Trust & Competitive Advantage: An Integrated Approach to Governance, Risk and Compliance

Trust and Competitive Advantage: An Integrated Approach

© 2006 New Paradigm Learning Corporation

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Executive Summary BURNED BY ENRONESQUE ACCOUNTING scandals, investors and governments are imposing rigorous reporting requirements to keep companies on the straight and narrow.

These reactions are a symptom of a fundamental force in the economy: a crisis of trust among stakeholders of corporations. Stakeholders are not only a company’s shareholders, but also customers, employees, business partners and communities, and in recent years their trust has been profoundly shaken. Naturally, they are now trying to protect themselves, often via legislation.

But companies that scramble reactively to implement one-off responses to each new set of compliance regulations won’t rebuild stakeholder trust—they’ll just spend a lot of money on shortsighted solutions. Companies committed to gaining stakeholder trust, as well as better planning and decision making are, instead, taking an integrated approach to the related issues of governance, risk management, and compliance (GRC). The approach comprises of people, processes, corporate culture, and especially systems. Technology provides affordable mechanisms for information sharing that can scale globally. Automation not only reduces expensive “human middleware” but also offers entirely new collaborative and analytical possibilities. Integrated GRC solutions help

improve relations with stakeholders and, ultimately, facilitate trust and competitive advantage.

1.0 Corporations Need to Rebuild and Strengthen Stakeholder Trust

In business, “trust” is the twofold expectation that the other party will deliver value and that they will behave in a way that’s consistent with four core values (see Figure 1):

• Honesty. The company is truthful, accurate, and complete in communications with stakeholders.

• Accountability. The company makes clear commitments and abides by them.

• Consideration of others’ interests. The company understands and shows regard for the interests, desires, and feelings of others.

• Transparency. Stakeholders have access to company information that affects their interests.1

Transparency, which underpins the three other core values, has been an important trigger for the current crisis of trust. The expression “What are they hiding?” demonstrates the relationship between transparency and trust. As I’ve argued, “trust depends on transparency and

Honesty

Accountability

Consideration

Transparency

Master Data ManagementBetter visibility into the firm

Single version of the truth

Understanding customers andforecasting marketsFair labor relations through consistent compensationEnterprise planningEnsuring integrity across the business webEffective scorecarding

Performance management

Better, more accurate reportingValid non-financial information

Supply chain transparencyEmployee portals

Customer relationship applications

Figure 1 The Four Core Values



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transparency depends on trust. Indeed, as people learn to collaborate well over time, transparency and trust reinforce each other, generating a virtuous cycle.”2 Until recently though, the ability to be transparent has been limited to small business ecosystems. Think of it this way: many rural businesses extend credit to locals. Word gets around in a small community, and everyone knows who can be trusted to pay their tabs and make good on their promises. It’s not blind faith, because everyone’s behavior is visible (i.e., transparent). But village community systems don’t scale easily to big cities. In places where participants’ behavior isn’t easily visible to others, businesses traditionally ask for guarantees: a letter of credit or a lien on an asset, for example. And for other stakeholders (consumers, suppliers, communities), it’s been a matter of gathering whatever information was available and hoping for the best.

But now, thanks to exponentially greater access to information, we can track information, rules, accountabilities, processes, and behaviors on any scale. Stakeholders of all types now have unprecedented visibility into the behavior, performance, management, and operations of companies. The optimistic old adage, “you do well by doing good” is coming to life. It used to be that a lot of companies did very well by being bad—creative accounting, unfair labor practices, and shady environmental behaviors could help beef up the bottom line. But thanks to increasingly sophisticated communication technologies and the interconnectedness of business webs, stakeholders now quickly uncover the rogues—and warn others against them. Like it or not, corporations are becoming naked, and as I’ve said before, if you’re going to be naked, you’d better be buff. Fitness is no longer merely optional.

