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Elinor Ostrom, Nobel Laureate, on Design Principles for Common Pool Resource Institutions

October 18, 2010 By brenda michelson

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:

  1. 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.
  2. 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.
  3. Collective-choice arrangements: Most individuals affected by the operational rules can participate in modifying the operational rules.
  4. Monitoring: Monitors, who actively audit CPR conditions and appropriate behaviour, are accountable to the appropriators or are the appropriators.
  5. 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.
  6. 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.
  7. 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:

  8. 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?

Discuss.

Filed Under: business, business-technology Tagged With: archive_0, CIO

BEI Conference Preview: Chris Curran on the Innovation Expectation Gap

October 13, 2010 By brenda michelson

[Update November 2, 2010 – Unfortunately, the Optimization for Innovation Conference has been postponed until 2011. However, don’t let that stop you from watching Chris Curran’s video below, or following his work.]

Did I mention that Chris Curran, CTO of Diamond Management and Technology Consultants, is the opening keynote for the Optimization for Innovation conference I’ve been working on? Below, is a video preview of Chris’ session.

To see the full Optimization for Innovation program, go here.

[Disclosure: The Business Ecology Initiative is my client.]

Filed Under: business ecology, business-technology, innovation

Forrester’s Empowered: Workplace HEROes + DIY Technology = Recipe for Shadow IT Disaster, or Front-Line Innovation?

October 10, 2010 By brenda michelson

Like many with corporate IT backgrounds, I find the do-it-yourself (DIY) technology movement simultaneously intriguing and frightening. Intriguing, because of the ease of connecting with co-workers, partners, customers and information to solve problems, improve interactions and advance the business.  Frightening, because I’ve lived through (barely) the data, network and integration nightmares brought on by islands of Access, Excel, FileMakerPro, Visual Basic, etc.

Of course, today’s DIY technologies – Smart mobile devices, Pervasive video, Cloud computing services and Social technologies – are exponentially more powerful than their office productivity predecessors.  Therefore, they must be exponentially more troublesome, right?  Well, that depends.

In Empowered, a new book by Josh Bernoff (co-author of Groundswell) and Ted Schadler of Forrester Research, the authors address this very challenge, how to balance front-line innovation with back-room risk management.  Or, as the authors describe it, changing the way your business runs to harness the power of HEROes: highly empowered and resourceful operatives. 

Following an attention grabbing introductory section, the book’s guidance is presented in two more parts.  In part two, the authors focus on HERO projects, describing opportunities and challenges, elucidating with real-world examples, sharing tools and walking through a four-step process to match-up with that other critical DIY base, your empowered customers.

A helpful tool is the HERO Project Effort-Value Evaluation.  After answering a series of questions on a potential projects effort and value, you calculate your projects EVE score.  Scores fall into one of six categories, from no-brainer (value exceeds effort by 25 points) to shadow IT (high effort).  On the Shadow IT projects, the authors don’t say never, however they point out the risk factors, success impediments, and advise collaboration with senior management and IT.

 

In part three, the authors discuss how management, information technology and HEROes work together to achieve that all important opportunity-risk balance.

The critical concept in part three is the establishment of a HERO Compact.  The HERO Compact is an accord between management, information technology and HEROes, guiding each group’s behavior to make “HERO-powered innovation successful”.

In the spirit of empowerment, I’ve clipped the high-level HERO Compact from Amazon’s Search Inside this Book. 

The chapter continues with specific pledges for IT, management and HEROes.  Each pledge reinforces that success requires individual responsibility, collaboration and trade-offs.

For example, the IT Pledge includes: “I will respect requests for new technology support and find ways to say, “Yes, and” rather than automatically saying “No.”. 

The HERO Pledge includes: “If my projects entail a significant effort, I will work with my managers and IT to better understand the long-term impact of those projects”.

And the Management Pledge includes: “I will respect assessments of technology risk in HERO projects and work with IT and others to quantify, mitigate and ultimately manage that risk”.

Empowered does a nice job of describing the compelling workforce and customer benefits of embracing DIY technologies, while painting a realistic view of the traps and risk, and offering pragmatic advice and tools for prospective HEROes, managers and IT to co-create a front-line innovation environment.

Organizations struggling to keep up with their customers, employees or competitors on the DIY technology revolution need to read Empowered and think seriously about HERO Compacts.

 

[Disclosure: Forrester sent me a free “no obligation” copy of Empowered.]

