Game 3 of the ALCS is in the books and the Astros had yet another hiccup on their march to back-to-back championships as Boston took Game 3 in Houston. However our sports-themed week continues but from a more tangential angle today as we pay tribute to Paul Allen, co-founder of Microsoft. Allen, together with Bill Gates, had a more direct impact on the last 20 years of the 20thcentury in the business world than almost anyone else on the planet. While being known as “Microsoft’s other founder” the skills Allen used in the sports world informs today’s post on why design thinking works in compliance. Over the next two blog posts I will explore this topic.

Yet there is a sports connection for Allen as while certainly most well-known for his Microsoft roots, he was also the majority owner of two professional sports teams, the Portland Trailblazers in the National Basketball Association (NBA) and the Seattle Seahawks in the National Football League (NFL). He was a minority owner in the Seattle Sounders, the city’s Major League Soccer (MLS) offering. Jon Wertheim, writing in Sports Illustrated, said of Allen, “Here is a man who combines Cuban’s passion with Howard Hughes’s instinct for publicity. Allen is, unmistakably, fanatical about his teams, the Blazers in particular.”

I thought about Allen and his passion for innovation when I read a recent Harvard Business Review (HBR) article, entitled “Why Design Thinking Works”, by Jeanne Liedtka. She believes design thinking “can be thought of as a social technology.” She reported on a seven-year study which led her to conclude that design thinking can “unleash people’s full creative energies, win their commitment, and radically improve processes.” The basic problem is that while we know how to stimulate new ideas “most innovation teams struggle to realize their benefits.” Liedtka believes the cause is that both employees biases and behavioral habits prevent innovations from gaining traction. She believes design thinking provides a structured approach which allows breakthroughs to occur.

I took a course in design thinking last year so I could familiarize myself with the technique. One key is the input from your customer base as a part of the design process. For any Chief Compliance Officer (CCO) or compliance practitioner your customer base are your employees. You may have additional stakeholders, both inside and outside of the organization, but your employees are the people who will implement the solutions you come up with the innovation process of design thinking. Generally, an innovation process must provide three deliverables: superior solutions, lower risks and employee buy-in.

In a very well put observation, the author wrote “Defining solutions in obvious, conventional ways, not surprisingly leads to obvious conventional solutions.” Compliance programs which are legal driven, check the box exercises are just that, conventional solutions which do speak to the business process involved or business efficiencies. Moreover, “it’s also widely accepted that solutions are much better when they incorporate user-driven criteria.” This means that if you incorporate ideas from your employee base it will make your innovation stronger.

This leads to the next observation which is that “An innovation won’t succeed unless a company’s employees get behind it” and the surest way to do so, is by having them involved in the process of generating ideas. Of course this means as a CCO or compliance practitioner you must listen but this listening can occur in a variety for forums such as town halls, focus groups or through a variety of other mechanisms, such as interviews or social media.

Liedtka believes that innovation should help to reduce both risks and costs. The flip side is that any change will bring some uncertainty. She writes, “The trade-off is that too many ideas dilute focus and resources. To manage this tension, innovators must be willing to let go of bad ideas—to “call the baby ugly,” as a manager in one of my studies described it.”

Another key insight was the structure that design thinking provides. As this is for non-design professionals, the “structure and linearity” helps those using it. Further, as the author noted, “Kaaren Hanson, formerly the head of design innovation at Intuit and now Facebook’s design product director, has explained: “Anytime you’re trying to change people’s behavior, you need to start them off with a lot of structure, so they don’t have to think. A lot of what we do is habit, and it’s hard to change those habits, but having very clear guardrails can help us.””

This last quote explains why compliance programs are now ready to embrace design thinking as an innovation technique. When anti-corruption compliance programs came into existing, largely in the first decade of this century, they were written by lawyers for lawyers. This is because companies had finally awoken to the need of effective compliance programs to not only prevent bribery and corruption but also as a bulwark under the US Sentencing Guidelines if a Foreign Corrupt Practices Act (FCPA) violation occurred. However, now corporate compliance programs have imbued the basic tenets not to pay bribes and are now ready to fully embrace business process as the manner to more fully operationalize compliance.

Tomorrow we will consider how the use of design thinking can shape the thinking of both the compliance practitioner and the corporation to more fully operationalize a compliance program.

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

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