# IAD FRAMEWORK Michael McGinnis and the Institutional Analysis and Development (IAD) Framework
Ostrom and McGinnis have been working a long time to understand how to best describe the ways that people organize themselves (create institutions) to take care of ongoing situations among acquaintances in particular contexts.
> See EIP Sketch
The **physical world** has a lot to say about how people can take care of situations. Such as: How far are things apart? Are things in limited supply? Do things get used up or reused? How easily can things be physically contained or controlled?
The **social world** has even more to say about how people can take care of situations together.
* Who should/will benefit from the use of things? Who gets to decide on these social matters?
* How easily can we control or influence the behavior of others?
* What is the nature of the different ways people organizing themselves to deal with situations?
* How is choice limited in order to take care of situations?
**Institutions** are arrangements for making decisions that affect more than one person. This multi-stakeholder decision making can be called governance. Ostrom became particularly interested in how people have successfully governed shared, yet limited, resources such as forests, fisheries, water, and grassland for grazing. She also became a commentator on fads and oversimplifications that led to poor decision making for future generations.
As communities become more involved in creating futures for their children and grandchildren we will need to understand our choices for making decisions that have Long Term impacts on our descendants and the places they will live. We must take an interest in forms of decision making that are capable of leaving something for future generations, maybe for making the future world more livable than it is now--a better world.
> I will write a piece on “the nature of better worlds” soon. A preview: we must find our motivation in affection and beauty and from there realize our affection through ethics, science and productive action, without betraying beauty, ethics or science in the process of taking action.
The IAD framework includes all types of arrangements that are used to take care of situations. Private and public. Highly constrained and voluntary. They explore the kinds of situations that match kinds of institutional arrangements.
The framework can be used to understand institutional arrangements—to diagnose the health of institutional designs and interactions. It can also be useful for designing institutions and perhaps avoiding some pitfalls that arise from use of less effective institutional arrangements in a given contexts to handle given situation types.
What kinds of Contexts are there? Contexts involve cultures, often multiple cultures—with different worldviews. So most if not all social contexts are truly complex.
What kinds of Situations are there? Situations have **scope**—space and time (duration of intentionality), **boundaries** (who is in and who is out), and **dynamics** (interactions among participants). So most situations are also truly complex.
What kinds (types) of institutions are there? Institutions can be classified according to freedom and constraints available to participants; who makes decisions; the availability, access to, and controllability of resources; and who benefits from the institutional arrangements (private, public, users, corrupt actors). There are also Interactions within institutions, among the parts of the institution, that are relevant in designing particular institutions and for interacting with other institutions.
What kinds of combinations and interactions are useful among institutional types? How can one type interact with other types?
Sometimes the context and situations call for creating **New and Different Institutions** than are currently in effect; so the institutionalization of purpose, participants, and resources within ongoing contexts and situations is a real possibility—fundamentally **different than improving** or reengineering or satisficing or “rearranging the deck chairs on the Titanic.” This can be a Creative act among current participants.
Any viable institution must have requisite variety (experience, knowledge, understanding and wisdom ) for the context and situation, ability to generate a diverse set of ideas that increase the likelihood of good decisions, ability to deal with conflict—including the authority, will and skill for monitoring and sanctioning its own participants for their misbehavior.
For me, and I think for Elinor Ostrom, the potential for self governance is very attractive. Local Voluntary Associations will form around common problems or common goals and make their own decisions with little disturbance from the “outside”. More freedom and responsibility can result in less “overhead” cost. Solutions can better fit the local circumstances. Of course local governance can be as bureaucratic and domineering as remotely controlled and remotely governed institutions.
So let’s look closer at Decision Making among groups of people. What is required? At least one shared purpose. Shared norms of behavior. Shared understanding of the context and the situation. A minimum set of functions: selection of goals, production of good or services, financing, coordinating, monitoring, sanctioning, and dispute resolution. For long term viability we must add to the set Strategic Planning, institutional development and identity management—who are we, for the sake of, what and how do we behave among ourselves and toward others. In order to carry out each and all of these functions we must take on roles with specific and limited responsibilities, authorities, resources. From these roles we must make public commitments to results and accomplish them within the roles and limitations.
Private enterprises can do as they like within the law—sometimes they can have pretty simple forms of decision making. On the other hand, our communities need forms of decision making that can make allowances for multiple stakeholder groups, diverse goals, diverse methods, overlapping jurisdictions/boundaries, nesting of some entities within others. We must find ways to make acceptable decisions within ever changing networks of stakeholders, interests and preferences—where both rights to resources and rights to decision making are contested. We need to construct peaceful means for managing disagreements that are generally perceived as fair enough and inexpensive enough for use.
