Compliance as Market Access with Kunal Chopra

Speaker A: Welcome to Innovation and Compliance, the only podcast focusing on innovation for the compliance professional. In this episode I'm joined by Kunal Chopra of uh, Certivo. And he has one of the great phrases I've ever heard for compliance because he defines compliance as market access. I can't think of a better way to think about how compliance works for the business and for business operations to think about compliance generating market access. I know you'll enjoy this episode. And now, Kunal Chopra. Hello everyone, this is Tom Fox back for another episode. I'm absolutely thrilled today to have with me Kunal Chopra, who is the CEO of Certivo. Kunal, first of all, welcome to the podcast.

Speaker B: Thanks Tom. I appreciate you having me here.

Speaker A: So Kunal, um, I wanted to start by asking you, could you tell us your professional background because it is very interesting and very varied if I can say those two words together.

Speaker B: Oh, absolutely, yeah. So, as you rightly mentioned, I'm currently the CEO of uh Sativo. Certivo is an AI native regulatory intelligence and compliance management platform for the supply chain. But my background as you said, has been pretty much in tech for the last 20 years or so, mostly in the greater Seattle area. I was the CEO of a private equity backed company in Texas and Dallas. I was a CEO of a public traded company prior to that on the Nasdaq. Both these were in mid market tech but had components of manufacturing, distribution, supply chain as part of their value proposition. I've been in big tech, general manager at Amazon and Microsoft. That's something that you have to do if you're in the greater Seattle area. Be part of one of those two companies at least. I've also been in the entrepreneurial world. I was an early employee at Groupon. Groupon at the time was one of the fastest growing startups in the world. Went from zero to public offering in less than four years. I was the chief operating officer for an esports betting company as well and prior life was a software engineer that transitioned more into the commercial side of building tech businesses through my MBA from the University of Chicago. But the last 10 years spent a lot of time in the supply chain through the last two CEO opportunities I had through my time at Amazon where I was running their shoes business in retail and so got to see a lot of the inefficiencies in the supply chain. One inefficiency that I'm sure we'll talk about today has been is around compliance and that's what led me to create Certivo.

Speaker A: So I have said for at least 10 years, that effective compliance equates to more efficient business processes, which equates to greater roi. You have come at it, I think, uh, maybe to the same answer, but a little bit different way, because you suggest that regulatory function is not a compliance issue, but can be a true business performance issue, not even just a business differentiator. So what led you to really that insight?

Speaker B: Yeah, as you know, through. As I was saying, through my last 10 years in the supply chain, one inefficiency that kept standing out to me was around compliance. But leaving compliance aside, it was really more about market access. What I saw was a lot of companies want to sell to certain jurisdictions. They want to achieve a certain PO that they've got from a customer. They want to launch a particular project on time. And one blocker to that entire process was our compliance processes. We need this certificate from a supplier. We need to scramble to get all of our documentation in place. We need to keep track of all these rules and regulations. We don't have this expert here, so we got to pay for consultants. And then we have to go and get approval for budget from folks. Budget is not approval. Right. Approved right now. So we have to do this next year. So there was this entire scramble around getting everything and all the evidence in place before they can achieve the objective, which was, I need to m access a particular market, I need to sell to a particular customer, I need to check my box when it comes to compliance. And so that's what led me to why is this scramble there all the time? And it came down to inefficient processes, manual labor, people, spreadsheets, emails, PDFs, documents floating around the supply chain. And as the AI world started taking off over the last few years, the question for me was, can we flip the equation and can we make this a more proactive process using AI as the first step to this process? Can the AI essentially coordinate across the supply chain? Can it keep track of all the rules and regulations? Can it read the documents? Can it analyze these documents? Can it extract information from those documents? And can it give enough power to the compliance teams before they can step in and essentially take away the grunt work that's required to ensure that your compliance program is successful? And that's what sort of flipped the equation for us. And that's where we are today.

