United States: A Year Of "Better Ways?" (Podcast)

Wrapping up year one of the Better Way? podcast series, co-hosts Hui Chen and Zach Coseglia share their top themes from the year and discuss how these Better Ways inform the work they do to address organizational challenges. From embracing complexity and expertise to exploring empirical evidence and measuring culture, this episode packs the highlights of 2023 that you won't want to miss!

Transcript:

Zach Coseglia: Welcome back to the Better Way? podcast, brought to you by R&G Insights Lab. This is a curiosity podcast, where we ask, "There has to be a better way, right?" There just has to be. I'm Zach Coseglia, the co-founder of R&G Insights Lab, and I am joined, as always, by my friend and colleague, Hui Chen. Hi, Hui.

Hui Chen: Hi, Zach. Hi, everybody. It's wonderful to be here now for our very last podcast of the year—wow! I started off the year doing this pretty much for the first time and felt incredibly uncomfortable. I can't say I'm entirely comfortable now, but a lot better than January.

Zach Coseglia: Definitely—I think we both feel that way. But it's been so much fun to meet all of these wonderful people who have come on as guests. It's been a lot of fun to highlight some of our friends and colleagues who have come on as guests. And obviously, as always, it's just been a lot of fun to spend an hour every couple of weeks with you, Hui, to talk about things that we care about.

Hui Chen: Same here. I really do want to give a shout-out to Jeremy Miller, our producer, who has been so wonderful throughout this process, who does magic with our recording. Thank you, Jeremy, for all that you and your team do for us. I also want to give a shout-out to all the people who have been listening to us. It's just so amazing when we get on a call or go to a conference, and people come up to us and say, "I listen to your podcast, and I particularly like this and that episode. You're doing some interesting and innovative things." All of that feedback and knowing that you're out there listening to all of the crazy things that we discuss in here, it's really been fun, and it feels like we're building a community.

Zach Coseglia: I couldn't agree more. So, this is our year in review. We don't have a guest today—it's just me and you to talk about some of the amazing people that we've had on the podcast over the course of the year and some of the Better Ways that they've shared with us. I say we just get right into it, Hui, and I am going to 100% put you on the spot to go first to share your first highlight of 2023.

Hui Chen: I think it would not surprise you, that I'm going to start with the concept of embracing complexity. The first guest that really highlighted this was our colleague, Dr. Caitlin Handron, and we almost rounded out the year with an extensive discussion of this concept with our last podcast with Alison Taylor—not to mention that we constantly mention this in between. The idea of embracing complexity, that not everything we do can be summarized in a Twitter message, and not everything works like clockwork because human beings are just not made like clocks. I feel like we're doing something that's really bucking a trend that people feel drawn to for understandable reasons—precisely because the world is complex, people want to have something more straightforward to grab onto. So, there is a strong tendency to just say, "Let's just reduce this to a formula. Let's reduce this to something that we can say in a slogan." But we find that when we do that, we really miss a lot of things. Actually, as Alison said in her podcast with us last episode, "It's just not working, that approach." That simple tick-the-box, reduce everything to a formula approach, we simply see that it's not working. And so, that's one of those things that just keeps coming up again and again, not just only on our podcast but in our work every day we see that. I think that for me it's not just my top Better Way, but it really embraces everything we do and how we approach them. What do you think?

Zach Coseglia: I agree. I can't tell you how many times I'm on a call with a client, we're doing a pitch or we're talking to the team, and I feel myself approaching a choice in my brain between the words "complicated" and "complex," and something signals in me to be intentional about which of those words comes out of my mouth, in recognition that they aren't the same thing and that they mean something very different. As we've talked about, words matter—that's another one of the Better Ways that we've explored. What I really like about the conversation that we've had around this over the course of the past year is, it doesn't mean that everything is complex. Some things can be summed up in a slogan. Some things can be summed up in that Tweet length. But some things can't, and it's when we try to push those square pegs into a round hole and simplify them unnecessarily that we wind up in the world of reductionism, rather than really leaning into and embracing the complexity that often exists in the worlds in which we operate. I love that one.

