In 2009, Dr. Elinor Ostrom received a Nobel Prize in economic sciences for her analysis of economic governance. According to Nobelprize.org, Ostrom’s research challenged conventional wisdom by demonstrating how shared property can be successfully managed by local commons without any regulation by central authorities or privatization.
Spending time in Africa and Nepal, Ostrom studied how how humans interact with common pool resources (such as irrigation systems, fisheries, and oil fields) to maintain long-term sustainable resource yields. Her work showed that many third-world societies are able to establish agreements among themselves for maximizing natural resources — without higher-order governance.
Successful Formula for Self-Managed Communities
The communities that can work together to secure an ecosystem more efficient than their neighbors’ practice eight principles identified by Ostrom. Paraphrased here, they are:
- The group has well-defined operational boundaries.
- The group has access to resources to accomplish their goals.
- The group can modify any rules that impact any member’s performance.
- The group’s rule-making rights are supported by management.
- The group has a system for monitoring member behavior.
- The group uses graduated sanctions for rule violators.
- The group has an internal process for resolving disputes.
- The group has a shared responsibility, within an interconnected system, for governing resources.
From Africa to American Businesses
I had the opportunity to talk with Jim Liautaud, founder of the Liautaud Institute of the University of Illinois Liautaud Graduate School of Business. Liautaud entered the academic realm after launching several industrial companies, and his Institute develops training processes that increase group cohesion and performance.
The Liautaud Institute is applying Ostrom’s principles to teams operating within business organizations. Using an approach called PDT (process-designed teams), the Institute is working with individual organizations to identify seven exceptional leaders defined as: (a) well-liked; (b) known for a happy, positive attitude; (c) known for championIng the company; (d) effective problem solvers.
This initial team becomes the catalyst for expanding PDT throughout the company. After that first group graduates from the 10-week PDT program, each member selects a new team of seven employees that do similar or interrelated tasks related to creating, selling, or servicing the company’s products.
Post-training, each team is empowered by the CEO to manage itself. What does this mean exactly? To summarize, the team decides when and how often it will meet. Each member posits a business problem or issue that the team is invited to help solve, using corporate resources that the CEO has made available. The process continues until all of the team’s “roadblocks” have been addressed.
In an era of diminishing hierarchies and collaborative leadership, PDT seems to fit right in. But can a team be truly effective with no boss? What do you think?