What is it?

A series of governance experiences testing various voting strategies and reputation systems. The experiments will leverage the Discord based Zodiac bot module and test the following voting strategies:

• One person one vote

• Reputation weighted voting

• Quadratic voting

• Ranked choice voting

The results of the studies will inform Zodiac product development and help inform DAO governance and reputation research. Both research content and tooling developed will be open source.

What is Zodiac bot?

The Zodiac bot module is a new tool that extends Discord-based voting to execute transactions on-chain over a Gnosis Safe. The bot leverages the Zodiac pack of DAO modules that extend Gnosis safe functionality. For more context on the origins of this project check out this article.

Why participate?

• Drive DAO governance framework and tooling innovation for the entire ecosystem

• Get early access to bleeding edge governance tooling

• Help shape the future of talentDAO

• Get paid to participate

• Earn reputation NFTs

Who is eligible to participate?

• Orange Protocol Verified users in the talentDAO community

• Talentbot holders

• Those following talentdao.lens

• Those who follow us on social and verify with flocker.app to claim their NFT

• Holders of the Research Staff governance badge in the talentDAO Research Guild

• Holders of Writers Guild governance badge

How can I become eligible?

Unfortunately it is no longer possible to become Orange Protocol verified as the campaign has ended. Do not worry! There are still numerous ways to become eligible to participate in the experiment!

The easiest way to become eligible is to follow us on Lens or join the talentDAO social media flock. If you are already an active contributor to talentDAO you may also be eligible for a Research or Writers guild governance badge - reach out to the talentDAO team in the Discord if you think you should be a Research Guild or Writers Guild badge holder.

How do I verify my eligibility?

Verify your wallet with Collab.Land by joining the Discord!

When will the experiments begin?

TalentDAO is actively working with RaidGuild and Collab.Land to implement v1 of the Zodiac bot module in Discord. Implementation will be completed in January 2023 and experiments are set to launch soon after. Stay tuned for more updates by following us on social and joining our Discord.

About talentDAO

talentDAO is a community of digital vagabonds, deranged scientists, and renegade internet natives, passionate about DAOs and the future of work. We believe DAOs can provide a path forward where knowledge is decentralized and talent is unlocked for the betterment of society.

Special thanks to Metacartel and the talentDAO Research Guild for funding this work.

https://mirror.xyz/signornessuno.eth/ge4vca5mWk17uS-5Icf3tEaOyEbBWL6PiCiSK0UOOmI

Leadership and DAOs

Leadership gives organizations direction, inspiration, and coordination to help reach goals. As organizations evolve to decentralize governance and operations through «decentralized autonomous organizations» (DAOs), new questions about leadership emerge.

In DAOs, «organizations» means:

virtual, geographically dispersed groups of highly skilled, autonomous professionals who use information technology as an integral part of the work process, a work process that is difficult to standardize and requires coordination of specialized contributions to achieve complex, often intangible outcomes. [1,2]

In groups operating under these conditions pure hierarchical leadership is not viable for many reasons - among which asynchronous work, lower communication richness, distributed understanding of context - and can lead to unintended consequences: single leaders risk to become central points of failure. Therefore, given the nature of these organizations we must find more appropriate forms of group leadership than hierarchical leadership.

Claims about DAO leadership abound: they are leaderless, there are no bosses, software rules aka «code is law». For many people talking about leadership in DAOs is an oxymoron. Reminiscent of how hierarchies motivate individuals to climb up the ranks, lead members at different ranks to have opposing interests and perspectives, and ultimately lead to conflict, people oppose the idea of hierarchy. Yet how can DAOs coordinate without hierarchies? Who gets responsibility to execute proposals? How to distribute tasks to make efficient use of skills? If anyone can pick up anything, who can solve conflicts that possibly arise? Ultimately, what is leadership in DAOs?