My first one, I'm pulling from the discussion that we had with Patrick McGowan, who, as a reminder to folks, is a senior director for global compliance auditing and monitoring at tech innovator Fortive. Everyone loved that episode—everyone loved our conversation with Patrick. The thing that I took away from that and that we talk also a lot about outside of the podcast, including with our clients, is the power not just of data analytics, but the power of using data to reveal insights about human behaviors. This, I think, is the real place that we should all be working toward and seeking out. There's a lot of data analytics being used in the culture space, compliance space, DEI space—all of these spaces in which we operate—but a lot of the time it's focused on metrics that are just really dumping data on folks in ways that aren't telling a story. And what we got from our discussion with Patrick, particularly around an example that he had done at a previous job, was around how in looking at T&E transactions, in looking at how money was being spent on meals, he was able to identify that, although the data suggested that no one was exceeding the policy limit and that folks weren't violating the policy by not submitting receipts for meals that required receipts, which in many organizations would be enough, when you actually unpacked that data, you would see a pattern of behavior that didn't make sense. You would see a pattern of behavior that suggested that the cost of meals was either out of whack with what they actually should cost, or people were intentionally submitting their expenses right at the threshold for needing a receipt, either because they didn't want to submit a receipt or potentially something more problematic, like they were falsifying their expenses or exceeding the limits. It's just a wonderful example, and there are a lot of those that we see in our work where when you look at the data with a process-based analysis or a policy-based analysis, you might pat yourself on the back and think that you're compliant, but when you look at it with a people-based analysis, you might see patterns of behavior that actually alert you to something that may not be problematic but certainly warrants additional questions, and I just love that.

Hui Chen: Patrick, like so many of our guests, is someone who just stimulates me every time I have a conversation with him. He does things that are innovative and deeply thoughtful and makes me think about things. So, your Better Way here is basically my next Better Way, but I would elaborate on that a little more. I call it "data narrative," so I'm almost combining two concepts that our colleagues, David Yanofsky and Megan Zwiebel, talked about in the beginning of the year on their podcasts, which is both the use of data and the power of storytelling. You're talking about insights from data. The insights are so compelling when you can tell it as your story. It's the story of compliance. It's the story of your culture. It's the story of how people are behaving in your organization. I find myself at a loss about how to describe David, because he can do so many things—he defies a simple label. He can do analytics. He can do programming. He can do visualization. He can do graphic design. I don't know what to call him, so when I'm introducing him, I often say, "He's the guy who can use big data or small data to help you tell a story." And that's what he used to do as a data journalist, which is taking lots of data and making compelling news stories out of them. I have just been thrilled to work with him and to see what he's able to do with organizations and their data and transform things from a data dump or a simple dashboard to something that's much more compelling, imaginative and resonates with the audience to whom these data are presented. Oftentimes, what we see is precisely something like a data dump or something like a dashboard with a lot of numbers, but a lot of those require more interpretation. What we want to do is to combine that concept of using data to get insights and then be able to share those insights in a way that's compelling, and that's stories.

Zach Coseglia: Absolutely. If you don't actually make sense of that data, not just in the voiceover in the actual analysis, but in the way in which you're actually presenting it with a visual story with that data, you're missing a huge opportunity.

My next one is from our discussion with Marian Currinder. And for folks, just as a reminder of that episode, Marian was on this task force, this group that was tasked with modernizing the United States Congress—so that episode was all about how to build consensus and achieve results in a divided organization. I think there were a lot of things to be learned from that episode. One of the things that I really loved is the importance of physical space and its impact on culture and in driving social norms and in impacting people's behaviors. The specific example that she gave us was just the difference that it made when they chose to actually sit around a table, rather than sitting in a traditional committee setting, and how they chose to intersperse Democrats with Republicans, so that folks were always sitting with someone who they might not be politically aligned with. So, just the dynamic of that was really powerful.

