alliance governance: balancing trust and control in dealing with risk
TRANSCRIPT
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
Trust Enablement Framework
Alliance Governance
Exercise: Alliance Governance Structure
Diagnosing Conditions for Trust
Trust to Create High Value
Time
Value
High
Moderate
None
Communicative
Coordinated
Trust Gap
Agility
Supply Chain Configuration Maturity
Collaborative
Co-opetitive
Tru
st E
quity
Blazer Barn
StrategicTactical
“Trust Enabled Supply Networks: Uncovering the trust-building
secrets of highly collaborative supply chains”, Alex Todd
Coordinators Risk Costs
Collaborators Coordination Costs
Source: Report on Business, May 2008
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
Risks & Uncertainties
Uncertainty
Risk Management Innovation
Control is Confining Trust is Liberating
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
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
Trust Optimizer ScorecardWe do not have clear goals for
the future of our alliance1 2 3 4 5 6 7 8 9 10
We have clear goals for the
future of our alliance
We do not have clear goals to
optimize the level of trust in our
alliance
1 2 3 4 5 6 7 8 9 10We have clear goals to optimize
the level of trust in our alliance
We do not know the level of trust
alliance stakeholders have in our
organization
1 2 3 4 5 6 7 8 9 10
We know the level of trust
alliance stakeholders have in our
organization
We feel there is a low level of
trust in our organization1 2 3 4 5 6 7 8 9 10
We feel there is a high level of
trust in our organization
We do not have a plan to
optimize the level of trust in our
organization
1 2 3 4 5 6 7 8 9 10We have a plan to optimize the
level of trust in our organization
We feel our alliance processes
are slowed down by lack of trust1 2 3 4 5 6 7 8 9 10
We feel our alliance processes
are accelerated by a high level
of trust
We are reactive and focus on
risk management and
compliance
1 2 3 4 5 6 7 8 9 10We are proactively taking action
to build trust in our organization
We are concerned that a lack of
trust is undermining our goals1 2 3 4 5 6 7 8 9 10
We are confident that high trust
is helping us achieve our goals
We are not confident that we
know how to build trust1 2 3 4 5 6 7 8 9 10
We are confident that we know
how to build trust
We do not see trust as a key
issue in our company1 2 3 4 5 6 7 8 9 10
We see trust as a strategic issue
in our company
ADD COLUMN TOTALSYOUR SCORE _____
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
• Don’t Trust
• Trust
• Trust• Don’t Trust
Reducing Uncertainty
ExperientialSources of Trust (Eye Witnesses)
InterpretiveSources of
Trust (Expert Witnesses)
Source of
Information
Sources of
Trust
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
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.
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
Acceptability
Motive Forces
Proficiencies
Risk Transference
Trust
Control
Shield
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 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.
Certainty Acceptability
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
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.
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 GovernanceProcedures 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.
Collaborative Coordinated
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
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
Collaborative
Coordinated
Communicative
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
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
Alliance Governance System Framework
Trust Enablement® Assessment
of Alliance Governance Model Parameters
Experiential Sources of Trust Motive Forces
Proficiencies
Risk Transference
Develop Trust Protect Trust
Interpretive Sources of Trust
Empowerment
• Monitoring:
Macroculture
• Coordination: Transfer Prices
• Coordination: Mutual Adjustment
• Coordination: Direct Supervision
• Monitoring: Performance Indicators
• Monitoring: Cooperative Scorecard
• Monitoring: Virtual Accounting System
• Coordination: Standardization of Work
Structure Mechanisms
• Centralization
• Specialization
• Formalization
• Synergy
Allocation Rules
• Coordination:
Standardization
of Output
• Motivation: Safeguards
Diagnosing Conditions for Trust
The Trust Optimizer
Program
Starter Kit
Alex Todd
Trust Enabling Strategies
http://TrustOptimizer.com
Tel: 416.487.1497 Fax: 416.487.9646