Category: Publish to KM Space

Toyota, Ethics and Compliance

Toyota Logo

With Toyota’s problems all over the news, I started to think about whether compliance and ethics professionals could learn anything from these problems.

To begin, I don’t think there is a systemic problem with their vehicles or with the company. I think the sudden acceleration problem is bunk.

Yes, I own a Toyota, but my Tundra has not been implicated.

Numbers

It is unfortunate that people have died in Toyotas. About 56 people have died in accidents involving Toyotas that allegedly accelerated out of control. That anyone has died or been hurt is difficult to face.

But lets put that number in perspective.  Over 34,000 people died in car crashes in 2008 and over 2 million people were injured.

Over 10,000 of those deadly crashes in 2008 involved alcohol impaired driving. That means you were at least 100 times more likely to be killed by a drunk driver than sudden acceleration.

From an ethics perspective, you obviously don’t want to sell a product that is defective or even a little more likely to injure your customers. Of course, that assumes there is a defect in the product and it’s not just a big pile of media hype.

Look back at Audi

We have seen this situation before. Twenty years ago it was Audi. The reports on Audi suffering from sudden acceleration nearly destroyed the automaker in the late 80s.

They never did find a problem with the Audi cars. Audi was never able to counter the outcry against their cars.

Is there really a problem with the cars?

Surely, the throttle of a car could get stuck open and cause the car to accelerate. Cars are increasingly run through electronics that control the fuel levels and throttle of the car. Floor mats can get stuck on the gas pedals. Cruise controls can malfunction. For any number of reasons, a car could accelerate without the driver’s input. (With Audi, the assumption is that the driver stepped on the gas pedal instead of  the brake pedal.)

But what about the brakes?

Car and Driver ran some tests for unintended acceleration. Even with the throttle held wide open, if you stepped on the brakes your car would stop in roughly the same distance.  In a normal situation, they stopped a Toyota Camry from 70 mph to 0 in 174 feet. With the throttle held open it took 190 feet to stop from 70 mph.

The brakes were not as successful for the hugely powerful Roush Stage 3 Mustang with 540 horsepower. It required an extra 80 feet to stop with all extra horsepower was fighting the brakes.

Even if the engine in most cars suddenly accelerates, the brakes should stop in it roughly the same distance.

However, if you pump the brakes, you may lose the vacuum boost needed for the power assist and have a hard time stopping the car. Prior to anti-lock braking systems, we were taught to pump the brakes in slippery conditions.

Another possibility is that the car could have suffered a brake failure at the same time the throttle failed.

Driver error

One way to deal with sudden acceleration is to disconnect the engine. With a manual transmission you step on the clutch and with an automatic you shift into neutral. (I’m not sure that I would have thought to do that if my throttle got stuck.  I would now.)

With Audi, they main theory was that people were stepping on the gas when they thought they were stepping on the brake.

As for the runaway Prius a few days ago, he could have pumped the brakes and lost the power assist needed to stop the car, or had a simultaneous failure of the brakes and the throttle. (Or he could have faked it.)

Systemic failure

What Toyota needs is a way to avoid systemic failure. It’s really bad to have the throttle and the brakes fail at the same time.

What Toyota needs is a throttle kill switch. When you step on the brakes, the electronic throttle control will cut the throttle and cut the power. In the Car and Driver test, they tried an Infiniti G37 that had the throttle kill and its braking distance barely changed. Many cars have this throttle kill mechanism, but not all.

Having a safeguard for a systemic failure is good thing from a compliance and risk management perspective. By having a throttle kill, it’s easier to point to operator error. (“If you had stepped on the brakes, the engine throttle would have released.”)

What about the conflict of interest?

One problem with a government investigation of Toyota is the inherent conflict of interest the United States government and the taxpayers have in the automobile industry. We own a competitor to Toyota. It would be good for the U.S. ownership in General Motors for Toyota vehicles to be less popular.

I was very disappointed to see Mr. Toyoda flogged in front of a Congressional panel. To some extent, he was being yelled at by the board of directors of GM.

Lessons

In the end, I believe the Toyota story is one of a failure of crisis management and not one of ethics or compliance. It seems like Toyota was not able to quickly gather the facts and act on the facts. They keep announcing recalls, without explaining the problem or the fix.

Every company action made in error is magnified under the white hot lights of the media looking for stories. We the taxpayers and our government has a big conflict of interest in attacking the company without a good set of facts.

The failure of crisis management is going to cost them. There will be shareholder class action lawsuits, driver lawsuits, owner class action lawsuits, the cost of recalls and the long term damage to the company’s image.