What I wanted to highlight from our conversation with her as a Better Way was the importance of consulting with the people who your work is going to impact. We talk about this a lot in the compliance space and the culture space and the DEI space, where oftentimes—not always—decisions are made by well-meaning people in a vacuum or by well-meaning people in a conference room, without going out into the field and collecting insights from folks, without talking to the "user" or "consumer." She said the following, which I really loved: "Given our mission with focusing on the internal workings of Congress, we also did things like, 'Let's talk to the people who actually work here.' So, over the course of four years we were in existence, we held regular brown bag meetings and listening sessions for staff. Many of the things that staff shared with us were these very simple things, like, 'It drives me crazy how the switchboard cannot transfer calls.' And so, we would just dig into things like that—they were these little things, but these little things that drove people crazy." It's just, one, such a reminder that especially in the cultural context, it's not always grand gestures or massive shifts or movements—sometimes there are just these little things, these simple things, that can make a world of difference to people. And then, I think the other takeaway there is, we won't know what those things are if we're sitting in a conference room or in a vacuum trying to figure out what people need when all we really need to do is ask them—just ask them. I think that applies in the compliance space as much as it applies in any other space. Let's actually put the human being at the center of our analysis.

Hui Chen: So true. When I was at my first compliance job, one of my tasks at one point was to draft a set of policies and procedures that would govern our sponsorship of events. So, I sat there and imagined what sponsoring an event was like, who would do it, what they would be doing, and I drafted what I thought was quite a terrific policy. Then, I had the idea that, "Maybe I should ask the people who actually do the events." I was really glad I did, because, I think, within the first 20 minutes, they shredded my policy and procedures. They asked me questions that I could not answer. They told me about things that I never thought about. And that was such a learning experience for me that, in fact, that was one of the reasons behind one of the questions that I had put into the Evaluation of Corporate Compliance Programs Document at DOJ, which was, "Whom did you consult with when you drafted policies and procedures?" That experience was so impactful, and, I think, it also underscores something that we've talked about on some of our podcast episodes: it's the importance of listening. Listening, I think, is one of the most underused tools in the compliance officer's toolbox. We are too busy talking, preaching and messaging out, and we're not doing enough of just listening to people.

I'm going to pick up again and do an expansion of what you said from Dr. Currinder's episode, but also from the episodes that we had with Katy Choo and Antoine Ferrère, and also, of course, our colleagues Caitlin and Nitish, and that's about culture. So, that is a big topic, of course, and we are of the belief here in the Lab that culture really is at the root of everything. This culture, to quote Alison, is "the way we do things around here." The importance of understanding how culture plays a role, how culture may be different in different parts of your organization due to functionality, due to the people involved, due to geography—how do you navigate these different cultures? How do you listen to these different cultures so that you can understand your messaging impacts? Your attempts to influence behavior cannot be successful unless you understand culture. So, the importance of culture, not just in terms of saying that it's important, but really making an effort to understand how it's working and its dynamics in your organization, that's just something that hits home to me every time we take on a project.

Zach Coseglia: I fully agree, and I think that with the discussion of culture, we can also tie it back to the discussion that we had at the outset, which was around the concept of complexity. Culture is the ultimate poster child for complexity, and yet what often happens—and we see this all the time—is that culture gets reduced to something that it isn't in an effort to shirk or out of fear for the complexity that exists within culture. And the thing that we often see said is that culture winds up getting reduced to something like "tone from the top." While tone from the top may very well be part of culture, culture is so much more than that. We do it a disservice when we try to reduce it to something that's catchy, which is exactly where we started.

All right, so my third Better Way, takeaway or top moment was the conversation that we had with Professor Suneal Bedi and Todd Haugh about a recent research project that they'd done on conjoint analysis in the context of compliance. Just as a reminder for folks, the research that they did was intended to assess whether or not a commitment to compliance or investments in compliance had any impact on consumer behaviors. So, taking an analysis that typically would be done in the marketing context or in the business context to see which product features were most appealing to a consumer and to have compliance be one of those product features. I thought what we got from this was highlighting of the Better Ways of measurement, of curiosity and of taking a scientific approach to these interesting elements of compliance that we're dealing with day in and day out. And what we learned about was that the results of their research actually gave us some reason to believe that people do care about compliance, and that it actually might have commercial value to a business in ways that can flip the script on the sometimes misperception of compliance as just a cost center.

