Author: Doug Cornelius

You can find out more about Doug on the About Doug page

Who Knows What?

WSJ-who-knows-what

A nice piece in Monday’s Wall Street Journal on knowledge management: Who Knows What? Finding in-house experts isn’t easy. But most companies make it harder than it should be. The article, by  Dorit Nevo, Izak Benbasat and Yair Wand, explores the expertise location benefits of enterprise 2.0.

The authors describe the use of blogs, wikis, social networking and tagging as ways to collect and expose expertise with an enterprise”

“Every big company has in-house experts. So why don’t they use them more?

In-house experts, with their specialized knowledge and skills, could be invaluable to both colleagues and managers. But often workers who could use their help in other departments and locations don’t even know they exist.

Talk about a waste! Because of an inability to tap expertise, problems go unsolved, new ideas never get imagined, employees feel underutilized and underappreciated. These are things that no business can afford anytime—let alone in this tough economic climate. Which is why so-called expertise-locator systems have become a hot topic in corporate IT.

To date, most such systems are centrally managed efforts, and that’s a problem. The typical setup identifies and catalogs experts in a searchable directory or database that includes descriptions of the experts’ knowledge and experience, and sometimes links to samples of their work, such as research reports.

But there are gaping holes in this approach. For starters, big companies tend to be dynamic organizations, in a constant state of flux, and few commit the resources necessary to constantly review and update the credentials of often rapidly changing rolls of experts.

Second, users of these systems need more than a list of who knows what among employees. They also need to gauge the experts’ “softer” qualities, such as trustworthiness, communication skills and willingness to help. It isn’t easy for a centrally managed database to offer opinions in these areas without crossing delicate political and cultural boundaries.

The answer, we think, is to use social-computing tools.”

Missing from the online story link are some additional resources listed in the paper for further reading in the MIT Sloan Management Review (they sponsored the Business Insight section).

  • Six Myths About Informal Networks— and How to Overcome Them
    By Rob Cross, Nitin Nohria and Andrew Parker (Spring 2002)
    Informal groups of employees do much of the important work in companies today. To help those networks reach their potential, executives must understand how they function.
    http://sloanreview.mit.edu/x/4337
  • Improving Capabilities Through Industry Peer Networks
    By Stoyan V. Sgourev and Ezra W. Zuckerman (Winter 2006)
    By sharing insights and perspectives with a group of noncompeting peers from other regions, managers can stay abreast of industry trends and combat complacency.
    http://sloanreview.mit.edu/x/47210
  • Defining the Social Network of a Strategic Alliance
    By Michael D. Hutt, Edwin R. Stafford, Beth A. Walker and Peter H. Reingen (Winter 2000)
    Paying attention to personal relationships accelerates learning and increases the effectiveness of alliances.
    http://sloanreview.mit.edu/x/4124
  • Creating Sustainable Local Enterprise Networks
    By David Wheeler, Kevin McKague, Jane Thomson, Rachel Davies, Jacqueline Medalye and Marina Prada (Fall 2005)
    In developing countries, examples of successful sustainable enterprise often involve informal networks that include businesses, nonprofit organizations and communities.
    http://sloanreview.mit.edu/x/47109
  • Are You Networked for Successful Innovation?
    By Polly Rizova (Spring 2006)
    To manage research-and-development projects, companies need to ensure that informal social networks are reinforced—and not thwarted—by formal organizational structures.
    http://sloanreview.mit.edu/x/47310

(I’m not sure why they left out Enterprise 2.0: The Dawn of Emergent Collaboration by Andrew P. McAfee, Spring 2006)

Another resource is this video of Jennifer Merritt from the Wall street Journal interviewing Dorit Nevo from the Schulich School of Business at York University.

No Bribe, Just a Thanks

fly fishing

The Commonwealth of Massachusetts Ethics Commission fined Norfolk property developer Jack Scott for violating section 3 of M.G.L. c. 268A, the conflict of interest law, by offering an illegal gift to a municipal employee. Scott offered a free week’s stay at his fly-fishing cabin in Pennsylvania to the chairman of the Norfolk Conservation Commission at a time when Scott had matters pending before the Commission.

