Not all obligations are the same or require the same capabilities and approaches to satisfy. One way to understand obligations is to consider them as a hierarchy of needs between commitments associated with accepting legal responsibility and those connected with accepting stakeholder responsibility.
These levels create increasing but separate needs to comply with minimum requirements, conform consistently to procedures and practices, improve performance to reach and sustain targets, and advance outcomes associated with stakeholder expectation. To accomplish these each level will have different set of functions, behaviours and interactions unique to the obligations at that level.
Starting and Finishing Well
Organizations most often begin their compliance journey by focusing on legal requirements associated with regulations. These represent the basic or minimum requirements needed to satisfy the conditions by which a regulatory license is given for a company to operate.
When companies begin to internalize their external commitments they start to improve how they meet these basic requirements. They also have an increased desire to accept greater social responsibilities.
In fact, many companies have now reached a tipping point where there are just as many, if not more, voluntary obligations associated with stakeholder expectations than those required by regulations.
It is for these reasons that meeting obligations now requires more than just following rules (we call this Compliance 1). In addition, organizations need operational programs to meet performance targets and deliver compliance outcomes (i.e., Compliance 2).
Adopting Compliance 2 capabilities is what Lean Compliance aims to help organizations establish. To that end, we have observed that many don’t know how compliance programs should work which hinders their ability to implement them and improve effectiveness over time. That is why our approach focuses on teaching organizations the essential concepts and principles that underlie management programs based on an operational model for compliance designed for performance and outcome-based obligations.
This model incorporates the science of governing, systems, risk, and promise theories, along with Lean principles and practices to ensure alignment, accountability, and assurance for organizations to meet all their obligations in the presence of uncertainty.
We quickly establish these capabilities by following a version of the Lean Startup methodology to establish a minimal viable program where all essential functions, behaviours, and interactions are working together at levels sufficient to deliver benefits – the outcome of compliance. This measure of operability provides a true assessment of effectiveness that all programs must achieve and improve over time.
The compliance landscape has changed and so must our approaches. This does not mean reinventing the wheel. What it does require is a different point of view. We need to look up, look forward, and build what is needed to continuously stay between the lines and ahead of risk – not a luxury, but a necessity.