Speaker A: So one of the things that I have known for some length of time is that to get innovation and compliance, you have to have someone who does not have a compliance background, because you look at things very differently than I do. I'm a lawyer by professional background. I understand compliance from a legal perspective. I can write a policy or procedure by a lawyer for a lawyer. You have given me an insight and I've literally never heard, which is compliance is market access. That's absolutely brilliant. No, uh, one in compliance has ever said that. And so that's why I love have your people talk to my people. Because that's really one of the main ways I think compliance evolves is by someone like yourself looking at this problem and saying, what's the real problem here? The problem's not compliance. It's not even regulation. It's market access. Um, so I really want to explore that. But before we get to the good stuff, I think we need to set the stage a little bit. Start with the regulators and why, not only are they getting more serious, but they're getting more ubiquitous. And we're not talking about United States, we're not talking about the state of Washington. We're literally talking about a worldwide market. So could you really set the stage by what the challenge, uh, operations or marketing person, or even a CEO, if we can maybe tap into one of your older roles would face around regulations at this point?

Speaker B: Yeah. And, you know, we are. I'm sitting here in Seattle, I'm sitting in Washington, and sometimes our world is so restricted towards, yes, we're a US Company, but your supply chain is global at the end of the day, and you're accessing markets globally. Any US Company that's in manufacturing typically is going to sell into the eu, is going to sell Europe in the United States. And so your purview around regulations has to be global from day one, depending on the markets that you're likely selling into. And as much as we think sometimes that the, uh, regulations here in the US Might be slightly less stringent or less enforced, that is definitely not the case in the eu. And in the eu, you're seeing more and more regulations come into play. They're getting enforced, the fines are steeper. There are deadlines that are coming up in August very soon. Like, you probably heard of the packaging regulations, you've heard of cra, which is the Cybersecurity Resilience act, and they're just right around the corner. And these are enforced regulations that are going to cause some serious damage to companies that don't adhere to them. And so having this purview globally around regulations is so important for companies. And having a, uh, view on that upfront as they're thinking about their business, even here in the US is important. So all I'll say is regulation, regulators are cracking down, deadlines are coming, they're going to be enforced, and you have to be ready at every point of time. And that readiness is not a scramble. It should never be a scramble. It has to be proactive, it has to be a well managed program. And, uh, uh, companies have to sort of think about it more holistically than they typically do today.

Speaker A: So what's the asymmetry problem that board, senior executives and compliance professionals have? Because I've often wondered, do they look at the same thing and see something different, or are they just not looking at the same thing? How do we tie that into this visibility gap?

Speaker B: Yeah, so the challenge that I've seen with a lot of companies is it's always deadline driven and it's always a scramble. So, hey, we've got a deadline coming in the next three, four months. We've got it, we've got, we've got to sort of make sure that we finish our reporting obligations. And then you have essentially, who's getting this done? Is our project at risk? Is our market access at risk? Is our shipping at risk? All right, let's push it down. The compliance teams and the procurement teams and all the other teams involved in compliance. So it's typically driven by, from that angle of there's a deadline, project at risk, shipping's at risk, revenues at risk, market access at risk. Let's go get the whole teams to scramble. And then you repeat that process for every deadline. And so you have this sort of point, like point in time through the year where you have these teams sort of scrambling to get all this thing together as opposed to the other approach which is recommended and which is flipping the equation around. Something that's more proactive in nature, that's more comprehensive, that looks at everything globally. And I think that's where the big disconnect has come in. At least what we're seeing. It always sort of bubbles up the chain that we're at risk and then it starts flowing down in terms of activity.

Speaker A: So when you have a new client or a prospective client, are you sitting across the table from a chief compliance officer, from a CTO or ciso, head of procurement or supply chain, CEO, board, all of the above? None of the above.