Sources:

MoFo2Go

Do I care if my law firm has an iPhone App? As client, I care about my law firms delivering useful information to me.

Kevin O’Keefe says your law firm should forget about building an iPhone App. Morrison & Foerster didn’t heed his advice and created MoFo2Go, an iPhone app.

iPhone App versus Mobile View

Kevin’s post was in response to a iPhone app built around a law firm’s blog. I looked at Arnold & Porter’s iPhone app for their Consumer Advertising Law Blog. It required a separate application and was very clunky. All it had was blog content. They would have been better off just having their site enabled for mobile viewing. Kevin was right.

(By the way, Compliance Building uses MobilePress to make a really nice looking mobile view of the site on the iPhone. It looks mediocre on the Blackberry.)

Rather than reading on the commute home, I decided to download MoFo2Go to my iPhone and see if Kevin was right.

Disclaimer

MoFo2Go is the first app I’ve seen that has a disclaimer wrapper that I had to “accept” before installing. Clearly this app had some lawyer input on the design.

Splash Screen

The four functional buttons take up 20% of the screen space, with the new firm motto taking up the majority of the space. Is this an ad or a tool? I think they got that wrong.

Lawyer Directory

This is a nice feature. I can look up lawyers. With one step I can call the lawyer. It also allows me to add the lawyer to my contacts, send an email to the person and view their full bio. I wish the phone number and email were clickable to take these actions instead of menu items at the bottom.

Locations

So assuming I’m trying to get to a MoFo office, I could use this to get directions. It kicks you over to the Google Maps feature in the iPhone.

News

It’s nice enough of MoFo to publish all of these updates. But MoFo is an international law firm with dozens of practice area. Only a small fraction of their publications are of any use to me.

They have four filters: Alerts, Releases, Newsletters and MoFoTech. Please explain why dividing the publications into Alerts and Newsletters helps me to find information. It’s a useless distinction from a client’s perspective.

The Releases are MoFo press releases, so I can just ignore those.

MoFo Tech is a publication focused on tech-based companies. It has all all 7 articles from the single edition of the publication. MoFo Tech Fall/Winter 2009. That seems to be a lot of screen devoted to a small publication.

Play

Yes, MoFo2Go has a game. It’s a classic marble maze. You tilt the iPhone to move a marble through a maze. When you succeed, in addition to a score, you get a MoFo Factoid (“In 2009, Chambers & Partners ranked MoFo Band 1 in Intellectual Property.” I guess I didn’t do very well if that is reward I got at the end of the maze).

So What?

The only useful feature in MoFo2Go is the lawyer directory. The rest is useless or a waste of time.

They should have just made MoFo.com mobile-friendly for the iPhone.  MoFo.com is unusable on the iPhone.

Surprisingly, there is a mobile version of MoFo.com for the blackberry. It’s stripped to the lawyer directory and the office locations. Unfortunately, they stripped the email from the directory. But you can just click on the phone number to call the lawyer. Nice.

Should Law Firms Have iPhone Apps?

From my perspective as a client, No. Don’t bother with an iPhone app.

Make your law firm website mobile-friendly so that your clients can easily to get to the information they need. That means make it easy to get to the lawyer directory and office locations. Just like MoFo did with the blackberry version of their website.

Sources:

Upcoming Appearances and Conferences

For those of you stalking me or trying to find out when my house is empty, here are some places I will be this spring:

Mark Fryenburg asked back to his speak to his class: CS 299 Web 2.0: Technology, Strategy, Community. I’m going to tackle personal knowledge management. After all, that is the reason that Compliance Building exists. I’ll be there on the afternoon of March 17. I did a similar presentation to this class last spring.

Rather than the marketing aspects of blogs and web 2.0 tools, I’ll focus on how they can help you as individual in accumulating the knowledge you need to do your job and develop yourself professionally.

Hopefully, I can open the eyes of these college students. Don’t assume that the digital generation knows how to use web 2.0 tools any better than you.
In April will be heading down to San Antonio to an ICI Mutual Conference to speak about social media and compliance.

My presentation will focus on the issues that investment companies and investment advisers will have in dealing with social media. This will be my first time in San Antonio.
On May 6,  I will be speaking at the Annual Conference for the Association of Legal Administrators.

My topic will be The Social Networking / Web 2.0 Revolution. I’m going to bring my experience as a lawyer, law firm client, legal administrator and user of web 2.0 to give a better understanding of the web can firms and ways that firms can manage the use of web 2.0.
On May 17, I will be down in Miami at Interact 2010: The Legal and Compliance Technology Forum.