My favorite part is this statement from Scott to the Chairman in an email:

Lastly when you step down from the commission so no one in this dame [sic] town can say anything about anything my cabin is yours for a week with your family… the best trout fishing in the east and great for the kids. Jeff no bribe just a thanks for being on the up and up with us regardless of how this all plays out. [my emphasis]

Just saying something is not a bribe does not work. If you offer something of value to a public official when you have a matter in front of the public official, it’s going to be considered a bribe.

Press release: Norfolk Property Developer Jack Scott Fined $2,000

Decision and Order in Mass. Ethics Comm. In the Matter of John F. Scott – hosted on JD Supra

Image is by koliver

Compliance Bits and Pieces

Here are some interesting stories from the past week:

Compliance Surprises in Cuba’s Closed Economy by Alexandra Wrage on the WrageBlog

Companies enjoying any success in Cuba have partnered with savvy locals who guide them through the dense, opaque bureaucracy. Such companies must convince the government that they are there for the long haul. They cultivate relationships and, invariably, they sponsor charity cigar auctions or kids’ “go-kart” rallies. But, by all reports from many sources, they don’t pay bribes.

Five Common Mistakes in Internal Investigations by Tim Mohr and Nidhi Rao for Directorship

Warren Buffett put it best when he said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” This statement could not be more relevant today. It takes only one person to tarnish an organization’s reputation. Not only is the current turbulent economy affecting the corporate bottom line, but if past history is any indicator, businesses can anticipate it to lead to an increase in incidents of fraud. As a result of the SEC, regulators, stakeholders and the public paying closer attention to the way an organization functions, organizations and corporate directors need to be diligent when conducting internal investigations.

Wall Street Meets the Wire by Gail Shifman on the White Collar Crime Prof Blog

In this case [against billionaire hedge-fund manager Raj Rajaratnam], however, the legal issue regarding the use of wiretaps that immediately jump to the surface is the question about whether The Federal Wiretap Act specifically authorizes the interception of electronic recordings for alleged security fraud violations (Title 15 U.S.C. §§ 78j(b) & 78ff and Title 17 C.F.R. §§ 240.10b-5 & 240.10b5-2) as charged in the criminal complaint. These statutes are not specifically enumerated in Title III, 18 U.S.C. § 2516, which provides the authorization for electronic interception. Wire and mail fraud (18 U.S.C. §§ 1341 & 1343) anti-trust violations, money laundering and numerous other offenses are listed, but not securities fraud. Chances are good that the government could have charged these defendants with wire fraud but were they scared away by the fact that the Skilling, Weyrauch, and Black cases are on review before the Supreme Court? One would think (hope?) that the government has preliminarily determined that section 2516 provides them with the authorization they need lest they find themselves licking self-inflicted wounds.

Facilitation Payments Still Leave Companies Vexed By Melissa Klein Aguilar for Compliance Week

A survey conducted by TRACE International shows some companies are prohibiting facilitation payments—colloquially known also known as “grease payments”—which are given to induce foreign officials to perform routine functions they’re already obligated to perform, such as issuing licenses or permits and installing telephone lines. In theory, such payments simply nudge foreign officials to do their jobs more promptly.

In practice, however, the line between a permissible facilitation payment and an illegal bribe can be very blurry. And to complicate matters, while the United States, Canada, Australia, New Zealand, and South Korea allow their citizens to make facilitation payments, they are illegal under local law in every country in which they are actually paid.

Personal Knowledge Management and Compliance

boston km forum

Today, I am presenting at the Boston KM Forum on Personal Knowledge Management. My presentation is part an all-day symposium on personal knowledge management.

My take on this subject is that knowledge management had been too focused on the benefits to the enterprise instead of the immediate benefits to the individual.

Firehose of Information

We are all on the receiving end of a firehose of information. We need tools to help filter, reduce and save that flow of information. In compliance, we are dealing with ever-changing rules and regulations. We need to find out which ones affect us, how they affect us and what we should do. Even better would be to see the rule changes coming so we can be ready for them.