2.0 Pervasive Fragmentation Complicates the Pursuit of Stakeholder Trust

At the same time that stakeholders have the means and interest to scrutinize corporate behavior, fast growing global firms find it ever more challenging to build and maintain trust. These firms are typically fragmented across

a variety of dimensions (see Figure 2)—and lack the coherence needed to engage in consistent trustworthy behaviors towards ever growing collections of stakeholders. An integrated approach to fulfilling the core values that facilitate trust allows everyone across the firm to act in concert and live up to internal and external standards (see: “An Integrated Approach to Transparency is Essential,” below).

Corporations must combat the fragmentation that separates their people, processes, and data. Three significant challenges stand out:

1. Think and act globally. Accustomed to setting policies locally, companies now juggle complex regulations that vary from one country to the next. Imagine that a European distributor has asked its manufacturers to eliminate all lead soldering circuitry in a product to comply with environmental standards like RoHS. The manufacturers willingly comply, but no one tells them that they also need to eliminate cadmium coatings on components. The distributor and the manufacturers end up stuck with piles of product that neither can sell. Or consider currency risks—mitigation often requires global coordination to carefully manage local contracts and commitments.

2. Bridge corporate silos. A corporation is an increasingly complex body of moving parts: assets, products, employees, relationships, information systems, contracts, and transactions. In the absence of integration, many day-to-day actions and interactions are at best suboptimal—and at worst create openings to illegal or even criminal behavior. Does design know the impact of materials substitutions on warranty costs? Does legal know the cost of a day’s delay in finalizing a contract? Is the sales team aware of how contract terms affect the ability to book revenue? Silos make it difficult to determine who has ultimate responsibility for compliance or overall risk management.

3. Use technology to improve information flows. Organizations are locked into the technology of the past, running collections of incompatible systems that communicate imperfectly with one another. Disconnects multiply with the volume and complexity of the information within and beyond the enterprise, and the tools have not been able to cope. As recently as a decade ago, the computational enormity of analyzing all this information was overwhelming. Glenn Wegryn, Associate Director, Global Analytics at P&G, says,

“If you’re going to be naked, you’d better be buff.”



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“we didn’t have the technology to really harness and optimize the capability ten years ago.” Computers at the time were inadequate.3

Fragmentation is hard to fix. Every day, people make bad decisions because of bad information. When people or departments don’t trust the data or can’t get the data they need, they create their own versions or make suboptimal choices, which not only wastes effort, but also further fragments information across the organization. Stranded information islands, from corporate databases and design drawings to Excel spreadsheets, create a tangled mess of untrustworthy information that impairs customer service, destroys market opportunities, and exposes the organization to risk.

Convinced yet? Most executives are: they see the importance of building and maintaining trust; they agree that transparency is essential; and they understand that geographical, organizational, and systems fragmentation complicates the problem. These leaders are committed to making sure that their company isn’t the next Enron or WorldCom.

Unfortunately, commitment isn’t enough: a company may have the best intentions, but fragmentation on the scale we’re seeing today means that the will to change—

on its own—can accomplish little. Royal Caribbean Cruise Lines learned this the hard way. In 1998, the company pled guilty to conspiracy and obstruction of justice and had to pay fines of $9 million for repeatedly dumping enormous quantities of waste oil into the ocean. Its employees had been bypassing waste water filtration equipment and deliberately dumping the contaminated water into the ocean. Jack Williams, the company’s new president, issued a statement saying the company accepted full responsibility for its acts and promised that it would never happen again.

A month later, another Royal Caribbean ship was caught dumping untreated waste water. Williams blamed a group of employees who refused to comply with company policy, and argued that the company’s enforcement was at fault, not its commitment to environmental laws. The courts were not moved by the distinction. The company was slapped with another $18 million in fines.