I will be on a panel with Kathleen Edmond, Chief Ethics Officer of Best Buy and Janice Innis-Thompson, SVP & Chief Compliance Officer of TIAA-CREF. We will talking about governing social media. The focus will be on ways to monitor, manage and make the most of employee use of web 2.0 tools.
compliance-week_2010 From May 24 to 26, I will be hanging out at the Compliance Week 2010 Conference. I’ll be able to sit back and enjoy the great agenda and leading speakers from the industry and government. I had a great time at this conference last year and met some great people. So I’m going back for more.

There should be some great compliance bloggers there: Francine McKenna of re: The Auditors, Bruce Carton of Securities Docket, Tom Fox of Tfoxlaw’s Blog (he needs a better name for his blog), Alex Howard of SearchCompliance.com, and Compliance Week Editor In Chief Matt Kelly
For a change of pace, I’m speaking at Pax East on March 26 on Bringing up the Next Generation of Geeks.

In my spare time, I’m a contributor to Wired’s Geekdad. The Pax East panel will be composed of a bunch of the GeekDad writers.

You can see my upcoming and past speaking engagement on my speaking engagements page.

Weekend Book Review: Shades of Grey by Jasper Fforde

shades of grey book cover (US edition)

Books about compliance, business ethics, law and financial markets can be well written, interesting and thought-provoking. But they’re not fun.

So I decided I needed change and found a whimsically absurd novel that touches upon compliance: Shades of Grey, by Jasper Fforde.

Chromatacia is a world where people have limited ability to see color and your standing in the community depends on the colors you can see and how well you can see them. At the top of the social order stand those who see purple. At the bottom are the greys who can’t see any colors. Society is dominated by color and you are what you can see.

The protagonist is Eddie Russert, a red-seeing youth who has been punished with a humility reassignment for a school prank. Eddie is sent out to a fringe city with a “Pointless Task” of conducting of a chair census.

The book is more about a totalitarian regime than compliance. But it’s the rules that run the regime and compliance with rules that keeps society in order.

“But they were the Rules – and presumably for some very good reason, although what that might be was not entirely obvious.” For instance it is forbidden to count sheep, make new spoons or use acronyms. There is also a ban on the numbers between 72 and 74.

“The Rule book tells us precisely what is right or wrong — that’s the point. the predictability of the Rules and the unquestioning compliance and application is the bedrock of —” Eddie is cut off by Jane, a grey in the village of East Carmine. It’s his interest in Jane that sends Eddie on his adventures in Shades of Grey.

Jasper Fforde is probably best known for his Thursday Next series of books where literature has a prominent place in everyday life. Thursday Next herself being in the Literary Detective Division of Special Operations at starts the series by looking into who has stole a manuscript and killed one of the characters in it, changing the story forever. If you enjoyed those books, you will also enjoy Shades of Grey.

Wikis, Learning, Teaching and Compliance

wikipedia

I am a believer that the use of 2.0 tools can help compliance professionals. (Hopefully, this blog is a part of that proof.)

Moving to the inherently open communication of 2.0 tools from the inherently private channel communication of email can expose sunlight on behavior and expose information. Incorrect information and behavior can be corrected. Bad information and bad behavior can be seen and stopped before it snowballs into something larger.

I often hear people take the position that the digital youngsters coming out of college can use these Web 2.0 tools as easily as dialing a phone or that they are demanding them in the workplace. I don’t think that’s not true.

Law Schools and Wikis

Eric Goldman and Luis Villa shared their experiences in using wikis as part of their classrooms. It certainly sounds like their students struggled with using these tools, both behind the firewall and in the public Wikipedia.

In Mr. Goldman’s case he offered his law students the opportunity to publish an article in Wikipedia for 20% of their grade. About a quarter of the students in his cyberlaw class at Santa Clara University School of Law took him up on his offer.

In reaction to that article, Mr. Villa recounted his experience using a school-hosted wiki as part of his classes at Columbia Law School.

Other wiki concepts, like extensive linking, or publishing drafts to the world in wiki-style, were apparently even more strange to most of my classmates. None of the four class wikis were deeply interlinked or cross-referenced, outside of what was necessary to create a table of contents and occasional outlinks to wikipedia. Similarly, few students were willing to post works-in-progress to the wiki and refine them there- most students preferred to work privately and then put a final text into the wiki.