Coordination is of paramount importance in complex enterprises. It is too easy to “step on toes”, “get wires crossed”, etc. The choice of successful coordination methods depends greatly on the context and situation. * Crises are one thing. * Complex, unpredictable day-to-day occurrences are another thing. * Algorithmic, repetitive processes are another. * Creative endeavors are another. No single method of decision making works well across this variety of situations with their differing degrees of uncertainty (complexity/variety).
David Snowden gives us a great introduction to a nuanced paradigm for selecting decision making methods.
What are IAD “rules” all about? For each action situation, embedded within its contextual environment, decision must be made. There are a set of **Seven Rules** that must be dealt with effectively. They include:
* Boundary Rules (Who is in and who is outside? Specify how participants enter or leave these positions.);
* Position Rules (What roles must be played and by whom with what resources, opportunities, preferences and responsibilities?);
* Authority/Choice Rules (What set of actions is Prohibited, Permitted, and Required of a position?);
* Information Rules (What is known and what must be known and what cannot be known?);
* Aggregation Rules (How are we to organize ourselves to achieve the desired outputs and results? Specify the transformation function from actions to intermediate or final outcomes.);
* Scope Rules (What is to be accomplished, where, by when, for whom?); and
* Payoff Rules (How benefits and costs are required, permitted, or forbidden to players? What results will make it worth the effort and risk as well as making the enterprise sustainable?)
In addition to managing Action Situations, the effects within the whole ecosystem must be evaluated and judged for survival value, because survival is determined by interactions with the ecosystem’s other actors.
These action situations must have access to Resources Systems, Users (markets) and decision making (Governance Systems capable of sustaining the viability of the ongoing action situation. The nature of the enterprise is heavily influenced by the nature of the Resource Units.
Resource Types are determined by whether or not the resource can easily be protected from unwelcome users (Exclusion Ability) and whether the resource is non-reusabe (subtractability); Private Goods—subtractability and low cost of exclusion; Public Goods—nonsubtractablity and high cost of exclusion; Toll Goods—nonsubtractability and low cost of exclusion; Common Pool Resources—subtractability and high cost of exclusion.
Constitutional Choice (yields constitutions) which authorize Collective Choice which yields policy decisions which result in Operational Choice which yield implementation of policy choices through programs, projects, processes, and maintenance, improvement or replacement.
Effective Communities have several attributes, including: Trust, Reciprocity, Common Understanding, Social Capital, and Cultural Repertoire. Communities could benefit from methods that increase any and all of these attributes. Each of these attributes can be assessed (Vester’s “fuzzy” methods and Bayesian Belief Networks of Ockie Bosch) and actions can be taken to enhance them. Syntegrations are particularly effective at increasing all together. It is my express goal to ensure that Malik’s and Ackoff’s methods (see below) become available for any community’s Cultural Repertoire.
Institutions have goals and outcomes. Satisfaction depends upon outcomes within the relevant contexts.
There must be ways of evaluating outcomes and methods including: Efficiency, Equity, Legitimacy, Participation, Accountability, Fiscal Equivalence (beneficiaries contribute toward production), Moral Values, Sustainability (adaptability, resilience, robustness). The VSM is the best way of diagnosis sustainability. There seems to be an interactive subsystem or bundle that includes the set that I will call the EFFECTIVENESS SET: Equity, Participation, Legitimacy, Participation, Accountability and Fiscal Equivalence. This effectiveness set is grounded or supported by shared Moral Values and operationalized through Sustainability structures and methods, only a small part of Sustainability relies upon Efficiency. A very common mistake is to over emphasize efficiency when in fact effectiveness must be primary if In my world, with three daughters and friends with children and grandchildren, Sustainability (long term societal functioning) is a primary requirement.
# Institutions make a few key statements including: * Strategies (what do we care about under these conditions), * Norms (What actions should be taken in these conditions to take care), and * Rules (How will we reward and punish participants for actions taken in these conditions—all in order to increase the likelihood of taking care). Each Norm requires a process of socialization that requires active participation by parents, teachers, religious leaders and other socializing actors.
Property Rights are particularly important when dealing with natural resources. Rights-holder may be an individual, private corporation, voluntary association, community-based organization, or public agency (government organizations of all types at all levels). Components of rights include: Access —without removing any resources; Withdrawal —removal for proscribed uses; Management—participate in decisions regulating resource and improvements; Exclusion—determine who has right of access, withdrawal or management; Alienation—right to sell, lease, bequeath, or otherwise transfer any of the preceding component rights.
Bundles of Rights or positions,( in the context of CPRs) include: Authorized Entrant—access rights only; Authorized User—access and withdrawal rights; Claimant—access, withdrawal, and management rights; Proprietor—all rights except alienation; Owner—all components in combination.
Types of Property Rights Systems (in context of CPRs) include Open Access—no restrictions on use of resources; Private Property—rights held by individuals or corporate entities including full rights of alienation; Public Property—rights held by official agents of government; and Common (or communal) Property—rights held, defined, and exchanged by some communal entity as a whole.
