Compliance: Boring but Essential

That no one ever brags about it doesn't make it any less important.

This August I joined the faculty at the W. P. Carey School Business at Arizona State University. Along with a course on analytics, I also teach the capstone course CIS440: Systems Design. In a nutshell, this means that students (all seniors) work on real-world projects throughout the semester. Put differently, this is no theoretical course. My students are developing valuable experience that will not only help them interview for full-time positions, but help them throughout their careers.

As part of the course, I’m stressing the importance of effective communication skills. Of course, I want my students to develop neat apps, websites, and/or databases for their project sponsors. Still, that is unlikely to happen if the former can’t articulate themselves to the latter.

And it’s no overstatement to say that they have wowed both their de facto clients and me. In only one month, these groups of students built some pretty powerful and visually appealing prototypes. No, they weren’t perfect, but Agile methods such as Scrum don’t aim for perfection—especially at the beginning.

Compliance: An Essential Hygiene Factor

I’ll be the first to acknowledge the wow factor of spiffy website design and functionality. While not sexy, though, I’ve also made sure that my students understand the importance of hygiene factors such as compliance.

Few companies brag about compliance-related matters. That doesn’t make them any less critical, though.

Admittedly, this isn’t the first thing on my students’ minds as they roll up their sleeves eager to code. Today there is no shortage of rock-star developers and code ninjas, but their compliance counterparts remain few and far between. What’s more, few companies brag about their compliance. Ditto for different forms of governance and risk management. Generally speaking, executives consider these areas to be necessary evils—i.e., costs of doing business. They really don’t serve as true differentiators or ways of sustaining competitive advantage.

But that’s not the right—or, at least, the entirely right—way of looking at things. Here’s a better question: What are the costs of not taking compliance and governance seriously?

High-profile compliance scandals over the last year, however, make it easy for me to underscore their import. To boot, we read The Phoenix Project by Gene Kim midway through the semester. Among other things, his book emphasized the costs of ignoring compliance- and governance-related matters.

Simon Says: Ignore compliance at your own peril.

You don’t have to be a career auditor or compliance expert to understand that compliance matters more than ever. In fact, some of the same analytic and technology tools can decrease the chances that organizations find themselves in hot water.

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