I picked up the Fall 2010 issue of Rotman Magazine because it is focused on complexity and uncertainty, two concerns of change-friendliness. Before I reached my intended target articles, I discovered an interesting Thought Leader Interview with Elinor Ostrom, Nobel Laureate in Economic Sciences.
In the interview, Ostrom speaks to two hard problems, the challenge of dealing with common-pool resources (CPR) and how to approach collective action dilemmas. While the context of the article is averting massive climate change, I found aspects applicable to classic business and IT issues. Particularly, the management of common pool resources. According to Ostrom:
“Common-pool resources, on the other hand, are any kind of resource where it is difficult to exclude anyone from using the resources, and where my consumption withdraws from the ‘pool’ that is potentially available to others. For example, with a fishery, the fish I remove from the system, you can’t catch. At the same time, it’s difficult to exclude anyone from using a CPR, and people will benefit from it whether or not they contribute to it. Theses two characteristics of CPRs are related in many ways, and when people talk about the ‘commons’, this is what they are referring to.”
In business-IT terms, the basic common pool resources are budget dollars and talent time. Some might add services of SOA and Cloud Computing, but the end of day resource limitations on SOA and Cloud services comes down to time and money. Who will pay for the change to Service X? Can we afford to scale service Y? Why must marketing wait on a customer service change to Service Z?
To deal with these management and allocation issues, we (IT) set up steering committees, governance boards, policies and waiver procedures. Most often, an IT representative – CIO, Relationship Manager, Chief Architect – sits at the center of the policy and decision-making processes. Even in the best situations, there is always a disappointed constituent, and often, lingering ill will.
There has to be a better way. Well, in her research, Ostrom has identified 8 design principles found in robust common pool resource institutions:
- Clearly-defined boundaries: individuals or households who have rights to withdraw resource units from the CPR must be clearly defined, as must the boundaries of the CPR itself.
- Congruence between appropriation and provision rules and local conditions: Appropriation rules restricting time, place, technology and/or quantity of resource units are related to local conditions and to provision rules requiring labour, material and/or money.
- Collective-choice arrangements: Most individuals affected by the operational rules can participate in modifying the operational rules.
- Monitoring: Monitors, who actively audit CPR conditions and appropriate behaviour, are accountable to the appropriators or are the appropriators.
- Graduated Sanctions: Appropriators who violate operational rules are likely to be assessed graduated sanctions (depending on the seriousness/context of the offense) by other appropriators, by officials accountable to the appropriators, or both.
- Conflict-resolution mechanisms: Appropriators and their officials have rapid access to low-cost local arenas to resolve conflicts among appropriators or between appropriators and officials.
- Minimal recognition of rights to organize: The rights of appropriators to devise their own institutions are not challenged by external government authorities.
For CPRs that are part of larger systems:
- Nested enterprises: Appropriation, provision, monitoring, enforcement, conflict resolution and governance activities are organized in multiple layers of nested enterprises.
What struck me about Ostrom’s findings is that the appropriator, the resource consumer, is at the center of the policy-making, monitoring and enforcement processes of effective common pool resource systems.
What can we learn from this? If (forgive me) we think of IT as a fishery, with the fishery infrastructure, processes and species specialization under the management of the CIO and team, could the fishing, consumption of IT goods, services and time be better governed by those hungry for service?
Or, would an appropriator-led governance regime result in widespread fishery failure?