The Houston Astros sign-stealing scandal is only going to get worse and worse. In addition to the report by Wall Street Journal (WSJ) of the “Dark Arts” program by the Astros front office to steal signs in a program called ‘Codebreaker’; there are now reports that the Astros player who headed the sign stealing efforts kept other players from stopping the scheme. Mike Axisa, writing in CBSSports.com, said that Carlos Beltrán kept other players from stopping the sign stealing scheme from continuing. Ken Rosenthal and Evan Drellic, writing in The Atlantic, went further saying, “McCann at one point approached Beltrán and asked him to stop, two members of the 2017 team said. “He disregarded it and steamrolled everybody,” one of the team members said. “Where do you go if you’re a young, impressionable player with the Astros and this guy says, ‘We’re doing this’? What do you do?”” It was this toxic subculture in the clubhouse, led by Beltrán, one of the co-leaders of the sign stealing scheme, which prevented any of the players from doing anything about the clearly unethical activity.

Turn in the other direction and employees can be some of your greatest compliance advocates. In a 2017 MIT Sloan Management Review article, entitled “How to Catalyze Innovation In Your Organization”, Michael Arena, Rob Cross, Jonathan Sims and Mary Uhl-Bien posited that companies can “fuel the emergence of new ideas by understanding and tapping the power of employee networks.” This article went in the opposite direction of the Astros players led by Beltrán, in detailing how employees can be used to further the messaging and communication of ethics and compliance, with several useful insights for the Chief Compliance Officer (CCO) or compliance professional.

The first was that “companies need to create context that allow people, ideas and information to flow across different groups.” The second identifies a group of employees who operate as brokers and they create “bridges between groups” within a company. These brokers should work with “central connectors, who are well-connected in one subgroup” to form a powerful network. Finally, “when facing a problem, innovators should engage their network early on.”

Interestingly, as with the ever-dwindling myth of the rogue employee in Foreign Corrupt Practices Act (FCPA) enforcement, the authors note, “Tales of a lone inventor with a blinding insight are unhelpful myths when it comes to corporate innovation. Successful service, product, or process innovations within large, complex organizations are very much a social phenomenon.” A successful CCO will know that they need to leverage employee networks for both innovation and communications of compliance initiatives.

The authors key insight was their three divisions of social networking within an organization. They believe, “A key to catalyzing emergent innovation is identifying and positioning innovators within an organization.” Moreover, it is the use of these networks which can move innovation back up to the top of an organization and communications down through a company as well.

Brokers 

The authors found, “brokers build bridges from one group to another within and outside an organization. As a result, they act as critical conduits of information and ideas. Specifically, brokers offer three competitive advantages to an organization: broader access to diverse information, early access to new information, and control over the diffusion of the information.” But more than simply acting as conduits, “Brokers facilitate this discovery process through their social connections and then determine how and when these insights can be introduced to other parts of the organization. The creation of adaptive space enables brokers to more actively connect and navigate beyond their local subgroups to explore new possibilities.”

Central Connectors

The second group the authors identified is “central connectors” who provide group cohesion for implementation of innovation and communications going forward. The authors stated, “Group cohesion represents how connected individuals are to one another within a group. A group is considered cohesive when many redundant connections exist among group members. That is, the likelihood of any individual within the group being connected to any other individual within the group is high. As a result, cohesive groups can quickly share information and generally operate with high levels of trust.” These central connectors can take an idea and move it into more disparate groups to diffuse both ideas and communications; in short it is often these central connectors who will drive an innovation to success.

While some industries and companies resist rotation for a CCO or compliance profession, it would appear the better practice is to use rotation as a catalyst for innovation and change. The authors noted one example where employees were moved between projects every three years or so which allowed knowledge to flow around more readily. The authors concluded that the company had “provided the space that enabled an active interplay between brokers and connectors.”

Energizers

The final group identified by the authors are the “engergizers” who can work to “trigger the interest and engagement of others and unleash the passion necessary for bold innovations to advance.” The authors believe that many factors can drive this including “Network energy, or enthusiasm, drives diffusion, cocreation, and active engagement across the larger organization.” The energizers challenge those within a company to “think more boldly than they would within their own subgroups and creates a contagious mindset as the innovation progresses.” Finally, “Energizers are able to fully engage in interactions, inspiring others to devote more time and energy to an initiative. The reputation of an energizer spreads quickly across the network, attracting others to aggregate multiple ideas into bolder, integrated concepts that are more likely to succeed. Energizers connect with individuals who have different expertise or backgrounds. These differences can be embraced as elements essential to the creation of bolder innovation.”

Through these three differentiated groups, the authors had five lessons which I believe adapt well for the CCO.

  1. Tap into adjacent expertise and a broad network early in problem-solving.Almost universally, more successful innovators did not immediately solve a problem they were given as “they were likely to ask questions and engage their network early to help them think about the problem differently and to find people with tangentially relevant expertise who might give them a different perspective on the solution.”
  2. Make early interactions beneficial to others. Innovators draw ideas to and from others, not fostering off their vision on their co-workers. This is directly attributable to sharing and exchanging as a more collegial approach.
  3. Spread ownership of the idea and seek feedback.This is the point which lays bare the myth of the lone innovator working in a closeted office. Indeed, the authors noted, “among our interviewees, trying to develop an idea in isolation until it was seen as bulletproof was a sure recipe for failure. The more successful innovators made decisions on whom to include and how to run initial meetings in ways that shaped both the innovation and the network.”
  4. Develop a prototype early.While the authors admonish “Be open in process” they suggest strongly that you “insist on pushing to a prototype as early as possible.” It is because, “Early prototypes provide proof of concept. But even more important is that a working prototype dramatically changes the nature of the conversation and engagement with the network.”
  5. Communicate the early-stage solution and then iterate with the network. The authors noted, “As more stakeholders and end users give input, ensure that your team is prepared to make incremental changes, test, and adapt quickly.”

There are always pockets and groups within an organization which resist change. For the Astros, you had at least one employee, Carlos Beltrán, who activity blocked other players who wanted to do the right thing and end the sign stealing system. For the CCO who faces somewhat less resistance than outright fraud, there is a clear path to overcome such resistance. By using central connectors and energizers, a CCO, the broker, can get the message of compliance moved faster, in a more complete and enthusiastic manner.

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, 2020

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