Trust Enabled ™ Ecosystems

1. Trust Enabled™ Ecosystems SAP Global Ecosystem Marketing September 2, 2008 1

2. Rethink Success ! Rethink boundaries Rethink innovation Rethink time 2 © SAP 2008 / Global Ecosystem and Partner Group Page 2

3. Rethink Criteria for Success! Rethink control Rethink exclusivity Rethinkexpediency 3

4. Think Value! Think trust Think collaboration Thinkagility Think Customer Focused Ecosystem. 4

5. Trust stimulates innovation • Trust raises overall innovative capacity • Trust facilitates innovative actions • Trust is of fundamental importance for the diffusion of a new technological style • Trust substantially reduces transaction, control, monitoring and enforcement costs • Innovative networks with a high level of trust tend to reinforce innovative capacity and trust Volken, T. (2002) “Elements of Trust: The Cultural Dimension of Internet Diffusion Revisited”, University of Zurich, Electronic Journal of Sociology See “The Facts on Trust” at http://trustenablement.com/opt/The_Facts_on_Trust.pdf 5

6. Sustainably Innovative Effective Trust Gap Trust Equity Efficient Blazer Barn Expedient Agility Trust requirements vary Specificity Value High None Moderate Moderate - Co-opetitive Collaborative Coordinated Communicative High None Time Tactical Strategic “Trust Enabled Supply Networks: Uncovering the trust-building secrets of highly collaborative supply chains”, Alex Todd 6

7. Change mindset • Risk Management • Control-based • Pessimistic • Defensive • Passive • Organization-oriented • Loss: Isolated self-interest • Trust Leadership • Trust-based • Optimistic • Offensive • Active • Stakeholder-oriented • Bonus: Golden Rule compliant 7

8. A B What role does trust play in marketing? 8

9. Trust Definitions Mirriam-Webster: • intransitive verb1 a: to place confidence : DEPEND <trust in God> <trust to luck> b: to be confident : HOPE2: to sell or deliver on credit • transitive verb1 a: to commit or place in one's care or keeping : ENTRUSTb: to permit to stay or go or to do something without fear or misgiving 2 a:to rely on the truthfulness or accuracy of: BELIEVE <trust a rumor> b: to place confidence in :rely on <a friend you can trust> c: to hope or expect confidently <trusts that the problem will be resolved soon> Wikipedia: "In sociology, trust is the willing acceptance of one person's power to affect another.“ 9

10. Trust “when agents expect a particular agent to dosomething.” Reputation “when agents believe a particular agent to besomething.” Trust  Reputation Cabral, L.M.B. (2005) “The Economics of Trust and Ruputation: A Primer”, New York University and CEPR 10

11. Trust is Always Contextual “A” trusts (or relies on) “B” for (a specific) “C” 11

12. Trust = Acceptable Uncertainty My Definition of Trust Trust is a person's willingness to accept (and/or increase)their vulnerability by relying on implicit or explicit information. 12

13. Certainty Acceptability Develop Trust Protect Trust Experiential Sources of Trust Personal experiences of the relying party or those of objective witnesses. Interpretive Sources of Trust Subjective assertions of the source of the information, the relying party, or third parties. Trust = Acceptable Uncertainty Empowerment Relying party’s ability to choose. Conditions for TrustTrust Enablement® Framework 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. 13

14. Experiential Motivation Forces (Will) • Willingness • Incentives (rewards/penalties) • Forward-looking • Outcome-specific • Long-term Trust Enablement® Mappingof John Hagel’s “Building Dynamic Trust”for Orchestrators of Process Networks Develop Trust Protect Trust • Notification system Authoritative Proficiencies (Skill) • Shared meaning • Senior executive evaluation • Reputation system • Joint capability Empowerment Risk Transference • Loose coupling • Performance bonds • Assurance mechanisms • Safety nets • Exception handling Hagel III, J., Brown, J.S. (2005) “The Only Sustainable Edge: Why business strategy depends on productive friction and dynamic specialization”, Harvard Business School Press 14

15. A Trust Enablement® ViewHow eBay Enables Trust Develop Trust Protect Trust Experiential Sources • Feedback Forum • Tradenable escrow • Product authentication Motive Forces • Policies (comprehensive) • SafeHarbor investigations • Disallowed products • SquareTrade dispute resolution • VeRO notice of IP infringement Interpretive Sources • ID Verify from Equifax • Product Opinions & Grading • Product Appraisals • Privacy Policy • TRUSTe seal Proficiencies • Industry practices (SSL, etc.) Trust Empowerment • Identify reliable providers of feedback Risk Transference • User Agreement • Fraud Protection Insurance • PayPal Buyer Protection 15

16. Experiential The ecosystem shall define, implement and document the experiential sources of trust that providers of stakeholder resources can rely on to establish the higher levels of trust they require to provide such resources. Motive Forces The ecosystem shall define, satisfy and document the levels of “acceptable uncertainty” (in other words trust threshold) required by providers of stakeholder resources. The ecosystem shall define, implement and document applicable motivation (decision-influencing) mechanisms that establish and enforce the methods for acquiring stakeholder resources. Trust Enablement® BasedEcosystem Governance Meta-Policies Develop Trust Protect Trust Authoritative • The ecosystem shall define, implement and document the authoritative sources of trust that providers of stakeholder resources can rely on to establish initial trust prior to providing such resources. Proficiencies • The ecosystem shall define, implement and document its ability to solicit, acquire, steward and productively apply stakeholder resources. Empowerment • The ecosystem shall provide stakeholders with access to resources and information they need to determine the validity of their contributions to the business and means to express their preferences. • The ecosystem shall periodically review and adjust its Trust Enablement™ policies, standards and procedures in order to optimize them for changing business conditions. Risk Transference • The ecosystem shall define, implement and document mechanisms and/or instruments that transfer risk away from providers of resources. 16

17. Negotiation & Order • Product fit • Negotiation criteria • Cultural issues • Quality assurance • Viability of seller • Applicable exchange rate • Order placement and verification Discovery • Identity • Value of goods/services • Vendor reliability • Rules of engagement • Credit worthiness • Authorization to commit Trust information throughout sales cycle Settlement & Compliance • Governing laws • Agreement • Payment method • Non-compliance protection • Disputes • Recourse • Transaction reversal Fulfillment • Customer services • Shipper reliability • Transfer of responsibility • Quality control • Applicable standards • Tariffs & customs 17

18. Develop Trust Protect Trust Experiential Sources of Trust Personal experiences of the relying party or those of objective witnesses. Interpretive Sources of Trust Subjective assertions of the source of the information, the relying party, or third parties. Empowerment Relying party’s ability to choose. How can SAP’s and its business partners’ sales forces use the Ecosystem to help Customersattain their trust objectives? 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. 18

19. Thank you Alex Todd +1 416.487.1497 AlexTodd@TrustEnablement.com http://www.TrustEnablement.com 19