k/factory, the Ins and Outs of a Self Managing Organization
A creature of Web3, Centrifuge is infused with the same values. And that’s why it’s run by a self-managing organization (SMO) that’s uniquely designed to foster decentralization.
Meet “k/factory,” the core team building Centrifuge.
Centrifuge is the DeFi home for Real World Assets and k/factory (k/f) is the SMO that runs it. Fun fact: “k factor” represents the relative pelleting efficiency of a centrifuge rotor at maximum speed.
So why an SMO?
Harvard researchers Amy Edmondson and Michael Y. Lee have described self-managing organizations as “those that radically decentralize authority in a formal and systematic way throughout the organization.”
Applying principles to action
People who build Web3 are often driven by a desire to do things differently. We deeply believe the best way forward for our world is to govern and own what we’re building and enable others to do the same.
Democratized access, autonomy and decentralization are the key principles of this movement and underpin the Web3 protocols and DAOs that form around them.
Born against a backdrop of market failure and advances in blockchain technology, Centrifuge aspires to solve inefficiencies and inequities in the global financial system.
Just as we are bringing transparency, access, fairness, and integrity to the world’s financial system we are using these same principles, as well of those of Web3, to organize our team.
Our self-managing setup facilitates building with agility and speed and allows us to innovate in a way not possible with a traditional structure.
Old paradigms don’t fit
Anyone working in Web3 knows that it is both a highly emergent and a complex adaptive system: change happens incredibly fast and there are many unknowns.
We are constantly contending with disruptive events. Thus using a simple or complicated organizing system like managerial hierarchy would be akin to trying to direct a tornado — it doesn’t go where you want it to.
Cofounder Lucas Vogelsang points out that SMOs are not about trying to remove all structure and just letting people do whatever they want. “It’s actually about building a more needs-based structure,” he says, “while also building more trust to let people exercise a far wider range of skills.”
In an SMO, everyone has the ability to decide how they will do their work, as well as the ability to introduce fresh thinking and participate in problem solving. Leaving this to a small group of people would be grossly inadequate.
At k/f we assume that:
- People can be “self-organizing agents”
- People have a love of exploration and discovery
- People are innately collaborative
If we give people trust and autonomy to make decisions, they’ll quickly become better at making them.
Martin Quensel, our other cofounder, adds: “How people are motivated to contribute to the success of [Centrifuge] is inherently different than what I have seen in the traditional companies that I have built in the past; not only does everyone own part of what we’re building but they also have the ability to see a problem and fix it without asking permission or getting stuck in the stifling politics of ‘who has official authority’.”
How does it work?
Our organizational structure embodies principles and practices that team members bring from backgrounds in open-source software and DAOs (iterative improvement, proposal culture), decentralized communities (relationships and trust as key), and approaches like Sociocracy (“safe enough to try”’ and “consent- based decision making”).
Circles
In k/f we use the idea of “circles” from Holacracy but instead of “lead links,” we have “facilitator leaders” for each circle. Circles have autonomy to execute and deliver on collaboratively agreed strategic goals.
Roles and Accountability
Everyone in k/f defines their roles with their circle. This involves figuring out the core components of all the things you are doing, and that are needed to achieve the strategy. When someone no longer wants to hold a role, there is a process to ascertain whether another core-team member will take it on, or whether there are enough empty roles to hire a new person. Each role has a purpose, accountability and measure of success. If you hold a role you also have decision-making rights.
Decision-making
Routine, simple decisions (i.e., how will I organize my morning, what message should I send to the community, what time should I schedule an onboarding call with an asset originator) are made without consultation. For other decisions the following applies:
- Advice process: the role holder or person who sees a problem or opportunity wants to take action to change something, and input is sought (often through “temperature checks”) from those affected or who have advice. But ultimately it’s up to the initiator to make the decision (they can integrate or ignore any advice they’ve been given).
- Consent-based decision: Once a proposal is made people can agree, disagree, abstain or block. If there are no blocks the proposal is adopted (“block” means “not safe enough to try” or “will have severely negative consequences for the project”). Although technically a proposer can push a decision forward even if a majority disagrees, such cases proposals are usually reformulated or withdrawn for reconsideration.
Leadership
Just because we don’t have C-Suite managers doesn’t mean we don’t have leaders. Leaders feature in all human groups and they play an important role. Our facilitative leaders face a new challenge: how to lead by partnership rather than domination. They uphold Centrifuge’s vision and strategy, ensure circles have access to the same information, and create the two sides of psychological safety: the ability to challenge accepted thinking and feeling supported to try new things.
Org Dev
We have an “Organizational Development” circle who meet weekly to sense-make and triage organizational challenges, forming working groups with the input from coaches at Greaterthan.works, an agency specializing in new ways of working and SMOs.
Culture
We also spend time growing our culture and relational fabric and developing our communication. Culture simply means “what’s normal here” and is formed over time via patterns that people consistently act out.
Because we’re a fully remote team, we have bi-annual all-team “offsites” where everyone meets up in a beautiful location to discuss strategy and prioritize circle goals. Equally important is using time at offsites to just hang out and connect.
Did you say ‘relationship fabric and inner work’..um, what?
Most of us had to learn to survive in societies and work cultures that run on domination and control. We are very used to having things decided for us.
We’re used to sniffing out where power lies and using any tactic we can to snatch some of that for ourselves. And we’ve had little choice.
When this results in stifling work cultures, positional authority that doesn’t reflect merit, and an inability to keep up with a non-linear world, we need to be brave enough to try new things. But it’s not easy to switch from the behaviors that we had to learn in the old paradigm.
To thrive in an emergent, self-managing environment we need to do inner work; look at our triggers, not shrink from exposing our vulnerability, be willing to communicate and really listen, and exchange meaningful feedback with our peers. A good way to check this is to think about whether your questions, comments and feedback are fueled by compassion and curiosity, or the desire to blame, criticize or prove a point.
Author Brene Brown says: “Vulnerability is not weakness. I define vulnerability as emotional risk, exposure, uncertainty. It fuels our daily lives. Vulnerability is the birthplace of innovation, creativity, and change.”
This new work culture could help move society away from destructive patterns of extraction, domination and centralized control.
Sounds great but surely it’s not plain sailing?
The journey of being an SMO is not simple, and we’re not perfect. We’ve still got improvements to make and processes to build but the principles, structures, mindsets and behaviors we have covered enable us to collaborate to build Centrifuge in a way that aligns with our principles and those of the Web3 movement we are proud to be part of.
If you’re interested in joining us, check our jobs page here or join our community via our discord or forum.