Hui Chen: I really appreciated their research, and I think it goes to, like you said, our real fascination with people who do empirical research on some of the assumptions that have so long been bantered about in the compliance world. I think we as a discipline have made a lot of assumptions but have really not begun to test a lot of those assumptions. We really are interested in approaching things like scientists or trying to put on that scientific mindset, and thinking through: How do we test some of the assumptions that we have held, and do they really work?

In that vein, I would say that would be my next Better Way, which is this entire mindset of pursuing empirical verification of some of the practices that the compliance industries have held dear. A couple of other professors—in addition to Todd and Suneal—Benjamin van Rooij and Daniel Beunza, have all done empirical research into different aspects of human organizational behavior that are very relevant to the work we do. Benjamin had done this experiment where he tested the length of policy and how it impacts people's understanding of those policies. That really was very enlightening in terms of finding out that whether you have a long policy or a short policy, it really didn't matter that much, at least in the type of anti-bribery and corruption policy that they tested. Now, I really would be interested to test this on other types of policies, for example, because I think anti-bribery and corruption rests in an area that is more common sensible. If you just go ask most people who are not trained in compliance, "Is bribery good or bad?" most people would tell you that they don't think it's good. But if you were testing them in a particularly specific area like money laundering or trade sanctions, that actually does require more than common sense knowledge, and that might be an interesting empirical study to run. Daniel Beunza told us about the ethnographic methods, which is fascinating to me. In my LinkedIn post for that, I publicly admitted to—which was not the first time I publicly admitted to—my liking for the show Undercover Boss, minus the bad wigs that they often make people wear. I still hope one day—I'm going to work on this—to get someone from that show to be on our podcast. It's such an interesting idea that you plant yourself among the people that you're hoping to understand, and you observe—it's such an underutilized method in compliance work. So, again, these various methodologies that are tried and true in many academic disciplines have yet to be fully utilized in the compliance field. We are seeing some, as we have heard from our podcast guests, and we hope to see more.

Zach Coseglia: There are two things that I take away from those examples, one of which is that with Benjamin van Rooij and his co-researchers' work, we didn't just get that, "Maybe these different versions of a policy don't make a difference." What we actually got ties back to the culture point and the importance of context, which is that maybe these policies didn't make a difference but what seems to make a difference are social norms—the impact of what you see your peers or those around you doing, and how that impacts the decisions that you make. I say that, one, because I think it's fascinating and it's important, and it's so consistent with so many of the other themes that we've talked about here, but also, I think that the compliance professionals out there, in my experience, many of them have heard about that research and thought, "If that's the case, what does that mean for us?" And I think that it means wonderful things for us as a profession. It means that the tools that we have to use and the ways that we have to go about this are just going to be different and more sophisticated, and that we now have some empirical evidence that that piece of paper itself isn't the end-all, be-all of compliance. So, that was one of the takeaways: the importance of context that we get from that research.

The other one is that I don't want the academic world to be the only place where this research is happening. Why can't this be happening within organizations? Why can't this be part of how a company runs its compliance program—it doesn't have to be massive scale, but—by doing some actual research to see whether or not the tools that they're implementing, the tactics that they're deploying are actually working in practice? What I think is so interesting about this conversation and how little of this is actually happening is that there are so many of these companies whose business relies on that kind of research. Whether you're a pharmaceutical, med device or another company in the life sciences space whose foundation is clinical research, or if you are a tech company that's out there creating products that you want people to ultimately buy, why don't we see enough of this thing that drives the business in compliance? I think one of the obvious answers is cost and skill sets, but I actually don't think this has to be expensive, and I actually don't think it requires much more than curiosity and commitment in terms of skill set. So, that's my plug—I want to see more of this happening within companies.

Hui Chen: You're kind of doing it, Zach, because I know you have led several training sessions for companies on a topic called "thinking like a scientist." Maybe it would be interesting for you to share a little bit of what that training is like, because this is a topic that certainly is gaining some interest among the people we work with.

