By Andrejs K. Bunkse
Years ago, I worked for a public company that manufactured and placed electronic bingo equipment all over the U.S. and in several countries. One day, I got a call from the Nevada Gaming Commission alerting me that one of our software engineers had likely manipulated our software systems to cause fraudulent jackpots. When the engineer discovered the allegations, he promptly committed suicide. Before regulators could interview him to unearth the extent of his bad acts and more importantly, to discern whether or not there were co-conspirators.
Immediately, all of the company’s gaming licenses were suspended pending questions regarding systems security – and overall corporate integrity. In other words, the business stopped. Cold.
So, what did we do? Rather than collapsing, we used this tragedy as a catalyst to create state of the art compliance systems and internal controls. We isolated the software breaches and built in comprehensive and rigorous software development processes and redundancies. We did a national road show in which all customers and state regulators were visited by company legal, compliance and technical personnel to give comfort that the issues had been remediated. We also strategically acquired a competitor who had been using the software breach as an opportunity to interfere with our customer contracts. Finally, we actively pursued expanded regulatory scrutiny requiring equivalent compliance and internal control mechanisms with all licensed entities.
The end result? Slowly but surely, state by state, the suspended licenses got lifted. And ultimately, our market share increased over time as other competitors weren’t able to mimic our sophisticated software security and development controls that customers and regulators alike began to view as industry standards.
The takeaway? Even during the most troubling of challenges, a thoughtful and well developed corporate re-positioning strategy can result in a better, more secure, and financially stronger company.
© 2016 Endurance Strategies Group, LLC