This example shows that espousing a set of values means nothing if the company isn’t structured to fulfill those values. In Royal Caribbean’s case, it turned out that compensation policies and environmental policies weren’t integrated—in fact, they were in conflict. It costs the company hundreds of thousands of dollars a year to filter

Global disconnects

Corporate silos

Technology islands

People Data

Processes

Figure 2 Fragmentation Inhibits Consistent Approaches



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water and carry oil waste back to port for disposal. The bonus structure rewarded cost control, and therefore rewarded employees for bypassing the oil-water separators and dumping dirty water at sea.4 The president could make a commitment to change, and mean it sincerely, but the company’s DNA countered that commitment. As a result, Royal Caribbean had to go back to the drawing board and make fundamental changes to its processes, systems and culture to ensure its values drove the behavior of everyone. Today it is a world leader in this regard.

3.0 Beyond a “License to Operate”: Trust Contributes to Competitive Advantage

Building trust is expensive—AMR Research estimates that in 2007 companies will spend $27.9 billion5 on compliance, and 32% of that will go to technology.6 But it’s not all bad news and cautionary tales—trust makes business sense. Organizations that invest strategically in compliance not only protect their “license to operate,” but also gain competitive advantage over companies that take a haphazard approach to compliance. It all goes back to the essential ingredient of trust: transparency—and, specifically, information liquidity, which I define as access, by those who need it, to integrated, accurate, and timely organizational data in a manner that respects the interests and privacy of stakeholders. It’s about visibility that cuts across the organization, and it increases your corporate metabolism.

Internally, organizations are already asking for the same transparency that reporting and regulatory requirements demand. But the internal demand has less to do with compliance and more to do with competitive advantage. Within the firm, transparency is a strategic imperative—easier access to information facilitates continuous improvement, innovation, and collaboration. Information liquidity can have a significant business impact, as these examples demonstrate:

• A customer purchases a table saw that’s prone to jamming whenever she uses it. But when she calls the store they say it’s a common problem with the blade guard and that many woodworkers prefer to

remove the guard for better visibility and freedom of movement anyway. The manufacturer doesn’t hear about this product defect and is unaware of the product liability it poses.

• A director of corporate social responsibility has made remarkable progress forging relationships with NGOs by striking frank and honest dialogue on difficult issues. In 2005, one of the employee’s well-intentioned editorials published misleading data about CO2 emissions (the internal sources he used turned out to be estimates, not actual data). Unfortunately, the editorial counts as “commercial speech” (see: Nike Inc. v. Kasky)7 and places the company at considerable legal risk.

• After months of negotiation, a star salesperson finally receives the go-ahead on a major deal. Excited to seal the deal, a contract template is modified to reflect the negotiated terms (with approval from legal). Unfortunately, the terms of payment included a seemingly trivial concession that, it turns out, will delay booking of revenue for accounting purposes.

• A circuit board manufacturer negotiates component pricing with suppliers and builds the project at razor-thin margins. Because the manufacturer doesn’t maintain an inventory of the board’s components, they’re unaware of the regulatory issues affecting them (e.g., material/contents or export restrictions), and aren’t tracking the impact of changing market prices (e.g., suppliers could be making huge margins following drops in component prices).

• Third parties sometimes take existing products and innovate in unexpected ways (e.g., BASF foam insulation, FedEx boxes, the Toyota Prius diagnostics port, Apple’s laptop motion sensor).8 WiFi fans even use coffee cans and other product containers to create powerful home brewed microwave antennas.9 Is this a potential marketing opportunity, or time to print a warning label about hazardous microwave exposure? Unaware of how their products or services are being consumed, many companies fail to react at all.

Information liquidity helps bind enterprises more tightly and creates a path for continuous improvement. From the introduction of the assembly line and Just-in-Time manufacturing to Triple Bottom Line reporting and the

“It’s not all bad news and cautionary tales—trust makes business sense.”



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Balanced Scorecard, firms have looked for ways to improve their coordination. These tools strive to maximize transparency and the flow of information (assembly lines share information via tight synchronization that quickly exposes bottlenecks or fragility along the production line; Balanced Scorecards map the causes and effects that contribute to enterprise value creation). And just as a conveyor belt closely synchronizes the activities of a production line, information technology and transparency can unite the activities of the organization.

• Novo Nordisk uses Triple Bottom Line accounting to balance economic performance with environmental and social considerations. The company now publishes an integrated report that merges a CSR report and traditional annual report into a single document.10

• P&G uses an ERP system to share information that improves inventory management. In the past, each store of inventory was managed autonomously, but now advanced analytics and visibility into multiple inventory stores allows new inventory reductions. Says Glenn Wegryn, “We're applying advanced analytical techniques to how we analyze those multiple piles of inventory. To reduce total inventory you must replace uncertainty with the visibility of information.”11 Today, similar analytics can also be performed to optimize tariff treatment through savvy logistics, or even model complex regulatory, labor, product approval, materials pricing, and tax considerations to support investment decisions (e.g., choosing a site for a new manufacturing facility).

• Steve Swartzenberg, Business Review Lead at manufacturer NIBCO, explains that information systems have helped expose fragmentation within the firm: “What you find out is no part of the organization is disconnected from another. It’s all connected; the processes are all integrated. If one part falls out, it doesn't link up.”12

In short, information technology can help connect and harmonize stranded enterprise data, people, and processes.

Trust and transparency are essential for any type of collaboration. At eBay, feedback ratings from other users improve the buying decisions of auction participants. In the stock market, confidence in the accuracy of financial statements helps remove uncertainty for investors. Collaboration—increasingly important both within

individual firms and among enterprises—depends on reliable shared data. Erik Degn, Novo Nordisk’s vice-president of IT System Management, says, “it’s a lot easier to collaborate in a model where you have consistent data that is integrated and accessible and trustworthy. We’re starting to see the benefits of having one shared information source for business intelligence, and that’s very valuable in steering the business today.”13 At eBay or any other organization, the trust that accrues from transparency drives down the risk and cost of collaboration.

Better information flows between an organization and its stakeholders are the key to minimizing transaction costs: not production or transport costs, but the costs of entering into and managing relationships, which some economists estimate account for up to 50% of GDP.14 Where transactions provide opportunities for misrepresentation, noncompliance, or fraud, mutual trust reduces the contracting costs associated with formal agreements.15 Today, every percentage of efficiency counts, and information-enabled collaboration is a powerful way to drive out inefficiencies. Lower transaction costs also allow firms to expand their networks and to unearth new talent and new opportunities for innovation. In the business web—the emerging collaborative business model—individual companies are a part of a business system, and the system’s success depends on every participant’s ability to deliver. Success or failure affects everyone, so it’s in every participant’s best interests to share critical business information. You can’t innovate in silos, says Dell Chairman Michael Dell: “Collaborative R&D between IT buyers, vendors, and partners is central to future innovation.”16 Often, critical information sharing doesn’t happen soon enough. For example, AMR Research has found that by the time a product is designed, approximately 70% of its costs have already been determined. Says Samsung CEO Jong-Young Yun, “It’s a cooperation between product development, product planning, and marketing from the very beginning, which adds speed overall.”17

“Just as a conveyor belt closely synchronizes the activities of a production line, information technology and transparency can unite the activities of the organization.”



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Today, there’s little competitive advantage to be gained through physical assets but tremendous benefit to having the best customer relationships, the most efficient coordination, and the most accurate business intelligence. David Newman, research vice-president at Gartner, sees corporate data issues as “a symptom of a much broader problem: how to use information and how to manage information more strategically.”18 While many compliance initiatives started out as burdens, many companies have found that their compliance efforts have forced them to improve data quality. For many organizations, better information management has improved business intelligence and optimized decision making.19

4.0 An Integrated Approach to Transparency is Essential To achieve transparency and the competitive benefits that accrue from it, organizations must embed the appropriate behaviors into the organization’s culture, processes, and systems. To do so, they need a comprehensive approach to governance, risk management, and compliance. Let’s clarify what we mean when we use these terms:

• “Governance” refers to rules, systems, processes, and structures that ensure the corporation operates in accordance with its defined policies and procedures, and engages with legitimate stakeholders to meet their expectations.

• “Risk Management” refers to the systems and procedures in place to proactively evaluate risk and to minimize or mitigate losses.

• “Compliance” refers to the tactical approaches to following the rules—the systems and processes that enable stakeholders to evaluate the extent to which companies conform to their interests.

In a networked economy, these three elements are as interdependent as the legs of a stool. But we’ve traditionally had different languages, taxonomies, and semantics for each one, which makes it nearly impossible to determine who is responsible for making governance, risk management, or compliance decisions.

Potentially even worse is the non-strategy of reacting to reporting rules piecemeal. Many companies, motivated by an overwhelming need to comply, jump on each new issue as it arises. George Young of professional services firm Kalypso deals with companies that are struggling to

resolve their issues of concern. As he points out, funding decisions are often the result of sudden senior panic: “somewhere at the top levels of the executive ranks they realize that if they have a problem related to compliance it’s a catastrophe.”20 But this approach is ad hoc and reactive. The company hasn’t worked through the business case for transparency—it’s simply about crisis avoidance. Executives in the organization see governance, risk management, and compliance as costs, rather than opportunity to trump the competition. The irony is that this approach is both enormously inefficient and less effective than an integrated approach. After all, narrowly focusing on each new set of regulations doesn’t lead to better business practices any more than hitting the brakes when you see a police car makes you a better driver.

An integrated governance, risk management, and compliance strategy becomes in itself a differentiator. Companies that bake integrity into their bones grow faster because they have better trust and better reputations, which lead to lower transaction costs and overall lower cost structures. A study published in the Quarterly Journal of Economics analyzed data from 1,500 companies and found that companies with the best governance (shareholder rights) performed 8.5% better annually than their poorly ranked counterparts. The study concluded: “firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditures, and made fewer corporate acquisitions.”21 According to institutional investors surveyed by McKinsey, shares of well-governed companies can also be worth a premium—in the U.K. and U.S., investors were willing to pay 18% more for shares of these companies.22

Such an integrated approach requires a company-wide effort, and if we go back to the four values that make up trust, it’s clear that there’s an important role for integrated IT and information sharing:

• Honesty. Leaders can’t be sure they’re being honest if they don’t have access to a single version of the

“Narrowly focusing on each new set of regulations doesn’t lead to better business practices any more than hitting the brakes when you see a police car makes you a better driver.”



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truth. Honesty means not only having “true” data, but also avoiding mixed messages—a mistake Royal Caribbean made when orders from the top contradicted a compensation system that encouraged dysfunctional behavior.

• Accountability. You can’t fulfill commitments unless you know what they are and you track them—integrated strategy needs scorecarding and performance management systems that link strategy and execution. Accountability ensures that commitments are captured and acted upon. Clear lines of responsibility make it harder to pass the buck.

• Consideration of others. It’s hard to consider the interests of others without engaging them to learn who they are and what they want. If you’re running dozens of fragmented legacy systems, it’s difficult to assemble a complete picture of stakeholders and act upon their needs.

• Transparency. The organization can’t be transparent unless it has systems that enable the communication of pertinent information to stakeholders in an accessible format.

While integrating governance, risk management, and compliance may require more time and effort up-front, it offers several significant long term advantages (see Figure 3):

1. Avoids the expense of a piecemeal approach. While an issue-by-issue approach may suffice for companies dealing with just a few regulatory issues, all signs point toward more, not less, regulation. And as compliance requirements multiply, companies will find themselves tackling the same issues over and over again. A coordinated approach today can help reduce duplicated effort.

2. Leverages your existing information technology investments. Information sharing is critical to business performance, and integration within and beyond the walls of the firm simply makes good business sense. In cases where integrated systems and processes exist, it makes sense to “plug into” this infrastructure to help coordinate your GRC efforts. Baking these practices into regular business activities is easier and less disruptive to your business.

Lower costs

Enable collaboration

Scale capacities

Enhance innovation

Leverage investmentsIntegratedIntegrated

ApproachApproach

Figure 3 The Benefits of an Integrated Approach



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3. Makes your efforts scalable. Manual point solutions are ad hoc and difficult to scale. But an integrated effort helps illuminate common processes and approaches suitable for lower-cost automation. That kind of scale and integration facilitates decision making. Normally, it’s cost-prohibitive to bring together all the information you need to make a decision—so most decisions, made with incomplete information, yield sub-optimal results. An integrated approach scales decision making, which lowers the cost of information retrieval and allows users to make sound decisions based on actual data.23

4. Enables new types of collaboration. Building rules, information, and processes into software enables heretofore impossible collaboration and coordination. At P&G, complex analytics model inventory and supply chain processes in unprecedented detail. Enormous libraries of rules and policies can be embedded in software to allow complex interaction tracking that would be impossible to manage manually.

5. Spurs innovation. Technology can enable collaborative innovations by removing transaction costs, reducing friction and increasing the metabolism of collaboration within organizations. The result is better/faster innovations from a much broader range of stakeholders. Hanne Schou-Rode, vice-president, Corporate Relations, Business Strategy and Governance of Novo Nordisk recognizes the benefit of stakeholder engagement: “in terms of knowledge, new ideas derive from interaction—especially from the stakeholder and customer dialogue.”24 User innovation is a significant phenomenon: users in a variety of settings are developing innovations for their own use (depending on industry, 9.8% to 37.8% of users report doing so).25

5.0 Conclusion

The piecemeal approach to compliance, risk management, and governance is beginning to catch up with many companies. It might once have been easier and less expensive to respond to corporate and social responsibility issues as they arose, but higher levels of scrutiny and global competitive environments have made the “ad hoc”

route less effective and more expensive. The scrutiny itself is merited and necessary: the public’s belief that firms can “do well by doing good” has been shaken, and every industry must address the resulting crisis in trust.

In this environment, the firms that prosper provide value and—most important—demonstrate the right set of values. For these firms, new levels of transparency, information liquidity, clear rules, lines of accountability, and the right processes are already making a difference. Rejecting piecemeal “solutions,” these firms have established a holistic approach that marries business considerations with stakeholder interests. Companies such as P&G and Novo Nordisk are as conversant with financial, social, and environmental considerations as they are with customer and business needs. These companies speak a common language internally and externally, and they’ve integrated their people, processes, and systems to coordinate more effectively, reduce transaction costs, and act with integrity.

The result is an integrated approach to governance, risk management, and compliance that has several benefits: lower costs, better leverage of existing investments, new scale for information sharing initiatives, support for new innovations, and unprecedented levels of collaboration and coordination. Some say that the crisis in trust means corporations should bear down on their compliance initiatives to avoid a misstep. Our point of view: missteps occur because companies take too narrow a view of their compliance efforts. A broader appreciation of all stakeholder interests improves compliance and reduces risk—plus, it just makes good business sense.



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I am grateful to Denis Hancock, Erin Lemon and Alan Majer of the New Paradigm Team for help in researching this paper and I also thank SAP for their financial support of this White Paper series. However, the views expressed are my own and my company New Paradigm takes responsibility for the opinions expressed herein.

Don Tapscott, Chief Executive and Founder, New Paradigm

DON TAPSCOTT, one of the world's leading authorities on business strategy, is Chief Executive of New Paradigm, which he founded in 1993. He is an internationally sought authority, consultant and speaker on business strategy and organizational transformation. His clients include top executives of many of the world's largest corporations and government leaders from many countries. The Washington Technology Report called him one of the most influential media authorities since Marshall McLuhan. He is the author of twelve widely read books about information technology in business and society including Growing Up Digital, which established him as one of the leading thinkers about the Net Generation. His new book, written with Anthony Williams, is WIKINOMICS: How Mass Collaboration Changes Everything. He is also Adjunct Professor of Management, Joseph L. Rotman School of Management, University of Toronto. He has a master's degree in Research Methodology, and two (Hon) Doctor of Laws.

Research assistance for this report provided by Denis Hancock, Erin Lemon and Alan Majer.

www.newparadigm.com



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Endnotes

1 See Don Tapscott and David Ticoll, The Naked Corporation: How the Age of Transparency Will Revolutionize Business, 2003, pp. 74-77. 2 Ibid, p. 77. 3 Interview with Glenn Wegryn, Associate Director, Global Analytics, Procter & Gamble, conducted by Denis Hancock and Alan Majer, March 23, 2006. 4 See Don Tapscott and David Ticoll, The Naked Corporation: How the Age of Transparency Will Revolutionize Business, 2003, pp. 255-256. 5 The $27.9 billion spending on compliance is a 2007 value; however, the 32% is a 2006 estimate. The 2006 percentage has been extrapolated onto 2007 spending. 6 John Hagerty and Fenella Sirkisoon, AMR Research. “Spending in an Age of Compliance, 2006,” July 25, 2007, http://www.amrresearch.com/Content/View.asp?pmillid=19239. 7 “Nike and the Free-Speech Knot,” Wall Street Journal, June 30, 2003, A16, http://www.law.ucla.edu/volokh/nike.htm. 8 BASF’s Basotect® foam insulation is used in P&G’s Mr. Clean Magic EraserTM, http://www.corporate.basf.com/basfcorp/img/stories/wipo/fruehjahrsputz/MagicEraser_engl.pdf; FedEx boxes are converted into furniture, http://www.fedexfurniture.com; <http://www.hybridinterfaces.ca/index.html> sells hardware that taps into the diagnostic port of the Toyota Prius for new diagnostic and display features; and Apple’s PowerBook motion sensor has been hacked to create a new type of input device, http://www.kernelthread.com/software/ams2hid/ams2hid.html. 9 See: “802.11 Homebrew WiFi Antenna Shootout,” http://www.turnpoint.net/wireless/has.html. 10 See companion case study to this paper: “Novo Nordisk: Transparency Champion.” 11 Interview with Glenn Wegryn, Associate Director, Global Analytics, Procter & Gamble, conducted by Alan Majer and Denis Hancock, March 23, 2006. 12 Carol V. Brown, Ph.D. and Iris Vessey, Ph.D., “NIBCO’s Big Bang,” 2000. 13 Interview with Erik Degn, vice-president of IT System Management, Novo Nordisk, conducted by Erin Lemon and Alan Majer, March 20, 2006. 14 http://www.encycogov.com/B11ResearchTraditions/TCE/ Stat_Growing_Imp_Of_TCE.asp. 15 See Don Tapscott and David Ticoll, The Naked Corporation: How the Age of Transparency Will Revolutionize Business, 2003, p. 105. 16 Stewart McKie, “Collaborate to Innovate,” Intelligent Enterprise, March 2004. 17 Erick Schonfeld, “The Master of Gadgets,” Business 2.0, November 1, 2005, interview with Jong-Young Yun, CEO,

Samsung Electronics. 18 Interview with David Newman, research vice-president, Gartner Group, conducted by Alan Majer, Bob Tapscott, and Brendan Peat, December 8, 2005. 19 Interview with Pamela Szabo, CIO, Stone Bond Technologies and Gretchen Weis, Weis Communications, conducted by Alan Majer, March 8, 2006. 20 Interview with George Young, founding principal of Kalypso, conducted by Alan Majer and Bob Tapscott, January 12, 2006. 21 Quarterly Journal of Economics, “Corporate Governance and Equity Prices,” Gompers, Ishii, and Metrick, February 2003, pp. 107-155. 22 Paul Coombes and Mark Watson , “Three surveys on corporate governance,” The McKinsey Quarterly, 2000, Number 4. 23 Interview with Peter Storti, principal at Kalypso, conducted by Alan Majer, January 6, 2006. 24 Interview with Hanne Schou-Rode, vice-president, Corporate Relations, Business Strategy and Governance of Novo Nordisk, March 20, 2006, conducted by Alan Majer and Erin Lemon. 25 Eric von Hippel, “Horizontal innovation networks—by and for users,” MIT Sloan School of Management Working Paper, June 2002.

Trust & Competitive Advantage: An Integrated Approach to Governance, Risk and Compliance

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