only consider the response of the US clothing industry to the scandals around the deaths from a collapsed building in The labels of many US companies were found among the dead and these same US companies stepped in to make sure a replay did not occur. For a CCO, this means you need to understand the risks of your competitors or even those in different business sectors in a foreign country where you operate.
- Lead with a new mindset.The authors state, “leaders need to leverage more informal ways of exercising leadership that can transcend national boundaries.” The most obvious approach is to get out of the Ivory Tower and travel to foreign locations. This is not only to learn but to also create relationships and widen influence. The authors conclude, “This transformation requires a mindset shift from thinking in reductionist models of company performance toward more holistic models of system performance. Leaders who manage this shift are bound to create an advantage for the company as well as their wider ecosystem.”
Thomas reminds us all that through very hard work (preparation) and seizing the moment when it presents itself (opportunity) something akin to luck can occur. But it only happens if you put in the work and are ready to move to the head of the peloton when your opportunity presents itself. Congrats, mate.
Finally, if you are a cyclist, a fan of cyclist or just a plain fan; I hope you will consider donating to my good friend Doug Cornelius, who rides each year in the Pan-Mass Challenge (PMC), a charity bike ride across Massachusetts to raise money for cancer research. 100% of your donation to Doug’s PMC ride will go the Dana-Farber Cancer Institute. Doug is not only a very dedicated cyclist, riding his bike to work year-round (even in the Mass. winter) but has consistently used his love of cycling to help fund cancer research. You can check out Doug’s page on his journey and why he rides the PMC by going to his website, Compliance Building.
CCO leadership in the age of uncertainty is even more critical now. How can a CCO take steps to move forward?Click to tweet
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© Thomas R. Fox, 2018