DAOs, Digital Organizations and Trust
This article is from the Workforce Futurist Newsletter, please subscribe for original research and insights from the rapidly changing world of work.
Decentralised autonomous organisations, or DAOs, have been a powerful idea in the blockchain universe for many years.
In my article Blockchain and the Decentralised Workforce I describe how Decentraland, a multi-player virtual world, use DAOs to run their organisation.
DAOs originate from the Ethereum school of Vitalik Buterin.
Definitions of DAOs aren’t going to help, so let’s break it down.
We understand Digital — yep, actually sick of the word.
We understand Organisation — been there and done that.
But Autonomous is more problematic.
Definition of Autonomous — (of a machine, device, etc.) able to operate with little or no human control or intervention.
Digital Organizations are compositions of humans without geographic constraints.
This is apt for the Digital-Covid Age when most of our knowledge workers are distributed geographically and most are wearing their pyjamas.
In 2014, Buterin provided an incomplete terminology guide to DAOs, DAs and DOs possibly influenced by this terrible song by The Police.
The premise with DAOs is that we can build decentralised organisations using digital smart contracts and tokens, all encrypted and avoiding centralised servers.
The smart contracts allow processes, rewards, and rules to function via source code.
Massive intelligence on a decentralized global computational substrate, an underlying layer, should change the architecture of the firm from a large collection of specialized departments run by humans, to software agents that can cooperate for longer periods of time to serve ongoing customer needs such as utility and maintenance. Others will swarm round a short-term problem solve it, dissolve just as quickly, having served their purpose.
DAOs like this are best viewed in the context of the ongoing march of automation, rather than blockchain development per se.
Amazon are known for their ability to harness data and technology and deliver about 400 million packages per month. Their platform is very efficient, however, they also have 1,300,000 employees who work there too.
I have highlighted some recent developments with DAOs on Workforce Futurist, for example with the publishing platform, Mirror. $Write tokens are used to share equity in its publication with the writers. It’s been carefully designed by smart humans like Patrick Rivera and colleagues. The publication has a clear purpose, and contributing writers have trust that any equity will be paid out fairly in the future because they trust the team at Mirror.
Mirror uses technology to achieve its goals, as Amazon does.
Many successful teams in business in the past have been organised using a simple Excel spreadsheet, email, a common goal, and a dose of trust.
Trust is the very human attribute that doesn’t melt away with blockchain-enabled tools, but these tools can help.
The context for digital organisations isn’t slow database technology, but rather social psychology and organisation design.
DAOs include some of the tools and processes needed for certain types of organisations to function.
Questions for entrepreneurs using DAOs might include:
- what features of DAOs (for example Colony or Aragon) make it beneficial to achieve their goals?
- what kind of business models will develop?
- will the network effect be different with DAOs to existing models?
I could draw a Venn diagram showing organisations (with people), DOs, and DAOs but the British Summer is far too short as it is…
For some more context, my recent 30 min talk on Blockchain and the Decentralised Workforce is available here, and builds on my research paper to extrapolate how work might change over the next decade or two.
This is an excerpt of an article on the Workforce Futurist Newsletter that you can read in full here — Do You Trust the DAO?