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Alliance Governance

Alliance Governance. Balancing Trust and Control in Dealing with Risk Alex Todd January 21, 2010. Agenda. Some Alliances - a perspective Risk, Uncertainty, Control and Trust Exercise : Trust Optimizer Scorecard Reducing Uncertainty Exercise : Conditions for Trust Worksheet

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Alliance Governance

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  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: Trust Optimizer Scorecard • Reducing Uncertainty • Exercise: Conditions for Trust Worksheet • Trust Enablement Framework • Alliance Governance • Exercise: Alliance Governance Structure • Diagnosing Conditions for Trust

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

  4. Coordinators Risk Costs

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

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

  7. Risks & Uncertainties Risk Uncertainty Reward Possibility

  8. Uncertainty Risk Management Innovation

  9. Control is Confining Trust is Liberating

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

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

  12. Trust Optimizer Scorecard

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

  14. Reducing Uncertainty Information Information

  15. Source of Information Sources of Trust

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

  17. Is it true that ____________? Interpretive Sources of Trust (opinion, i.e. expert witnesses) Experiential Sources of Trust (observation, i.e. eye witnesses)

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

  19. Acceptability Trust Control Shield

  20. Certainty Acceptability Develop Trust Protect Trust Interpretive Sources of Trust Subjective assertions of the source of the information or third parties. Empowerment Relying party’s ability to choose. 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.

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

  22. 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 creates an environment within which the alliance can flourish to the benefit of key stakeholders. It "memorializes" the tone from the top (by senior leaders) with parameters that guide management decision-making. 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 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 helps to enable trust between alliance stakeholders in order to improve mutual performance.

  23. 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.

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

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

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

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

  28. Alliance Governance System Framework

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

  30. Diagnosing Conditions for Trust

  31. 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

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