Zach Coseglia: What we often do in our trainings—and certainly in this one—is we start by having a conversation about thinking like a scientist and its value, but we talk about it completely outside the context of compliance. So, just the value of thinking like a scientist more generally, what it looks like and what the qualities are of thinking like a scientist. We often pull from Adam Grant in his focus and in his book Think Again on putting "humility over pride and curiosity over conviction"—I love that quote from him and how that can guide the way that we develop a compliance program and evaluate and assess a compliance program. The way that we really frame it is that it's all about being curious and collecting data, but also, it's not just enough to be a data-driven exercise, it's got to also be a human-centered one, and how we can marry those things together to really think like a scientist and ultimately just build a modern compliance program. It's a tremendous amount of fun to do that session. We've done it together. I also love to do it with Caitlin Handron on our team, who's actually a scientist, which makes it all the more authentic.

My fourth is something that we heard from the incredibly talented, very thoughtful and lovely Julia Ormond in our discussion with her about ESG disclosures and her work as an activist. I want to share a quote from her that really resonated with me—she said, "Somebody described it, from the corporate side, as it sometimes feels as if what activists are saying is that water is wet. We identify water because it's wet, and it's like, 'That's also oil. That's also blood. That's also sweat and tears.'" She continues and says, "But from a scientific point of view, water is H²O. So, for me, the measurement is critical, because it gets us away from emotional biases and presumptions that on some level, are really useless." Part of the reason that this really resonated with me is that, in some ways, whether we're talking about our work in the culture space, compliance or DEI, there's this element when we've been in-house in these roles, that there almost is this feeling of we're kind of like activists within this whole organization. We want to promote compliance. We want to promote diversity. We want to promote inclusion. We want to promote a culture that's going to support both risk management and performance and all of these things. But what I found is that when we lead in these cases with the emotional argument, with a softer argument, with the water is wet argument, rather than with the scientific point of view and with the measurement point of view, we lose people, or we just simply don't make our point as effectively as we could. I feel like this ties into so much of what we've talked about today, which is the power of thinking like a scientist with measurement and data to drive heft to the messages that we're putting out there.

Hui Chen: I really appreciated Julia's discussion with us because she really was the first one that brought an activist point of view to our podcast. It is an important point of view for people to understand, because when someone chooses to be an activist it's because they're passionate about something—in this case, it is not directly relevant to them. It's not like Julia herself has experienced human slavery, but it's because she has this level of empathy and she understands that at the end of the day, everything is connected to humans because we are all humans. That fundamental recognition of basically our collective humanness is also something, by the way, that Alison talked about. The way she thinks about how corporations can really appropriately exercise their influence is to look at their impact on humans. And our Lab is very big on being human-centered. We think about the human beings that are at the center of the policies, processes, trainings and programs that we've built—all those things—because ultimately, that's what it's all about.

All right, so my final is precision. Precision is a concept that is so important in the work that we do. One of my all-time most popular LinkedIn posts was from the time when I was still at DOJ—I published an article on LinkedIn called Precision Matters. There was so much interest in that, and I got messages from law school professors that said they're going to make that required reading for their students. I think there's just so much imprecision in our space, and we oftentimes hear people make statements that aren't necessarily backed up by evidence or data—statements that are just incredibly vague. I constantly read policies that are not precise and are not clear on what they're referring to and what they're prohibiting or allowing. But more importantly, this is a point that our guests—from our colleagues David Yanofsky and Shannon, to Rumman—have all harped on is the importance of the precision in using words, in using data and in understanding concepts. I think one of my developing pet peeves now is people's overuse of the word or the term "AI." When people say "AI" today, most of the time what they mean is "technology." But as some of these guests have articulated, it's so important to understand what you're talking about, because it affects how you regulate it, how you use it and what the limitations are. When you're talking about AI generally, "How can my compliance program use AI?" That really needs a lot more dissection to understand what you're looking for, what exactly the function is that you're trying to advance technologically, and oftentimes—I'd say way more often than not—it's not AI, it's something else. It could be an algorithm, it could simply be machine learning, but it's not just your generic AI. And that applies all across the board from the words we use to the evidence that we cite. It's just something that I cannot emphasize enough how important it is that we be precise in the things we do and the things we say.

