Are Good Businesses Compliant? Hare and the Tortoise story retold

What do great batsmen like Sachin Tendulkar, Brain Lara and Ricky Pointing have in common with successful football teams like Bayer Munich, Real Madrid and Manchester United? Think again, what is common between successful businesses and these sporting greats? All of them combine attractive attacking play with a dogged defence. To achieve sustained success there is no choice but to master both the skills, for attacking play sans solid defence can only produce sporadic wins and dogged defence without attacking play is ineffective.

Businesses too are like sports, where winning profitable deals is only half the challenge with the other half being the ability to keep it profitable? In contrast to the sparkling flowing attack, visible in the business world as new product innovation demonstrated by the iconic Apple and market place wins seen in brands like Flipkart and Whatsapp, defence is less glamorous.

Defence is more about the two D’s:

• Dedication to identify details that add to costs without adding value and eliminating avoidable costs that sprout up as fines and penalties.
• Discipline is the second D.  Without the second D the first is rendered ineffective, for discipline is required in attending to details and eliminating avoidable costs, not once or twice, but each and every time it is needed. In short,compliance is one facet of this discipline and dedication that used in eliminating fines and penalties.

Compliance comes in different hues when we look around. At the bare minimum, compliance to the letter of law is motivated by a desire to avoid fines and penalties. Often this is seen in compliance with labour laws where sub-contractors are used to contain wages. Some businesses go beyond the letter of law and want to comply with the spirit of law. These businesses take a comprehensive and longer term view and do not want to depend on shrewd lawyers to keep them from paying fines and penalties. Instead, they restrain themselves when in doubt or invest in people and technology to stay within the sphere of law.

In contrast to looking at compliance as a defence mechanism, there are some businesses who convert it into an offensive play. Voluntary compliance with social and environmental standards builds resilience into their business model. In addition, they build a unique brand for themselves by respecting their stakeholders when they comply with public ethical standards and publish sustainability reports like the GRI Reports based on the concept of triple bottom-line by quantifying financial, social and environmental impact of their business.

There is little doubt that focus on compliance can slow down the pace at which a business can move. Perhaps businesses focused on comprehensive compliance are like the tortoise in the fable of hare and tortoise, they know that the slow and the steady wins the race, and hence sacrifice their speed for steadiness.

But what is the race that businesses run?

Next week, this blog will focus on the race; more specifically what could win in the race of business mean.