Filed Under: business, business-technology, cloud computing, innovation, social, trends Tagged With: books

Optimization for Innovation Conference – Call for Participation

July 27, 2010 By brenda michelson

I’m working with the Business Ecology Initiative (BEI) on a new Optimization for Innovation Conference series.  The inaugural conference is “Optimization for Innovation: Reset; Joint Business & Technology Actions for the New Normal”:

As the world economy emerges from a painful recession, organizations are confronted with the challenge of retaining bottom-line diligence, while pursuing market sustaining and gaining innovation, in an environment riddled with uncertainty, increased regulation, consumer reluctance and tighter credit. This is the “new normal.” To execute in the “new normal,” organizations are seeking new ideas and techniques to optimize business operations and foster business innovation.

At the inaugural Optimization for Innovation conference, executives, senior-level practitioners, experts and thought leaders will share real-world experiences and pragmatic 90-day action items to harvest savings and trapped value from existing processes, resources and capabilities. The conference will consist of a combination of invited guest speakers, keynotes, case studies, presentations and tutorials.

By attending this conference, direct reports and senior staff of the COO, CFO and CIO will learn:

  • How leading organizations are optimizing for innovation
  • Business Optimization Techniques and Practices
  • Business & Technology Partnership Models
  • Business Performance Analysis and Measurement Practices
  • Business Risk Identification & Mitigation in a Connected World
  • Business-Technology Enablers

The conference is December 6 – 8, 2010, in Santa Clara, CA USA.  December 6 is tutorials.  December 7 & 8 are full conference days. 

This morning, we issued a call for participation.  We are seeking proposals for presentations including (but not limited to) the following topics:

Program Topics

  • Optimization for Innovation Success Stories
  • Business-Technology Reset: Optimization for Innovation
  • Governance Models for the New Normal
  • Business Analytics as Optimization Foundation
  • New Normal Linchpins: Business-Tech Savvy Professionals
  • Business-IT Alignment is a Dead-End
  • Business Optimization Techniques

Tutorials Topics

  • Instituting a Business Performance Measurement Framework
  • Cyber Risk Analysis: Assessment, Policy, & Economics
  • Business Process Modeling and Business Instrumentation
  • Lean / Six Sigma in the New Normal

Presentations and tutorials proposed should be geared toward an audience comprising direct reports and senior staff of the COO, CFO and CIO. All presentations and tutorials  must include a 90-day action plan for attendees to pursue post-conference.

The submission deadline is August 13, 2010. Please note, submissions that are direct pitches for product or services will not be considered. Submissions should be prepared in English, containing the following information:

  • Presenter name, title and affiliation
  • Presenter Bio
  • Session Title
  • 2 – 3 paragraph description of proposed session
  • 3 – 5 bullets on what attendees will learn
  • Target audience characteristics: role, skill and industry
  • 90-day action plan items

Submit abstracts as described above to Program Chair Brenda M. Michelson (me) via e-mail.

[Disclosure: The Business Ecology Initiative is a client of my firm, Elemental Links.]

Filed Under: business ecology, business-technology, innovation

New Business Ecology Initiative Podcast: Aleks Buterman on Decoding Business/IT Unity

June 30, 2010 By brenda michelson

This morning, the Business Ecology Initiative released a new podcast of Aleks Buterman (@aleksb6) speaking on Decoding Business and IT Unity.  From my BEI post:

“Utilizing a case study approach, Buterman spoke of classic and newly identified failure patterns associated with enterprise technology investment. Interestingly, Buterman’s case studies extend beyond initial delivery, to focus on real-world challenges of product, program and business sustainment brought on by unanticipated customer and business unit demand, organizational change and insufficient architectural investment.

For preventive and corrective measures, Buterman advocates a capability portfolio approach to bring complexity to a manageable level. The capability portfolio approach considers four dimensions: business, technology, organization and risk. Buterman emphasized the need to apply business discipline, particularly risk assessment and management, throughout business-technology lifecycles.

Amplifying Buterman’s findings was a special video conference guest appearance from a vice president at a large Fortune 500 Financial Services firm.”

To listen to an audio recording of Aleks’ presentation go here.

 

[Disclosure: The Business Ecology Initiative is a client of my firm, Elemental Links.]

Filed Under: business ecology, business-technology

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Brenda M. Michelson

Brenda Michelson

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