Complete Ownership would ensure: Priorities are selected by local communities themselves. Implemented by process of co-production. Recipients impose taxes or user fees on themselves in support of the project. Benefits are shared by locals in communities. Local communities take responsibility for sustainability. Local Public Economy (market place) includes relevant public, private, voluntary, and community-based organizations active in a give area of public policy.
Public Service Industry includes all organizations engaged in providing or producing public or tool goods or th e management of common-pool resources. Public refers (Dewey) to a group that is affected by some problem or issue. Commonly used Governance Mechanisms in Local Public Economies include: Constitution; Citizen choice, voice, and exit; Representation; Overlying jurisdictions; Public entrepreneurship; Professional associations; Multi-jurisdictional forums; Functional ties and overlays.
Principles of Good Governance for Local Public Economies (Oakerson) include: Local governments are primarily provision units, not production units. Let citizens choose how to constitute their local governments. Let citizens create optional neighborhood units. Let local officials decide how to organize production. Allow citizens to increase local taxes. Be sure that an umbrella jurisdiction overlies metropolitan and rural areas. Micro-situational Context necessary for trust, reciprocity, and cooperative behaviors:
Micro-situational Context: Factors that help explain levels of trust, reciprocity norms, and cooperative behavior include (PJO 2010) * High marginal per capita return on cooperation * Security that contributions will be returned if not sufficient. * Reputations of participants are known. Longer time horizon. * Capacity to enter or exit from a group. * Communication is feasible with the full set of participants * Size of group. * Information about average contributions is made available. * Sanctioning capabilities on levels of trust or distrust * Heterogeneity in benefits and costs. > How does the IAD framework relate to Vester’s Sensitivity Model and Beer’s Viable Systems Model and Beer and Leonard’s Syntegrity Method? What does it add? What is left out? Vester’s Sensitivity Model integrates nine system perspectives and methods to guide the design of social futures. Beer’s VSM delineates the necessary and sufficient functions and structure of functions to sustain any purposeful enterprise. VSM does not deal explicitly with institutional types related to Goods: Private, Public, Toll, and CPR. However, these considerations are appropriate VSM System 4 functions for understanding the external environment and their implications. Choose the “wrong” institutional type for the given institutional Good and all one can hope for from VSM is that it keeps things going long enough for System 4 to discover the mistake and correct it. So in a way one could say that IAD framework analysis is a VSM System 4 function—model building and design. In my Linkage Map platform there must be the ability to denote (a property of an entity or of a subnetwork) an estimation of the VSM health of each entity (a diagnosis). Ideally it would be a colored representation of the generic VSM with the health of each of the five functions represented. This can be applied to every purposeful, free standing, autonomous living entity that is capable of making its own decisions (thru its homeostatic mechanisms). When a Linkage Map node represents a non-free standing entity (hopefully a rare event on a community linkage map) that can be marked as VSM functions 2, 3, 3 prime, 4 or 5—and these should be associated visibly with a viable entity with a uniquely designated position in a network of autonomous entities—by recursion level (including its participation in meta-organizations and its enfolding of participant independent agents) and relevant environment. Syntegrity is a method of rapid and deep communication leading to shared understanding which leads to commitments to create shared futures now. In my Linkage Map platform, Syntegrations are organized around Themes and twelve Sub-themes which must be identified in the map. Stakeholders to any theme must also be identified in the map. These Themes and Sub-themes can come from Sensitivity Model exercises, Idealized Design exercises. Hopefully the construction and reflection on the Linkage Maps will surface attractive Themes with potential for Syntegration. Up to twelve can be dealt with in a single Syntegration, if they have a common set of stakeholders. IAD framework is an analytical tool for studying the effectiveness of institutions in the real world. As stated above it is a VSM System 4 tool within VSM. Many of the IAD designations should map to the VSM. Syntegrations should carry out some of the communication functions delineated in the IAD framework and in the VSM. The Sensitivity Model should dramatically clarify what few actions (strategies), among an extensive candidate list, can best lead to the desired future (development). The Sensitivity Model is a VSM System 4 tool. Idealized Design can be added after the Sensitivity Model has yielded it short list of powerful actions—another VSM System 4 tool. Affect (mood) matters most. Culture preconditions affect in an ongoing way. The ratio of positive affective to negative affective experiences predisposes us toward selfishness and war or toward openness (community) and innovation. Managing affect requires meta management because affect is a metasystem requiring metacognition for understanding and indirect action (influence). Making and keeping commitments is as important as affect in making institutions possible and successful. Even though culture preconditions commitment making and keeping, there are skills that can be learned, shared and refined. Commitments are particularly important for arrangements among voluntary participants such as CPRs. Don’t misunderstand, commitment are key to all efficient and effective social coordination.