DAOs: The Evolution of Human Organizational Structures
A new framework is emerging around the concept of employment and DAOs are leading the way.
Decentralized Autonomous Organizations (DAOs) have been getting a lot of attention lately because their structure enables transparency in contribution and governance across the organization. Participants are able to contribute openly to tasks and bounties depending on their interest and availability while the blockchain provides transparency in earnings. Token holders are able to propose and vote on key topics regarding the direction of the organization.
This is a huge step forward because it enables a more direct form of democracy in which everyone has the ability to get involved directly. Although it is not without its drawbacks (e.g. voter apathy, tyranny of the majority), it is evidently a vast improvement from traditional organizational structures.
Organizing codes and principles show the evolution of human psychosocial “DNA” as we become more advanced and self-aware.
Survival Band and Tribal Order are more primitive organizing principles which center around basic survival needs. Human organizations operating on this level tend to be centered around the amygdala response—otherwise known as “fight or flight”—as people react instinctively out of need for survival and with little concern for future development. Typically humans do not operate on this level unless faced with the threat of conflict or loss.
Exploitive Empire and Authority Structure are focused more around power building. This is more commonly seen on the political level (empire building, whether kinetic or cultural) and the corporate level (pushing down costs across the supply chain in order to remain competitive). Power is derived from the work of others to serve those at the top of the food chain, and power is entrenched out of fear of losing to competitors.
Strategic Enterprise and Social Network are where we found the limit of our organizational abilities until recent years. At this stage scarcity still exists through meritocracy, consumption of resources and obsession with status, but more awareness of equality and sharing of those resources has emerged. A greater focus on human values and community is manifested, but coordination tools are still lacking.
Systemic flow is when the concept of abundance starts to emerge. Concern about work-life balance emerges at this stage, and we start to see more flexible, humancentric organization models emerge such as Google’s cross-functional team based organization and remote work policies. Technological innovations emerge that provide opportunities for greater distribution of wealth, organizational structures flatten as authority no longer feels threatened, and tighter forms of group coordination emerge that keep teams oriented towards processes rather than leaders.
DAOs embody this type of organizational structure as they operate similarly to cross-functional teams by dividing groups into product/project based organizational structures and coordinating in more of a matrix style with less need for middle management. This encourages greater openness for communication between contributors across the organizational structure, regardless of status.
As contributors are empowered to make decisions and work autonomously, they are able to find greater meaning in their work and therefore can create more significant value for the organization—if their values align.
More than ever, employees want to make a difference. 75% would rather work for a cause that they resonate with. However, this is becoming increasingly difficult with large corporations, as evidenced in how distrust is growing for businesses and institutions.
DAOs enable contributors to shop around and find a clean fit for their values. They are able to contribute part time to a few tasks or bounties to see if they resonate with other contributors, and if the feeling is mutual, a longer term commitment can be undertaken.
Once contributors start earning tokens, they also become part owners in the organization. These tokens represent a share of their ability to steer the DAO through participating in governance votes. Additionally, anyone with a certain threshold of tokens can make a proposal, and if the majority vote in favor, it passes. This takes the concept of autonomy to a whole new level.
In fact, this creates a power dynamic in which no individual is bigger than the organization itself. If the masses move on and leave the leader behind, the driving ethos of the DAO can hold it together—providing, of course, that the rest of the group can remain united and not fall into chaos.
DAOs are the closest organizational structure we have to Holistic Organisms. Their financialized incentive structures are the first iterations of true Holacracy, or distributed governance by the people. They are the natural next step in the evolution of human organization systems.
However, they are not without their drawbacks. In the following article I will examine issues with contribution, governance, and culture.
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