Speaker B: So it depends on where the conversation is. But in some cases we're talking directly to the CEO. And in the CEOs case, they are essentially looking down and saying, I have all this risk in the business that I have no visibility into. And again, moving the conversation from Compliance to revenue at risk, to market access. That's what the CEO cares about at the end of the day. So the CEO is sitting there and saying, I have all this revenue at risk, potentially. I don't, I have no visibility into what revenues at risk. Um, all I know is that there are some deadlines coming up, et cetera, et cetera. So that's one conversation that we are, that we have. And then you have the more tactical conversations with the procurement folks, with the compliance folks, with the sustainability folks, who essentially have been pushed down some of these targets around ensuring that they can get stuff done in time. So it's typically at both levels, the more tactical conversations with the procurement, sustainability, compliance, even legal folks like yourselves, and then the more strategic conversations with the CEO, chief legal officers, CEOs, presidents, that's typically how we see this. Everyone's looking at it from a different angle though.

Speaker A: Certainly a, uh, compliance professional or chief compliance officer are going to look at what we might call the grunt work, which might be called inefficiencies, which might be called sort of the tactical approach that AI can be very helpful with. But how can a ccco, a Chief Compliance Officer really move to more strategic thinking? Do they need to sit down and really understand the business? Do they need to have a cup of coffee or several lunches with the Chief of operations? How would you suggest a CCO really understand the message you're bringing about market access?

Speaker B: Yeah, so definitely the chief legal officers, chief compliance officers need to have conversations with procurement, with operations. But more importantly, I would tie it back even to having conversations with the sales and the marketing folks. Because if you work backwards from at the end of the day, I need to sell to a particular market, I need to access a particular market. Like they are on the front line, the chief sale, the Chief Revenue officer, the chief marketing officers, they're on the front line. They know what the strategy of the company is, they know where they want to sell. They are the front facing to customers. They're the one getting requests from customers on what's needed to ship a PO to that particular customer. So if you work backwards from there, that's really the starting point to a lot of these conversations. And I think that's where the big gap is as well. In a lot of organizations, the conversations are happening at procurement around compliance, they're happening with operations, they're happening deep down in the supply chain. And then the folks at the top of the chain, which is sales and marketing, are not brought into the loop. And so I think if we bridge that gap. Well, and, uh, the compliance officer has a good opportunity to bring these stakeholders together, if you ask me.

Speaker A: Can I maybe turn to certivo and ask you to explain how the tool or tools you have really help meld this or blend this together, Certainly from the tactical regulatory perspective, but then moving to the market access perspective, and I have to throw out another phrase I love, which is allow compliance to move at the speed of business.

Speaker B: Yeah, yeah. So certibo, very specifically, Tom, we've taken this different approach, which is we have essentially said, let's start with figuring out where do you sell or where do you intend to sell? And depending on your product category, let's figure out what regulations apply to you as a whole. So I'm selling in the eu, I have a medical device product, so I have these five regulations that matter to me. But it's not just in one category of regulation. We also look at it cross categories. So whether it's quality, safety, trade, material, sustainability, we bring out a comprehensive picture of what regulations matter to you. So that's step number one. Step number two is let's try to bring in all your product data and then let's apply a layer of AI intelligence on top of that product data to essentially now track real time how compliant or not you are against all those regulations. So what that means is, if you think about it, at the end of the day, you just have one product base across the board that you're selling in all these different markets, and there's a set of rules that has to apply on top of that bill of materials that essentially an AI can start handling on top of that. So we bring in all your product data into the platform, whether it's connecting from your internal erp, your PLM systems or otherwise. And then we apply this layer of intelligence to say, hey, the AI now has context on all the different rules and regulations. It knows which ones that you need to be compliant towards. Now let us start operating the system automatically on your behalf. And what does that mean? The AI will keep track of the rules, it'll go coordinate with your suppliers, it'll bring all the documentation back from them, it will go read all the documentation automatically, it'll extract all the information, it'll map them back to the rules, it'll say whether you're compliant or not across the different rules. Then it essentially says, I can only do so much because I'm an AI, I'm going to escalate it to a human in case I can't do it. So it's not replacing the human. It's essentially saying, I'm going to take away all the grunt work that you have to do today and then I'm going to let you focus on the work that I can't do because I'm just a measly little AI er. So it sort of works in tandem with the human, empowering folks to essentially say, let me manage this program as much as I can. 80, 90% automation. And you as the compliance engineer, you focus on the last 10%. That I really can't do. And if I do this in a proactive way across the board, when you do come up with a deadline in the future, I'm already ready, I have all my documentation in place, so I at least have the most real time version of all my documentation in place on file. And if I get audited, I have a trail, I have everything because I've been doing this automatically, proactively, behind the scenes, and I'm doing this cross functionally, globally across multiple regulations. And I can do this at scale. That's really what Certibo is doing at the heart of it.