Collaboration Between Generations

I found the same to be true at my old law firm. In particular, the younger attorneys did not want interim drafts to be seen and were reluctant to contribute content. The more seasoned attorneys were more willing to edit and add information. The vast majority of article creation was limited to a small group.

In my view, younger team members are reluctant to produce content because they do not want to expose their lack of knowledge, they do not want to expose themselves for criticism and they have little grasp of the technology.

The lack of knowledge is true regardless of how you teach collaboration. It would seem silly to put the youngest members of the team in charge of the team’s knowledge and content production. They have the least understanding of the subject matter.

Dealing with Criticism

The criticism issue has two parts. On one side, I don’t think students are taught to collaborate. They go through school being graded on their individual performance. The few classes that grade as a team are outliers.

The second issue is the internal culture of  your company. Collaboration requires trust. You need to work as a team and avoid individual blame. It also requires sharing the credit for good work among the team. That is just how your company or group at the company operates. Technology does not change culture.

The Technology

As both Goldman and Villa point out, the technology is still a barrier. There are many inherent limitation in a wiki that you don’t have with Microsoft Word. I think the wiki markup language is a mistake. I think platforms should just use html based code.

Regardless of the underlying code, web-based documents do not have the rich formatting of Word. Arguably, you don’t need the vast majority of that formatting. It’s still very frustrating when something easy to do in Word is hard to do in a wiki.

Printing is another issue. In the end you may want to print hard copies. I have experienced widely different quality in what happens when a wiki page goes to the printer.

Wiki for One

I have to admit that I have not been preaching the benefits of 2.0 tools within my company. I use them purely as a knowledge tool for me. I use this blog and an internal wiki to store information for me to find as part of the compliance program. Most of the company is numbers driven, something for which web 2.0 tools are poorly suited.

I did collaborate with a summer intern on a compliance project using the wiki. I had the same experience as Goldman and Villa. Using a wiki did not come naturally to her. It took time for me to develop the trust for her to use it effectively.

In the end we worked together to create a tremendous amount of content for the compliance program that is well-organized and easy to find.

Other Examples

Over the last year I have seen an increase in the public use of Web 2.0 tools by compliance professionals. There has been a dramatic increase in the use of blogs. You can look at my blogroll for other examples.

One to take a close look at is Kathleen Edmond’s Blog. She publishes disciplinary examples from Best Buy. As you might expect, the examples do not include specific people or products. She is able to get the ethics story from Best Buy out into the public. She can get comments on her reasoning and the results.

Sources:

Data Breaches and Knowledge Management

One of the features of the new Massachusetts Data Privacy Law is that it forces some knowledge management on companies in the context of data breaches.

Since the law required compliance on or before March 1, 2010, I assume you already have the policy and safeguards in place. That is, if you have social security numbers or financial account information for any Massachusetts resident in your computer systems or files. Yes, the reaches beyond the borders of Massachusetts and is not limited to Massachusetts companies.

201 CMR 17.03(h) and (i) require regular monitoring of your program and a periodic  review of its scope.

201 CMR 17.03(j) goes on to require that you document any responsive actions, have a post-incident review and document any changes to your program after the review. That sounds a lot like knowledge management to me.

The Office of Consumer Affairs and Regulation has published a handy 201 CMR 17.00 Compliance Checklist (.pdf). You should also review and be familiar with the law itself contained in 201 CMR 17.00 Standards for the Protection of Personal Information (.pdf).

Image is by Darwinek in Wikimedia Commons: Flag Map of Massachusetts

President’s Day

Washington’s Birthday, the federal holiday was originally implemented by the United States Congress in 1880 for government offices in the District of Columbia (20 Stat. 277) and expanded in 1885 to include all federal offices (23 Stat. 516). As the first federal holiday to honor an American citizen, the holiday was celebrated on Washington’s actual birthday, February 22. On January 1, 1971 the federal holiday was shifted to the third Monday in February by the Uniform Monday Holiday Act. A draft of the Uniform Holidays Bill of 1968 would have renamed the holiday to Presidents’ Day to honor the birthdays of both Washington and Lincoln, but this proposal failed in committee and the bill as voted on and signed into law on June 28, 1968 kept the name Washington’s Birthday.

In Massachusetts, while the state officially celebrates “Washington’s Birthday,” state law also prescribes that the governor issue an annual Presidents Day proclamation honoring the presidents that have come from Massachusetts: John Adams, John Quincy Adams, Calvin Coolidge, and John F. Kennedy. MGL Chapter 6: Section 15VV (Coolidge, the only one born outside of Massachusetts, spent his entire political career before the vice presidency there. George H. W. Bush, on the other hand, was born in Massachusetts, but has spent most of his life elsewhere.)

