It seemed appropriate that another version of Tom Wolfe’s book The Right Stuff, has been released, this time for the small screen. It came out just as we lost the origin of the term ‘the right stuff’, who was Chuck Yeager, who died last week. Yeager was the American test pilot who broke the sound barrier in 1947 flying in an X-1. According to his New York Times (NYT) obituary, Chuck Yeager, was “the most famous test pilot of his generation, who was the first to break the sound barrier and, thanks to Tom Wolfe, came to personify the death-defying aviator who possessed the elusive yet unmistakable “right stuff””.
Unfortunately, Yeager was never in contention to become one of the original seven astronauts in the Mercury space program because he was not a college graduate. Yeager enlisted in the Army Air Corp straight out of high school and was later accepted into a program for enlisted men to go to Officer Candidate School. Yeager became an Ace in one-night flying over Germany and later flew in the Korean conflict and Vietnam War. He retired as a Brigadier General. Yet he will always be remembered for crashing through the sound barrier in 1947, which Richard Goldstein said, in Yeager’s obituary, “the exploit ranked alongside the Wright brothers’ first flight at Kitty Hawk in 1903 and Charles Lindbergh’s solo flight to Paris in 1927 as epic events in the history of aviation. In 1950, General Yeager’s X-1 plane, which he christened Glamorous Glennis, honoring his wife, went on display at the Smithsonian Institution in Washington.”
I thought about Yeager and the Right Stuff in considering how a Chief Compliance Officer (CCO) can use 360-degrees of communication with compliance stakeholders who are outside your organization. Obviously, the communications with those third parties about your compliance evaluation is a critical element for compliance program’s success. Just as 360-degrees of communication is more than simply a two-way street of passing information, a more holistic approach is needed when dealing with third parties as they can also be a key to more than simply adherence to a compliance program but also providing back to you valuable information and modeling the culture you expect going forward. Yet how can you achieve such a more holistic approach?
This issue was explored by Jennifer Blackhurst, Pam Manhart and Emily Kohnke, in a 2015 Supply Chain Management Review article, entitled “The Five Key Components for Supply Chain Innovation”. In it, they ask “what does it take to create meaningful innovation across supply chain partners?” Their findings identified five components that are common to the most successful supply chain innovation partnerships which derive from the 360-degree approach to communications.
It is almost universally recognized that third parties are your highest compliance risk. What if you could turn your supply chain from a liability under the Foreign Corrupt Practices Act (FCPA) to an area that brings innovation to your compliance program? This is an area that not many compliance professionals have mined. The authors set out five keys to successful innovation spanning supply chain partners.
Don’t settle for the status quo. You should not settle for simply the status quo. Innovation does not always come from a customer or even an in-house compliance practitioner. The key characteristics are to be “cooperative, proactive and incremental”. Further, “you need to be leading the innovation change rather than catching up from behind.” If a company in your supply chain can suggest a better method to do compliance, particularly through a technological solution, it may be something you should well consider.
Hit the road to hit your metrics. To truly understand your compliance risk from all third parties you should get out of the ivory tower and on the road. This is even truer when exploring innovation. You do not have to hit the road with the primary goal to be innovation but through such interactions, innovation can occur organically. There is little downside for a compliance practitioner to go and visit a supply chain or other third-party business partner and have a face-to-face meeting simply to get to know the partner better and precisely identify that partner’s compliance issues.
Send prospectors, not auditors. While an audit clause is critical in any contract, both from a commercial and compliance perspective, “Too often firms use supply chain managers as auditors when they are dealing with supply chain partners.” This is wrong as you should consider these types of managers as innovation partners and not auditors. Every third-party should have a relationship manager, whether that third-party is on the sales or supply chain side of the business. Moreover, the innovation partners are “able to see synergies where [business] partners can work together for the benefit of everyone involved.”
Show and tell. If there has been one key theme throughout this chapter, it has been trust. In the supply chain and third-party arena, “trust plays an extremely important role in supply chain innovation. Firms in successful innovations discussed a willingness to share resources and rewards and to develop their partners’ capabilities.” Moreover, “Through the process of developing trust, firms understand their partner’s strategic goals.” Another way to consider this issue is that if your partner has trust in you and your compliance program, they could be more willing to work with you on the prevent and detect prongs of compliance regimes. Top down command structures may well be counter-productive.
Who’s running the show? This really means what is each side bringing to the relationship, both in terms of resources and capabilities. In the compliance regime, it could well lead to your partner to take a greater role in managing compliance in a specific arena or down a certain set of vendors. Your local supply chain partners might be stronger in the local culture, which could allow it to lead to collaborations by other vendors in localized anti-corruption networks or roundtables to help move the ball forward for doing business ethically and in compliance with relevant anti-bribery/anti-corruption laws.
Finally, as a rule, utilization increases through innovation. Imagine if you could increase your compliance process performance by considering innovations from your third parties? From the 360-degree perspective, it could lead to 1) trust and culture alignment strengthened, leading to future innovations and improvement; 2) seeing what is needed in other partners to facilitate their role in compliance innovations; and 3) both sides reaping rewards in a low cost, low risk, highly achievable manner. Your company’s supply chain is literally there at your fingertips, why not tap into them with a 360-degree approach.
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