Better Governance Key to Driving Positive Corporate Behaviors
A recent article in the Economist raised some interesting questions for me in the context of information governance. The article was primarily concerned with accidents and misconduct in the corporate world. They happened to include some substantial names:
- Boeing faces claims that it sold 737 MAX planes with dangerous software.
- Goldman Sachs in Malaysia played a role in arranging $6.5bn of debt for a state-run fund that engaged in fraud.
- Monsanto failed to warn a customer that its weed killer could, allegedly, cause cancer.
- Wells Fargo admitted creating 3.5m unauthorized bank accounts.
- Facebook, Equifax, and others were also mentioned.
The impact cannot be understated. According to the article: “Take a sample of ten big American listed firms involved in controversial episodes: their median share price has lagged behind the stock market by a bearable 11% since the event, after adjusting for dividends. Although Boeing's shares have lost 8% since the crash in Ethiopia, they are above their level in January.”
The article suggests three things are the cause of these scandals happening in the US more than elsewhere: less regulation, less litigation, and increased competition. Our standards have slipped. The effort involved in complying, litigating, and building safer products is sometimes greater than the costs of mistakes. One solution is to lower the costs and barriers to ethical and effective behaviors.
Time for a Reset
For a reset to happen, companies must face their past, present, and future to make the right decisions and begin acting based on information-powered ethics.
You can bet that when these events happened there was a mad dash to reactively plow through the mounds and mounds of information ‘hay’ to find the critical ‘needles.’ Companies did this both to fix the problem and to fend off any negative impacts of the event stemming from investigations to litigation. These costly reactions often prompt a proactive governance project to clean up content.
Accidents and misconduct result when poor decisions are made. The evidence we need to make decisions is often buried in the dark data in our organizations. I have seen situations where up to 70% of the content in shared drives is untouched after it’s first created.
Only 10-20% of our unstructured data often makes it into advanced repositories where it can be searched, shared, protected, and organized. Still, roughly 60% of our corporate knowledge resides as unstructured content. When we take our valuable information assets and leave them to rot, our shareholders suffer.
This is what we mean when we talk about shining a light on dark data and building an indexed data lake. Make corporate knowledge accessible, clean and easy to find, and leveraged for better decisions. When the threat of litigation diminishes, the benefits of good ethics need to come into play.
Start building better information management practices. The goal is to cut response times, increase accuracy, and make good decisions more available and better utilized. The recommendation is to build systems and structures that provide strategic value.
The EU’s GDPR regulation argues that ‘Privacy by Design’ is the real goal for the way we manage information. Thinking about protecting information is a critical first step in building better ethical practices in the business world. Data-centric regulations of all flavors and jurisdictions stand to benefit from better understanding, design, and management of our information structures.
Being compliant helps to reduce the risk from regulators, but it doesn’t completely reduce the risk of the accident or the misconduct. Building privacy by design means that we don’t need to think about acting appropriately; it will come naturally. A compliance framework that insists on and facilitates better control of information will reap rewards and reduce society’s need for regulations.
The complacency in US attitudes, according to the article, comes from incumbent firms in a market feeling less motivated to be responsible since they have a monopoly on our relationships.
Competitive advantage comes from better management of information, since it allows for getting products to market faster, better responsiveness to our customers, and cheaper overall operations (think TCO of storage). It’s harder in today’s world to switch to the competition. Non-incumbent firms engaging in comprehensive information governance practices stand a better chance of toppling existing structures. This, in turn, will result in more ethical and responsible behavior.
Make Doing the Right Thing Easier
Accidents and mistakes happen when there is less downside to worry about. If you must pay someone to be good, pretty soon they’ll be ‘good for nothing.’ The counterbalance is to make the potential upside—doing the right thing—more easily obtainable.
You can accomplish this by having a more transparent view of your corporate knowledge through Nuix’s total data intelligence. Doing so will help you improve decisions, decrease response times, and drive more ethical behavior. Nuix can help you respond to regulators, save money, and have more control in litigation and business operations.