1. Alliance Governance Balancing Trust and Control in Dealing with Risk Alex Todd January 21, 2010

2. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

4. Trust to Create High Value Expedient Efficient Effective Innovative & Sustainable Trust Equity Blazer Barn StrategicTactical Trust Enabled Supply Networks: Uncovering the trust-building secrets of highly collaborative supply chains, Alex Todd

5. Coordinators Risk Costs

6. Collaborators Coordination Costs Source: Report on Business, May 2008

7. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

8. Risks & Uncertainties

9. Uncertainty Risk Management Innovation

10. Control is Confining Trust is Liberating

11. Trust Definitions Trust is a person's willingness to accept and/or increase their vulnerability by relying on implicit or explicit information. Trust = Acceptable Uncertainty

12. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

13. Trust Optimizer Scorecard

14. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

15. Dont TrustDont Trust TrustTrust Dont TrustDont Trust Reducing Uncertainty Experiential Sources of Trust (Eye Witnesses) Interpretive Sources of Trust (Expert Witnesses)

16. Source of Information Sources of Trust

17. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

18. Is it true that ____________? Interpretive Sources of Trust (opinion, i.e. expert witnesses) 1. 2. 3. 4. 5. Experiential Sources of Trust (observation, i.e. eye witnesses) 1. 2. 3. 4. 5.

19. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

20. Acceptability TrustTrust ControlControl ShieldShield

21. Trust Enablement ® Framework Experiential Sources of Trust Personal experiences of the relying party or those of objective witnesses. Motive Forces Factors influencing the actions of the beneficiary (trusted party). Proficiencies Aptitude, knowledge, behaviour and disciplines employed to consistently deliver expected value (people, processes & technology). Risk Transference Mechanisms and processes that transfer risk away from the relying party. Develop TrustProtect Trust Interpretive Sources of Trust Subjective assertions of the source of the information or third parties. Empowerment Relying partys ability to choose. CertaintyAcceptability

22. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

23. What does alliance governance mean to you? It seeks to create a climate of equity and collaboration by guiding the design of mutually productive policies, structures and processes. It sets the tone from the top (by leaders) to create alignment by defining, monitoring and adapting principles and policies to alliance stakeholders' motivators ("strategic intent" and external forces) and risk/return preferences for preserving equity beyond the narrow scope of previously established contracts (future past). It "memorializes" the tone from the top (by senior leaders) with parameters that guide management decision-making. It is a "pact", a process for cultivating a "relationship" and "cadence. It enables trust, but where control is required (if trust is undesirable or impractical) governance may not be appropriate - however, alliance governance must also deal with a broader set of functional business performance considerations. It creates an environment within which the alliance can flourish to the benefit of key stakeholders. It is especially valuable in large/complex alliances. It helps to identify and create new possibilities and (re)define the rules of the game for the alliance. It helps to enable trust between alliance stakeholders in order to improve mutual performance.

24. Alliance Governance Defined Alliance An alliance is an agreement between two or more parties, made in order to advance common goals and to secure common interests. – Wikipedia Corporate Governance Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation – such as the board, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making. - OECD Alliance Governance Procedures and processes according to which an alliance is directed and controlled. The alliance governance structure specifies the distribution of rights and responsibilities among the different participants in the alliance – such as the boards, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making. Alliance Governance Procedures and processes according to which an alliance is directed and controlled. The alliance governance structure specifies the distribution of rights and responsibilities among the different participants in the alliance – such as the boards, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making.

25. CollaborativeCoordinated CommunicativeCo-opetitive Alliance Governance Structures Trust Control Operations (risks)Possibilities (uncertainties) Hierarchy Market Equity Controlling Interest Joint Venture Equity Participating Alliance Bilateral Contract Alliance International Alliance with Central Secretariat Co-marketing Agreements National Buying Clubs Loose Affiliations

26. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

27. Collabor ative Coordin ated Commun icative Co- opetitive Alliance Governance Structures Trust Control Operations (risks)Possibilities (uncertainties) Hierarchy Market Equity Controlling Interest Joint Venture Equity Participating Alliance Bilateral Contract Alliance International Alliance with Central Secretariat Co-marketing Agreements National Buying Clubs Loose Affiliations

28. Agenda Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise Exercise: Trust Optimizer Scorecard Reducing Uncertainty Exercise Exercise: Conditions for Trust Worksheet Trust Enablement Framework Alliance Governance Exercise Exercise: Alliance Governance Structure Diagnosing Conditions for Trust

29. Alliance Governance System Framework

30. Trust Enablement ® Assessment of Alliance Governance Model Parameters Experiential Sources of TrustMotive Forces Proficiencies Risk Transference Develop TrustProtect Trust Interpretive Sources of Trust Empowerment Monitoring Monitoring: Macroculture Coordination Coordination: Transfer Prices Coordination Coordination: Mutual Adjustment Coordination Coordination: Direct Supervision Monitoring: Monitoring: Performance Indicators Monitoring: Monitoring: Cooperative Scorecard Monitoring: Monitoring: Virtual Accounting System Coordination Coordination: Standardization of Work Structure Mechanisms Centralization Specialization Formalization Synergy Allocation Rules Coordination Coordination: Standardization of Output Motivation Motivation: Safeguards

31. Diagnosing Conditions for Trust

32. The Trust Optimizer Program Starter Kit Alex Todd AlexTodd@TrustEnablement.com Trust Enabling Strategies http://TrustOptimizer.com Tel: 416.487.1497 Fax: 416.487.9646