Crypto is changing the world.
It’s coming for f i n a n c e, cloud storage, music, art, insurance, real estate, logistics, e-commerce.
And maybe even for your manager.
A decentralized autonomous organization (DAO) is an organization that makes decisions either automatically by computers based on pre-written, public code or by a member vote.
A DAO is fanatical. Complete transparency of rules and actions. Complete transparency of every financial transaction. Complete empowerment of members. No managers. No secrets.
Not every organization can or should be a DAO, but every organization can learn from them.
Why do members love their DAOs and what can you take from that to build a happier, more successful organization?
1. Ownership = Incentives
DAO: By definition, every member of the DAO is an owner of the DAO. Every member benefits when the DAO succeeds and loses when the DAO fails. Every member’s ownership share is transparent and easy to understand. Everyone has incentives to push in the same direction.
Your Org: Align everyone’s incentives by giving material, understandable ownership in the organization to each member and using other incentives as helpful. Owners, senior employees, junior employees, everyone, should all have ownership and aligned incentives.
2. Meritocracy + Decision Making
DAO: A DAO makes decisions either automatically by computers based on pre-written, public code or by a member vote. Every member has a voice. Every member can propose an idea. Every member can vote on that idea. Every member can fearlessly argue in support of their idea. No one person makes decisions in secret. Even the debates are often in a public forum. The best ideas and arguments can win, no matter who they come from.
That can be great. When everyone is involved in everything, everyone is empowered. But, when decisions are made by a vote, it’s also difficult to move fast, make decisions, and have accountability. If everyone is involved in every decision, then no one gets to make any decisions. And, having open group debates and member voting doesn’t necessarily mean the best arguments and ideas will win. Just ask the United States Congress.
Your Org: Take the good parts from the DAO, but don’t go too far. Involve people in decisions. Listen to them. Bring them with you in the process. Explain the decisions. Bring the feeling of involvement that a DAO provides, but keep individual owners of projects and tasks, who have the ultimate responsibility and make the decisions.
3. Empowerment
DAO: In a DAO, no one has a manager. Members manage themselves, do the work that they want, or not. Members can propose their own projects and volunteer for any work. DAOs are collections of owners and independent contractors, not managers and employees. Not much feels better than being your own boss.
Your Org: It can sound a little naive to think that everyone can do whatever they want and all the necessary work will get done. But your best employees crave empowerment, ownership, and impact. Remember to manage but also empower your team as much as you can.
4. Transparent, Documented Operating System
DAO: With a DAO, all the on-chain rules are transparent in the code. All the decisions are made in front of every member. Every financial transaction is public on the blockchain. The system runs itself and enforces its own rules. And the rules can change only if the members vote on it.
This is extreme transparency, extreme decentralization, extreme member control.
(Related, to manage members’ expectations, attract the right members, and give the DAO the foundation it needs to succeed long term, make sure your DAO has both its computer Operating System but also its version of a people Operating System for anything that the computer won’t decide.)
Your Org: At your organization, you don’t need to have every transaction be transparent. You don’t need to have every decision be public. But, you can have a transparent, documented operating system that prioritizes a healthy, involved team and organization.
5. Trust
DAO: Because a DAO has no secrets and the rules are all public, a DAO by definition creates trust in the system. Or, in other words, you don’t need to trust the system because there is nothing to betray your trust. Whether you call that complete trust in the system, or a complete absence of mistrust, it’s a factor that makes for a healthy organization.
Your Org: You may not be able to use all the same tools as a DAO, but you want to aspire to the same absence of mistrust at your organization. By using some of the methods above, you’ll be able to do that. You’ll hire and retain the best people and be more likely to achieve your goals. You’ll minimize politics and maximize alignment and teamwork.
If you found this valuable, here are some other OpsMBA resources you might like:
- Your DAO Still Needs An Operating System
- Your Startup Needs An Operating System
- Foundational Materials
- How To Be A Great Manager
- Job Versus DAO
- How Can DAOs Achieve Their Mission? Be A Platform.
Additional research and material for this post:
- DAOs, DACs, DAs and More: An Incomplete Terminology Guide
- Unchained Podcast: Think a DAO Will Automate Things? Think Again
- DAOs, DeFi and Dollars: the Bold New World of Decentralized Entities
- Decentralized autonomous organisations (DAOs) | ethereum.org
- What’s a DAO?
- Wikipedia: Decentralized autonomous organization
- Introducing GTC – Gitcoin’s Governance Token
Resources for Startup Operators 