Speaker A: Kunal, uh, how do you address the concern around AI hallucinations in a regulated environment?

Speaker B: That's such a great question. And we get that all the time. So the AI in Certivo's case, very specifically is what we call as deterministic AI. So we are not using AI to make a compliance decision. We are using AI to extract data from documentation and that's a big difference. So the actual decision around compliance is made deterministically, no different than how a human would make that decision. I have a rule, I'm going to compare it and I'm just going to do a side by side mathematical comparison. The AI is really used in dealing with the unstructured data that comes across the supply chain. You can imagine a supplier is sending them a PDF. The PDF is in Mandarin, PDF is in German. There's some Excel sheet that they have some documentation in extracting all that information that today some human has to do or some compliance engineer has to do and takes them so much time is what's done by the AI. And that's the big difference. There's no hallucination at any point of time because the actual decision around AI, around compliance, is made deterministically.

Speaker A: One of the things that I have tried to communicate to compliance professionals is the. Not the volatility of business today. I think they understand that, but it's what volatility means in your business and it Means that who may have been a US Ally three weeks ago may not be a US Ally today. Who may have been a US Enemy three, uh, weeks ago may not be an enemy today. There may be geopolitical reasons that part, uh, of your supply chain is no longer available. Of course, there may be a pandemic reason or a health reason. There can be a wide variety of other reasons that cause things to change and that compliance needs to either game out these scenarios or really prepare for these. Does certivo allow you to actually do, I don't want to say hypothetical risk assessments, but look at potential scenarios where you may lose a supply chain in Central Africa. What are you going to do next? Talk to me about that.

Speaker B: Exactly. Because what I explained to you so far was you had the data, you have the intelligence layer on top of that, it's proactive and everything, which is great. And it tells you how you're doing from a particular regulation perspective and doing it at scale across all these different regulations. But now to your point, because I have access to all of that, I can now do scenario analysis. I can essentially say, hey, this supplier is only 60% complete and there's some geopolitical event because they're shipping and they're a, uh, supplier from Iran, for example, and I can't use them anymore. And so what other options do I have? Hang on. Based on certibo's data, Uh, I have this other supplier that gives me a similar part who's actually here in the United States and they have 70% of their compliance done. I'll select them. So now you can start doing stuff like this across the board because you have access to all this data because it's proactive, it's real time. It's operating across different jurisdictions at scale, which was very hard to do because your data is all fragmented all around the place in any organization. So by centralizing some of this and creating this intelligence layer on top of your data, you now have access to all these different scenarios that you can start managing and which gives a lot of power to the procurement folks, to the compliance officers, to the legal folks, um, and they can start managing risk much more better in their organizations.

Speaker A: I was going to ask you, how does compliance move from reactive to proactive, but I think you just told us how to do that. Was there anything else you would want to add on that? Part of. Really, there are three prongs in a compliance program. Detect, prevent and remediate, or prevent, detect and remediate. How do we move from detect or preventive to reactive to proactive.

Speaker B: Yeah. The only thing that I add outside of the, outside of what I've already m mentioned is the continuous compliance monitoring is also a key part of what a platform like Certivo does, which means I have context on the rules right now for a particular regulation. I can do all the things that I mentioned. I can bring all the documentation, but now the rule changes. The AI can keep track of that. It can say, hey, the rule has changed. I'm going to go expire all my documents automatically. I'm going to go email all the suppliers automatically. I'm going to start collecting new documentation from them. But it can go a step further, Tom. It can also say, I predict that this rule is going to come three months from now. Or there are some rumblings of this rule is going to come three months from now. It's not official yet. Maybe I can start proactively coordinating with suppliers and asking them what if this rule comes into play three months from now? And how do I start? How do I, you know, are you ready for that? So you can start bringing this process really upfront and making it as proactive as possible just by doing some predictions around what could potentially come in the future as well.

