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Governance Reimagined: Organizational Design, Risk, and Value Creation by David R. Koenig

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Chapter 9

The Role of Trust in Networks

To increase the value of what we do today, the Value Equation shows that we need to do the following three things:

1. Increase the utility that others expect to receive each time they interact with us.
2. Increase the number of times that others can expect to receive utility from us.
3. Reduce the risk they perceive that the expected utility won't be realized.

Ideally, these three conditions can be achieved simultaneously through more effective governance (which is the point of this book). Up to this chapter, we've focused on how innovation happens within systems and complex networks—how we invent and deliver things of value or utility to others—and on the perception that other agents have of our organizations and their risk; in other words, what drives sentiment and, particularly, what causes large movements in sentiment among those in our network. Beginning with the next chapter, we'll focus more purposefully on the second factor mentioned above. But, before we do, we have to consider a highly important contributor to the success of all that we have outlined so far: trust.

Trust is a necessary component in the relationships in our lives, as well as in the systems in which we engage. Complex systems like our business; our coffee shop; our friendships; and our state, provincial, local, and national political economies can be highly dynamic entities, generating amazing results when agents within them are allowed to successfully interact. ...

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