What’s In It For Me

I’m sure it’s great for the enterprise that we save our stuff into a central place according to the rules imposed by that central system. But how does that help me manage my firehose of information? Give me a tool, a system or a technique that has an immediate, direct affect on me.

Many companies offered incentives, like gift cards, for contributing to the system. If you have to give away a prize to motivate people to contribute, then perhaps they do not seen enough value in contributing. What in it for me? Sure, you get the Starbucks giftcard. And you get some smug satisfaction for contributing into the central knowledge system vault.

Marketplace of One

Davenport and Prusak, in Working Knowledge, point out that “People rarely give away valuable possessions, including knowledge, without expecting something in return.” There is a knowledge marketplace. But I’m the biggest consumer of my knowledge. Help me organize and memorialize the things I know. Others can benefit form this, but the focus is on me.

Knowledge management solutions will work better if they are focused on improving the normal workflow and better capturing that information. The user is more likely to use a new tool if it is easy to use and provides more functionality than what they currently use.

Compliance Building is published for me. I am the biggest consumer of information on the site. I am happy that it allows me network and be a part of the compliance community. But I primarily put the posts together so I have a collection of the information I need for my personal use.

Lessons from Web 2.0

I spend a lot of time during the presentation showing how web 2.0 tools have helped me manage my flow of information. Compliance Building being one of them.

Slides

Here is my slidedeck:

Personal Knowledge Management

References:

Update:

Other views from the Knowledge Management Forum Symposium on Personal Knowledge Management:

New Mexico Regulates the Use of Placement Agents

Flag_of_New_Mexico

New Mexico, like New York and California is regulating the use of placement agents. The state has adopted the New York Model and banned any future investments with money managers who employ third-party placement agents. They have also instituted enhanced disclosure requirements.

The New Mexico State Investment Council policy will preclude any investments being made with money managers who use outside placement agents to market their fund. This is a complete ban of third-party marketers. Money managers who use internal marketing teams will have to disclose details of their relationships. Fees paid to attorneys, consultants, brokers, administrators and others related to investments will also require disclosure under the new rules.

The policy was enacted at the end of May, 2009. (I just realized that I forgot to write a post about it.)

References:

Insider Trading Enforcement

sec-seal

Either the Securities and Exchange Commission has stepped up its enforcement of insider trading or it’s doing a better job of publicizing its enforcement.

Earlier this week, the SEC announced its case against Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP.

On September 23, they charged Reza Saleh with insider trading in connection with Dell’s tender offer for Perot Systems. These charges were filed just two days after the date of the merger.

Last month, the SEC brought charges against Melissa Mahler for insider trading activity that happened in 2004. Ms. Mahler made the stupid mistake of lying to the feds about whether she had purchased the shares. That turns the insider trading case from a civil case to a criminal case. It’s also easier to prove, since all the feds can pull up the brokerage statement showing that she had purchased the shares.

There is also the SEC’s insider trading case against Mark Cuban. Even though the initial charges were thrown out in district court, they are appealing that decision to the Fifth Circuit Court of Appeals.

According to reports there are 10 More Insider Trading Arrests Coming Against Securities Professionals.

Perhaps the SEC is finding insider trading cases to be some easy wins? After being raked over the coals, maybe they see insider trading enforcement as an area that can get them some good publicity?

As we heard on The Wire: “We want dope on the table for the six o’clock news.”

References:

Privacy on Both Sides of the Atlantic

North_Atlantic_crust_age

Here is the United States we are mostly talking about financial information and medical information when it comes to privacy and  data security. The state data privacy laws focus on social security numbers and financial account information. HIPPA created a federal regulatory regime for medical information.

Europe has been focused less on financial information and much more on personal information when it comes to data security. The EU regulators are much more protective of the information about where you live, your race and your religion.

I thought this quote summed up the different approaches quite nicely:

Europe: You don’t understand privacy until they come for your neighbor in the middle of the night.

