How To Run Experiments Without Compliance Wanting To Kill You

Source: How to Have Legal Give Experimentation a Chance

By Aaron Eden on October 13, 2015

This article was co-written with Christopher Anderson, J.D. Chris was a Senior Product Manager at LexisNexis before founding his own firm and helped offer a firsthand account of fostering healthy collaboration between legal, product and innovation teams at LexisNexis when it comes to rapid experimentation.

Large successful organizations can’t turn into startups again. They shouldn’t. They have core business assets that generate billions of dollars. Exposing those assets — brand, sales and distribution engines, proven products, operational excellence — to the chaotic environment of rapid experimentation and “failing fast” is a recipe for disaster. These core assets must be protected. That is the role of legal, compliance, corporate marketing, IT and other functions. They act as antibodies, fighting of “viruses” that threaten the core business.

But that’s not the end of the story. These assets are optimized for executing in the known, well-understood markets that exist today; that existed yesterday. But with increasing volatility in the market, and industry disruption lurking around the corner, enterprises must also be able to innovate; they must be able to incorporate startup-like practices in the face of uncertainty.

To the antibodies, innovation looks like a virus.

Innovation requires that people work differently, and different is bad. It requires people take risk, and fail, two things that typically go against the grain of corporate culture. We’ve seen the same story happen time and time again. An organization begins to adopt lean startup and run rapid experiments. Soon after, teams stop running experiments. Not because they don’t want to, or because they don’t see the value, but because they’re scared of butting heads with internal compliance teams.

In one Lean Enterprise Accelerator Program we ran with a client, during the workshop an attendee said, “if compliance knew we were getting out of the building to talk with customers, they’d flip out.” Good luck innovating when that’s the biggest fear…

In our 5 Ways to Spark Innovation at Your Organization we touch on how to create an environment where innovation is likely to occur, but in this post we want to get compliance to help innovation instead putting it in a chokehold using methods we’ve seen work inside companies like Intuit, Humana, GE, LexisNexis and others.

The Root of the Problem

Inside corporations, avoiding trouble is a tried and true path to promotions. Corporate lawyers look for ways to say no. A situation that could lead to failure or blame is a situation better avoided as nobody gets fired for doing the safe thing. Legal teams want to avoid any and all possible negative repercussions and as a result, innovation efforts and nimble experimentation become the virus and compliance becomes the antibody. Compliance is there to protect the existing business (as they should), but if that’s all they do innovation will not occur.

We’ve seen this lead to teams either running experiments under the radar, not running experiments at all due to fear, or becoming the impetus to co-creating experiment guidelines with compliance so experimentation is a norm that’s rewarded, not an exception.

So, what do you do?

1) Talk to Compliance About Why You Want to Run Experiments

First things first, if you want to create an environment where compliance welcomes nimble experimentation, compliance teams need to understand why you’re attempting this new way of work. What they don’t know can hurt them. It’s a new way to work, and at face value, the practices will lead to many raised eyebrows. ‘Talking to customers? Testing out a solution before it’s built and passed rigorous compliance standards? What are you thinking?!’

We’re not here to pitch you on the value of lean experimentation, but we are here to say that it’s up to you to pitch them. ‘Companies talk a lot about innovation; here’s a practical way to do it. There’s things we want to learn, and the fastest way to learn them so we can build successful new products is by interacting with potential and existing customers early and often so we don’t build something they don’t want.’

Start small and let it snowball. Share one specific project, what you’re trying to learn, why, how you plan on learning it, what sort of interaction with the customer this will entail, and what sort of customer insight you will gain.

Be sure to empathize; understand how they perceive their role and the importance of protecting core assets from legal action. Risk isn’t inherently evil, but it’s important to approach different types of risk in different ways. There are risks that can get the company in massive legal trouble. There are risks that can lead to millions of wasted dollars. And then there are risks on such a small scale within an experiment, that even if it fails, everyone’s better off with the new learnings at hand.

Also, in the same way there are early adopters for new products that you create, there are internal early adopters of corporate innovation. Seeking to transform the whole compliance team right off the bat is foolish. Finding someone on the team with klout who buys into innovation, and communicating the buy in and support from your senior leaders in conversation with them will stack the odds in your favor.

The key here is to start a conversation with the right person, to get guidance around how to run the experiment in a way that makes both parties happy. It’s not about getting permission, or having legal give a green light and being hands off. It’s about collaboratively determining the right way to go about running an experiment so all internal stakeholders are happy: you, them, the leaders who are trying to instill a more innovative culture, etc.

2) Invite Compliance to Participate in An Experiment

At this point, you should now be good to go on running a non-stealth experiment. One that’s been endorsed by compliance. Run it. Come back, let them know that they played a key role in your newfound learnings. This is a cycle that doesn’t end in the same way that experimentation is an ongoing practice.

3) Work With Compliance to Develop Guidelines

Therefore, the key is to not stop here, but keep the conversation going so you can co-create experiment guidelines with compliance. No two experiments will ever be the same, but there will be many similarities across different types of experiments. Guidelines should be created for the different types of experiments, and those guidelines can always evolve and be iterated upon in the same way you go about iterating through experiments.

We could give you guidelines that have been used within some of our clients, but that would go against the very method proposed in this article. A method focused around co-creation. That co-creation is key to taking down silos and creating a web of vested interest in this new definition of success where learning is king.

“But I work in a very regulated environment, I don’t think this will work”

After working with many regulated companies in banking, insurance, etc. we’ve seen that the masked foundation of this statement is fear. The same fear that prevents companies from experimenting regardless of industry. Legal council’s are trained problem solvers. They can handle small cases like interacting with customers or running experiments off brand, as long as they understand why.

If creating a culture of innovation is important to your company, alleviating the fear that often prevents it from occurring is vital. One of the most common causes of this fear comes from the “find a reason not to” mentality rife in corporate legal teams. Using the co-creation method we just discussed, we’re confident you can help create a culture of safety and rid the culture of fear.

Transformation is just as much stripping away the old as instilling the new, and this is how you do both when it comes to getting legal off your back and on your side. Happy innovating!