Down at the edge, round by the corner.
Close to the edge, down by a river.
I continue to explore my list of Tom’s favorite prog rock albums by focusing today on the English band Yes. The group dominated prog rock in the early 1970s with three great albums; The Yes Album, (1971), Fragile (1971), and Close to the Edge (1972). For my money Close to the Edge is the top of the three. Will Hermes, writing in Rolling Stone, said, “Yes’ greatest prog statement is a complex pair of multi-part suites, plus the dazzlingly unintelligible showpiece.” A headphone journey with album’s cryptic lyrics are well worth the trip. The album was released just eight months after Fragile. While drummer Bill Bruford left the band after the grueling studio sessions, the album “might be his ultimate showpiece. He quoted Rush’s Geddy Lee that Close to the Edge, is “To my mind, Yes may be the single most important of all the progressive rock bands and that it is “among my favorite rock albums of all time.”
The single Close to the Edge encapsulates prog rock about as well as one song can. I agreed with its entry in Wikipedia, that the song’s glory is revealed immediately as the song opening fades in with the sounds of running water, wind chimes, and birds chirping; a layering of sounds derived primarily from “environmental tapes” collected by lead vocalist Jon Anderson. These nature sounds fade into a crescendo and into a somewhat menacing guitar solo, the backdrop for which is a cacophonous musical passage that serves as a replacement for the natural cacophony that preceded it. The guitar solo is punctuated by a series of sudden vocals. Again, a crescendo signals a transformation, this time into a more down to earth melody. Like a classical composition, this melodic passage is the establishment of a theme that will go through many variations throughout the life of the song. The lyrics themselves come are inspired by the Hindu/Buddhist mysticism of Hermann Hesse’s book Siddhartha. It does not get much better than this.
I thought about all this interconnectedness when I read a recent article from the Harvard Business Review (HBR), entitled “How Smart, Connected Products are Transforming Companies”, by Michael E. Porter and James E. Heppelmann. While the focus of their article was on new products they also had some interesting insights into both the interconnectedness of processes and structures, which apply to the compliance practitioner going forward. I call it “connected compliance.”
Process in Connected Compliance
Processes are being reshaped by the data which is now available and more “intense coordination among [corporate] functions is now required.” Regarding structures, the authors believe, “new forms of cross-functional collaboration and entirely new functions are emerging.” I will explore both in this post.
Obviously compliance is a permanent process. Yet it should also be a continuous process. The data from a wide variety of sources should be used to track the types of risk that compliance professionals must manage. This begins with third parties. Continuous monitoring of third party watch lists seems almost pedestrian now yet many companies do not understand they have a continuing obligation to understand who they are doing business with, even after the contract is signed. Put simply, due diligence once every two years is a recipe for trouble. But this type of information should not only be limited to third parties’ in your sales business. You should also consider your exposure from your customers.
However, what if a large part of your company is exposed to the financial risk of a corrupt company slowing down its business? If you are in the auto supply business or even the software industry, have you considered how much of your business is at risk through your relationship with a company like Volkswagen (VW)? Most Foreign Corrupt Practices Act (FCPA) risk analysis considers corruption risks involving third parties in the sales arena or vendors that come in through the Supply Chain, now, based upon the VW, Petrobras or you name the scandal, you may need to know the corruption propensity of your customers as well.
Finally, connected compliance will help make people, materials, energy, plant and equipment far more productive, and the repercussions for business processes will be felt throughout the economy. The authors’ state, “We will see a whole new era of “lean.” Data flowing to and from products will allow product use and activities across the value chain to be streamlined in countless new ways.” For the compliance practitioner, waste will be cut or eliminated. Connected compliance will also allow a compliance solution to be delivered when certain thresholds are met, rather than according to a schedule. New data analytics will lead to previously unattainable efficiency improvements and allow you to do more business in compliance going forward.
Structures in Connected Compliance
Just as processes will evolve in connected compliance, so will structures. As the authors note, the classical organizational approach combines “two basic elements: differentiation and integration. Dissimilar tasks, such as sales and engineering, need to be “differentiated,” or organized into distinct units. At the same time, the activities of those separate units need to be “integrated” to coordinate and align them.” Connected compliance will have a major impact on both differentiation and integration in your company going forward.
This structural changes means that compliance will be integrated into diverse functional units of the company such as manufacturing, logistics and SC, sales and finance. This integration across functional units will occur through the business unit leadership team and through the design of formal processes for connected compliance with multiple units having roles.
This sounds quite like burning compliance into the DNA of your company. It is. However connected compliance gives you the means and methods to think through how to accomplish this goal. You will have to coordinate between and across multiple functions within your organization. It will require the critical function of not only data management but also data analysis. What does it all mean?
The authors believe that such an approach will require “dedicated data groups that consolidate data collection, aggregation, and analytics, and are responsible for making data and insights available across functions and business units.” Once again the compliance function is uniquely situated to be at the fulcrum of this connectedness. No other discipline within an organization can tap into so many areas and have such an effect. Scott Lane, Executive Chairman of the Red Flag Group, has described this as a straight line of sight. Connected compliance indeed.
It is through connected compliance that all groups within a company will become responsible for compliance. The integration of this data into compliance is still viewed as cutting edge; nonetheless companies have this data, structured within their own ERP systems. Connected compliance will allow senior management to view information to make the business more efficient and allow a company to take more risk because the risks will be managed more effectively.
Today, I present all three of the great Yes albums for your listening pleasure…
To listen to The Yes Album on YouTube, click here.
To listen to Fragile on YouTube, click here.
To listen to Close to the Edge on YouTube, click here.
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