Zach Coseglia: This actually ties in really well with my final one, and that is, I think that precision often comes with expertise. Your ability to be precise is often driven by the expertise that you have in a particular area. My final takeaway was actually pulled from the discussion that we had with Benjamin van Rooij, who, when talking about his book, shared how the most important behavioral code that we have, the legal code, has actually been written by lawyers who are behavioral novices. And that leads me to a Better Way that is so deeply connected to our work in our Lab, which is, let's have a multidisciplinary team of experts. So, if we're going to talk about behavior, if we're going to talk about culture, let's have a behavioral scientist, let's have a cultural psychologist who's there and involved. If we're going to talk about AI and its impact, either from a legal perspective or otherwise, let's have people like Rumman. Our ability to be precise is connected to us opening ourselves up to a broader group of people who can contribute their experience and their expertise to help us understand how all of these various things piece together. There's a role for the lawyer. There's a role for the traditional compliance personnel. There's a role for the auditor. But there's also a role for the AI expert, the behavioral scientist, the cultural psychologist, the data journalist and the professional writer. It's when we bring all of these minds together, which are all archetypes that exist within our Lab, that just really wonderful magical things happen, and we inherently become more precise as a result.

Hui Chen: It's been so much fun working with our team because of all the different expertise and perspectives they bring. I feel like every time we just have a team meeting, I learn a ton of new things. In our remaining minutes, I want to give a sense of what's to come for next year. We're going to have guests to talk about environmental crime. We're going to have an expert talk about whistleblowing. We're also going to have some more conversations about culture and the concept of "the right thing to do." What else?

Zach Coseglia: We're going to have a law school professor who teaches compliance to aspiring lawyers and future compliance professionals, specifically through a clinic, which is going to be really exciting to hear how the next generation of compliance professionals are being taught. There's just so much great stuff in the hopper, and we are on the hunt for other Better Ways and other interesting guests, so anyone who's listening, if you have ideas, share them. If you have potential guests that you'd like to connect us to, if you know someone who has been on or who works on Undercover Boss, definitely make that connection for Hui. And Hui, before we break for the year, I just want to ask you one more question. I love our Proust questionnaire, our Better Way? questionnaire, so I thought, "What from the questionnaire takeaways did I get from the year?" So, one of my takeaways was, I think, lots of people wish they could sing. Lots of people end their emails with "Best," and all of them think that they're unique, and yet, they're not, because that was by far the most popular choice. What about you—any takeaways on that?

Hui Chen: I would say, I'm always interested to find out people's outside interests. There are the people who are hikers, hunters, sailboat racers and professional writers—I find their outside interest always gives me a whole extra dimension of looking at them. Oftentimes, when you interact with them it's in that professional capacity, and you're interested in this particular aspect of this person. But what I appreciate about that Proust questionnaire is when people come into focus, not only in their outside interests, but in the importance of their hobbies and their families, those come through, and they, to me, really fill in a whole extra dimension and make this person just so much more of a human being than you would otherwise have known.

Zach Coseglia: Absolutely. That's why we do it. We approach our work with a human-centered point of view, and we've approached the ways in which we put this podcast together in the same way. Hui, it has absolutely been an incredible year. Thank you so much. We'll be back in 2024—we can't wait.

Hui Chen: We wish you all a happy holiday and happy New Year!

Zach Coseglia: Happy New Year! Thank you all for tuning in to the Better Way? podcast and exploring all of these Better Ways with us. For more information about this or anything else that's happening with R&G Insights Lab, please visit our website at www.ropesgray.com/rginsightslab. You can also subscribe to this series wherever you regularly listen to podcasts, including on Apple and Spotify. And, if you have thoughts about what we talked about today, the work the Lab does, or just have ideas for Better Ways we should explore, please don't hesitate to reach out—we'd love to hear from you. Thanks again for listening.

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