That came from Kim Howard the Editor of ACC Docket through a Twitter update. Memories of the Holocaust still drive regulations in the EU.

Compliance and Solitaire

solitaire

Compare playing solitaire on your computer against using a deck of cards to play solitaire. The computer won’t let you cheat. You can’t put the card on a stack if it doesn’t belong on that stack. The rules are embedded in game’s software.

Ultimately, that should be one of the goals for compliance. You want the business rules to be embedded in the software applications that run your business processes.

Of course, for many things that is really hard to do. The rules of solitaire are simple. The rules for compliance are often not. (Maybe that means you need to simplify some of your rules.)

Richard Susskind, author of The End of Lawyers?: Rethinking the Nature of Legal Services, uses this concept in explaining the future evolution of legal services. I found it equally useful when thinking about embedding compliance into business processes.

What do you think?

One in Two U.K. Companies Block Social Networking Web Sites

fulbright trends

Fulbright & Jaworski, the international law firm, just published their 6th Annual Litigation Trends Survey Report. It is an independent survey of senior corporate counsel from a wide range of industry sectors.

About half of the respondents (52% of U.K. and 46% of U.S.) claim to block employees from accessing social networking Web sites. Two in five of all corporates (42%) block the most popular personal social networking sites (such as Facebook, MySpace and Bebo) and 30% block business-related networking sites (LinkedIn and Plaxo). The YouTube web site is also blocked by more than a third of companies (37%).

Only 1/3 of the companies reported that they have no restrictions on access. Technology companies are the least likely to block social networking sites, with 56% of all tech companies saying they have no restrictions on such sites.

I found it interesting that 18% of U.K. companies have been asked to produce electronic information from such web sites as part of an electronic discovery request in legal proceedings.

Melanie Ryan, a Fulbright partner, commented, “For some businesses, networking sites can provide an efficient platform for keeping up-to-date with the latest developments and maintaining a profile in their industry. For those businesses that block access, such benefits are outweighed by the possible legal risks, including the inadvertent disclosure of confidential or proprietary information and the resulting claims or fines imposed by their regulators – not to mention, the security threat to their IT systems.”

But do they have a policy in place to let employees know what they should not be doing on these sites? Or are employees just doing those bad things at home or on their iPhone?

Blocking is not an effective policy.

fullbright-findings

California Regulates Use of Placement Agents

California

California has followed the lead of New York and started regulating the use of placement agents. California’s law requires placement agents to disclose contributions and gifts made to state and local pension and retirement board members, as well as information about the placement agent’s compensation, the services provided, and any lobbying or regulatory registrations.

The California law is based on disclosure. It does not ban the use of placement agents like New York and as proposed by the SEC

The new California law (Assembly Bill No. 1584) went  into effect on October 11, 2009 when Schwarzenegger signed the bill into law. The law establishes a disclosure-based regime that requires:

  • Potential placement agents, prior to acting to solicit a potential state or local public pension or retirement system investment, must disclose campaign contributions and gifts to public pension board members during the prior 24 months.
  • Placement agents must disclose any subsequent gifts and campaign contributions to pension or retirement board members for as long as they are being paid to solicit investments.
  • Each state and local public pension system must develop and implement policies requiring disclosure of payments to placement agents by external asset managers by June 30, 2010. The new disclosures must include, at a minimum, the following information:
    • the existence of the relationship;
    • a résumé for each officer, partner or principal of the placement agent;
    • a description of compensation paid to the placement agent;
    • a description of services to be performed by the placement agent;
    • a statement of whether the placement agent, or its affiliates, is registered with the SEC, the Financial Industry Regulatory Authority  or other regulatory body; and
    • a statement of whether the placement agent, or its affiliates, is registered as a lobbyist with any state or the federal government.
  • A state or local public pension or retirement system may not enter into an agreement with any asset manager that does not agree in writing to comply with any such policy.
  • Any placement agent or external manager that violates any such policy is barred from soliciting new investments from that state or local retirement system for five years from the time of the violation.

References: