Endless audits, certifications, and paperwork. The compliance trap buries entrepreneurs with forms and fees, and the compliance industry benefits.
“We can’t proceed before we have received those extra 912 documents.”
“You can’t be our supplier without an ISO 27001 certificate.”
“Can you put this information in a formal document?”
“Just tick this box.”
I’m sure you have heard similar statements in your daily entrepreneurial life. As the Founder & CEO of Yonder, a B2B SaaS company, they are my daily bread and butter.
Do such statements create any value for your company? It’s a rhetorical question; they don’t create any value. So why do entrepreneurs have to battle such topics all the time?
It’s simple: There is an entire cover-my-ass industry behind those topics. They camouflage as compliance, due diligence, or insurance. It’s a perfect two-way vicious or virtuous circle, depending on which side you stand on: Vicious circle for entrepreneurs, virtuous circle for compliance, due diligence, and insurance providers.
I Cover My Ass
Switzerland, my home country, is heavily over-insured. People have been well off for decades, and they are rather risk-aware by nature. They want their asses covered, and they are willing and able to pay for that coverage.
An Eldorado for insurance companies.
What is insurance for private households is compliance for companies. Many companies are paying meticulous attention to being compliant at all times and not even coming close to breaking a contract clause of a minor supplier contract.
An Eldorado for compliance providers.
I Cover Your Ass (And Make Money with It!)
Assisted by ever-growing legislation on corporations, compliance providers don’t have to do much sales other than lobbying parliament to pass new compliance laws.
Once that’s done, they can go around their customer base and tell them in dark visions what new regulations have been passed, and what consequences companies face if they don’t comply.
To make it easier for their customers, their business model usually comes in the form of recurring audits — at the threat of loss of certification if you don’t perform (and pay) for the recurring audits. And whilst getting paid to perform the recurring audits, providers have plenty of opportunity to deep-sell further compliance products based on all those new regulations that have been passed since the last audit.
It’s hard not to call this business a Ponzi scheme — because at some point, it will collapse.
Who Is Suffering?
Like in any fraudster scheme, it’s the simple people who are trapped in it accidentally that suffer the most: Entrepreneurs who try to put all their energy into building and selling an innovative product, but still have to comply with laws and norms.
What Needs Change?
It’s a fact that the compliance industry has better lobbyists than the entrepreneurs’ guild in Europe’s parliaments.
Maybe if times become tougher due to geopolitics, wars, and other crises, this will deal a blow to the compliance industry.
