Today we celebrate a little remembered incident from the Kennedy Administration. On this date in 1961, President Kennedy sent a letter to Congress in which he recommended the US participate in an international campaign to preserve ancient temples and historic monuments in the Nile Valley of Egypt. According to This Day in History, President Kennedy “believed that America’s participation in the project would reflect “the interests of the United States,” as well as the country’s interest in ancient Egyptian culture “from which many of our own cultural traditions have sprung” and the U.S.’s “deep friendship for the people who live in the valley of the Nile.” His administration also wanted to develop diplomatic ties with the Arab nations in the Middle East and North Africa. The effort was projected to cost $100 million and the US contribution was approximately 20% of that amount.

This innovative approach by Kennedy paid off bountifully for not only the antiquities preserved but the Egyptian government also allowed the US to house some important Egyptian treasures. For any Chief Compliance Officer (CCO), a seemingly perceived or real dearth of resources can lead to frustrations around the innovation process. However, according to a new article in HBR.org, entitled “Innovation Starts with Defining the Right Constraints, authors Fiona Murray and Elsbeth Johnson believe that what drives big, breakthrough innovations is often constraints or “limitations that force designers to rethink the whole problem and come up with something completely new to address it.” Over a short blog posts series, I am exploring their article from the compliance perspective. Yesterday we considered how the traditional constraints of budget and risk are no longer sufficient to help drive innovation. Today, I discuss the alternative constraints of outcome and time and why they are so critical to innovation in compliance.

The Outcome Constraint

The authors relate that the key feature of the outcome constraint is its focus on the end result. It defines what a good solution does for end users, which for the compliance professional will be their in-house consumers or employees. The authors went on to identify three approaches by which leaders impose effective outcome constraints. The first approach is for an organization “to set a single, big new constraint — one that forces people to think about the problem in a fundamentally different way.” In this manner, “even if the ideas they produce don’t all fly, they are often a source of genuinely new ideas. And that’s because having big, audacious goal creates an environment where the ideas need to be so big and new in order to deliver the outcome, that big, new ideas are exactly what you get.”

The second approach is to set “conflicting constraints; where two or more seemingly conflicting outcomes — ones that appear impossible to deliver together — force a fundamental re-evaluation of the solution space.” This could mean a project with seeming inherent internals contractions such as a compliance solution which at first blush appears to be a tech sales solution. The third approach is to specify what is not allowed, which can be a useful approach as it reduces the scope of the problem and creates a more focused and faster innovation process.

The Timeframe Constraint

Not too surprisingly, the second useful constraint is a deadline. The relationship between time pressure and performance is well established and the authors feel that innovators “benefit from being under some pressure because it makes them focus and work faster, so long as people believe that not meeting the deadline has real consequences”. Take care not to create a fake deadline nor one which is  “so high that it triggers stress and other performance-killing reactions.” But the authors believe it is even more than the natural tendency to move towards a goal as pressure of time increases; it is that a time constraint is more effective for innovators than a budget constraint. The authors state, “It’s largely because people experience the passage of time much more viscerally than they do the running down of a budget, where the information on a project’s cash position is often invisible to front-line managers and accountability for the over-spend isn’t always clear.”

Here the authors caution you not to link your project timeframe “to the internal cadence of your business, e.g., the annual planning process, the budgeting cycle etc.” The key is to set timeframes for delivering innovation that are appropriate for the outcome you have established. Of course, setting the right timeframe is critical and here the authors offer three approaches. Option 1 is to “set the overall timeframe and then subdivide it, structuring the overall deliverable into a series of workstreams.” Option 2 is to “set big, multi-year strategic objectives — for example, a certain market share or cost ratio — broken up into quarterly milestones to gauge progress. The combination of long-term targets and shorter-term milestones provides the best of both worlds: a large enough target long enough away to enable fundamental change but with regular milestones to make the size and scale of the task feel both more manageable and more immediate.” Option 3 seems very old school as it simply asks, “what can we accomplish in a week/month/year?” Even though this may seem like the most straight-forward option, the authors caution, “for this option to work, leaders will need to broadly agree on the outcomes that need to be delivered but by defining the scope purely in terms of the time available, effort is focused on what can be done quickly.”

For every CCO, the selection of both of these parameters of timeframe and outcome are critical for your compliance initiative, particularly if you are using them rather than the more tradition constraints of budget and risk constraints. Join me tomorrow as I conclude this series on innovation in compliance by considering how a CCO should think through this process of combining outcome and time frame.

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