— From Wikipedia

Weekend Book Review: In Fed We Trust

It is only fitting that I am writing this book review on a Sunday. In Fed We Trust: Ben Bernanke’s War on the Great Panic starts off by telling about the importance of a few Sundays in 2008. In March, there was the Sunday when the Federal Reserve announced an unprecedented action to lend $30 billion to JPMorgan Chase to buy Bear Stearns. There was the Sunday in August when the Federal Reserve and the Treasury Department decided to seize Fannie Mae and Freddie Mac. Of course, there was the Sunday in September when they allowed Lehman Brothers to fail. There was the Sunday when Bank of America agreed to take over Merrill Lynch.

David Wessel tells a story about Ben Bernanke’s rule of the Federal Reserve deciding to do “whatever it takes” to protect the U.S. economy from the incredible economic threat of those Sundays. The story takes us through what it missed, what it did, what it didn’t do, what it got right and what it got wrong during the “Great Panic.”

During Alan Greenspan’s term as chairman of the Federal Reserve we mostly watched as he and the Board decided whether to raise interest rates or not. Most of the country thought that was the extent of what the Federal Reserve did. During Bernanke’s term we saw the incredible power of the Federal Reserve to create vast sums of money out of thin air.

One of the key takeaways from the book is that is very difficult “to get the politics, the policy and market reaction all right at the any one point in time.” That was a quote from former Secretary of the Treasury Henry Paulson shortly after leaving office.

The book is sometimes short on its depiction of events. The one that stuck out the most was the short description of the Merrill Lynch discussion by Bank of America’s Ken Lewis and Joe Price. The New York Attorney General tells a more interesting tale in his indictment of the Bank of America executives.

But of the book provides terrific insight into the events of the Great Panic. (That’s the term the Wessel uses.) During the full-court press of forcing the largest banks to take TARP money, it’s Merrill Lunch’s Thain that asks how taking the TARP money would affect government controls on executive compensation. As we later find out, Thain became one of the poster boys for the banks’ failures with executive compensation.

In the end, as we all know, mistakes were made. The Federal Reserve did not always get the politics, policy and market reaction right.

But what if Bernanke had not been a student of the Great Depression? What if he had not taken bold steps? I think the economy and the country would be much worse off.

Blogoversary!

anniversary present

Instead of substantive information, today’s post focuses on me and this website.

Compliance Building went public on February 12, 2009.  Since then, it looks like I have managed to get out a blog post every business day.  Sometimes, more than one.

Thanks for reading. If you haven’t done so already, you can subscribe and have my posts sent to you. It’s free, except on the Kindle. (I can’t convince Amazon to change the price.)

I started my first blog, KM Space, on this day in 2007. I set up Real Estate Space a few months later. Now I’m moving into my fourth year blogging.

Here are some statistics from the past three years:

Posts
Compliance Building 873
KM Space 614
Real Estate Space 144
Total: 1631

I hope at least some of those posts were useful to you, whether you are a subscriber or one of the other 90,000 or so visitors to Compliance Building.

Why do I do this? I publish because the information is useful to me, but I’m happy to have you along for the ride. (I put down my thoughts in more detail in the Why I Blog page.) This blog is a personal knowledge management tool.

For those of you who know me from KM Space, I will continue to publish a subset of my posts to the KMspace feed. No need to say goodbye. Unless I’m boring you.

Image is from Petr Kratochvil at publicdomainpictures.net.

Dan Pink on the Surprising Science of Motivation

Dan Pink, at TED Global in July 2009, broke tasks, performance and rewards for performance into two groups. With complex problems, financial rewards do not impact performance and seem to dull creativity. Actually, they seem to deter performance. With a simple problem and a simple set of rules, then contingent motivations for performance (like financial rewards) are very effective.

He comes to three conclusions:

  1. The twentieth century rewards that we think are part of business do work, but only in a surprisingly narrow band of circumstances.
  2. “If, then” rewards often destroy creativity.
  3. The secret to high performance is not rewards and punishments, but that a drive to do things because they matter.

There are some great lessons for compliance and corporate governance in the presentation. He explains it much better than I can. Take the 19 minutes to watch the video.

I have his book Drive: The Surprising Truth About What Motivates Us on my reading list. After watching this video, I have moved it higher up in the queue.

Thanks to Jack Vinson of Knowledge Jolt with Jack for pointing out this video: What is the right culture for your organization?