Speaker A: It strikes me, listening to you, Kunal, that just the mere fact of compliance, having these conversations with the different corporate functions is going to provide not simply insights, but a much better integrated, efficient use of data throughout the corporation. Would that be a fair statement?

Speaker B: Exactly. And the biggest challenge, Tom, that I've seen is a lot of organizations get stuck in. Oh gosh, before I do something that Kunal is saying is I got to get my data story correct. Well, I got to get all my data into a single warehouse, but it's impossible. That's a two year long project because have all these different data sources across the organization. There's some documents in different formats. But the good news about a platform like Certivo, for example, is you can, you don't have your, your data doesn't have to be in a certain format anymore. We can essentially, the AI can essentially read data from all these different sources. It can consolidate all that data, it can make the connections appropriately from product to part to manufacturer to supplier, etc. And it can do that now because of its ability to handle all this unstructured data and then it can apply this layer of intelligence on top of that. So data has always been the big issue. We've solved the data problem, which has, I think has now changed the conversation.

Speaker A: So if we could leave the compliance professional. I'm going to limit it to that, at least with this question. With one or two key points that you would want them to take away from this podcast, what would it be? Kunal?

Speaker B: So I would say think about your compliance program to be more comprehensive in nature. We got to get away from this conversation of, uh, point solutions. I got to check the box for, I have to check the box for cbam. I have to check the box for reach or ROAS or one of these, um, compliance frameworks. You have to think about this from the perspective of market access. Compliance professionals are in a key role. They have a key role in terms of enabling their sales teams, enabling their business, their true revenue drivers. Compliance has always been thought of this efficiency, operational function. And I'd like to challenge that and say you're actually in a revenue driving function. You can enable better revenue for your company, you can prevent revenue, you can protect revenue at risk as well for your company if you just do your program right. If you think about this more holistically, that would be the one big takeaway I would have for everyone, is just think holistically, think globally, think revenue, think market access. And you want a key function to be able to drive that.

Speaker A: Kunal. Unfortunately, we are near the end of our time for this episode, but before we leave, I did want to ask you if any listeners wanted to connect with you or find out more about Certivo, what would be the best place or places for them to go?

Speaker B: The easiest place is to just go to our website@certivo.com. that's C-E-R-T-I-V O.com but please, you can email me directly as well. I'm kunalartivo.com K U N A L and I'll be happy to answer any questions that you may have.

Speaker A: Well, Kal, I wanted to thank you again. I'm gonna steal your phrase, market access. I'm just gonna tell you now. I'm gonna start talking about my compliance brothers and sisters about you need to think about market access. That's just brilliant.

Speaker B: I love it.

Speaker A: I hope we can continue this conversation.

Speaker B: We most definitely will. Thank you, Tom.

Speaker A: Thank you for listening to this episode of the award winning Innovation Compliance. I'm thrilled to announce three new podcasts on the Complex Compliance Podcast network. Two are weekly news wrap ups of AI. The first AI Today in five in Healthcare, the second AI Today and five in Fintech where I took a look at the top stories in both of those disciplines from the AI perspective. They both um, are released on Friday, so check out either one of those. I've also released a new podcast on GSK in China, 12 Years A 12 Year Retrospective Where I look at this one of the most significant scandals in China in the past decade and one of the continuing compliance lessons learned from the scandal. So check out GSK in China a 12 year retrospective. Finally, the Innovation Compliance Podcast is produced by myself, Tom Fox, with assistance from M. Jaja Derridar as a production assistant. Thanks so much for listening and we look forward to visiting with you again next week.