Introducing core DAO leadership

Core DAO leadership is flexibly shared rather than held by single individuals. The goal in a DAO should be to create minimum viable hierarchies [3] that born and die as the context evolves. The challenge lays in avoiding that hierarchies crystallize into full-time, top-down, rigid arrangements that concentrate power, slow down operations, and harm morale.

On these premises, we define DAO leadership as:

a dynamic, emergent group property in which people flexibly lead one another - selectively using skills and expertise based on the evolving needs and context of the DAO - by sharing responsibility to perform specific leadership behaviors to achieve group or organizational goals

In centralized organizations, leaders undergo formal appointment based on pre-defined roles, exert top-down influence/control over people and resources, accrue power and authority as they climb up the ladder, and give the largest bites to the cake based on their rank-order rather than contribution.

In DAOs members co-govern and co-own, participate in decision-making, undertake tasks collectively, collaborate with other members to achieve their common goals, and reap the benefits as a collective. Leaders emerge formally or informally based on the situation (problem at hand) so there is no one leader but multiple ones. Yet what does it mean to lead in DAOs? What are the leadership behaviors contributors are responsible to perform?

Democratizing effective leadership behaviors

Leading in DAOs boils down to doing those things that keep the organization up and running. Building on decades of field research in the realm of organizational science we developed a framework of leadership behaviors that drive individual and organizational outcomes and are applicable in DAOs. We call it core DAO leadership and it includes self, people, task, and change leadership behaviors that empirical research shows can increase organizational effectiveness.

Sharing leadership means taking ownership of these behaviors, acting in ways that prompt the group processes that underlie group effectiveness. Beyond the influence of someone formally emerged as a leader, informal leadership can also have a significant impact on organizational performance. In fact, under conditions of shared leadership everyone has a role to play in the organization, be it large or small. Thus, the goal of a DAO is to reach a state in which the collective is leading itself by harmonically performing the following four sets of leadership behaviors.

Leadership behaviors that drive outcomes

Leading self

Self-leadership means leading from the inside out: you influence yourself through your own thoughts and behaviors before even thinking of influencing and leading others. At the heart of self-leadership there is people’s choice of higher-level objectives to pursue and the actions taken to regulate or control tactical behaviors to achieve such objectives.

Leading people

People leadership means giving attention to people before tasks. Leaders challenge team members to put the interests of the team ahead of their personal interest, encourage them to do more than they get money for, and support them to feel comfortable working autonomously.

Leading tasks

Task leadership means doing what it takes to get the job done, such as determining goals and expectations, clarifying roles, creating plans, monitoring the team's progress over outcomes, and sharing rewards and recognition for achievements.

Leading change

Change leadership encompasses actions such as developing and communicating a vision for change, making strategic and tactical decisions, encouraging thinking beyond traditional norms, and taking risks by pushing things forward.

Putting it all together

The core DAO leadership framework builds on decades of field research in the realm of organizational science, accounting for hundreds of thousands of leaders in several organizational settings. Given the characteristics of this evidence-base, we expect the findings to generalize to different contexts, including decentralized autonomous organizations.

Since leadership can have powerful impacts on collectives like teams, units, and organizations, by introducing the core DAO leadership framework we aim at equipping DAO members with knowledge of effective leadership behaviors to enact as the context demands in order to drive progress, spur commitment, galvanize coordination, and contribute to making decentralized work become the future of work.

Sources

[1] Center for Evidence-Based Management (2019). A rapid evidence assessment of the research literature on factors associated with knowledge workers performance.

[2] Chartered Institute of Personnel and Development (2020). A rapid evidence assessment of the scientific literature on attributes of effective virtual teams.

[3] Concept of minimum viable hierarchies mentioned by Richard Bartlett in «Patterns for decentralized organizing».

About us

To diagnose and mitigate poor organizational health, psychologists developed empirically-driven psychometric surveys to measure the psychological factors that contribute to a healthy organization.

In the traditional scientific literature on predictors of healthy organizations, these same factors have been shown to predict outcomes such as turnover, staffing needs, productivity, performance, client satisfaction, and profit. [1] Predictors include positive organizational attitudes, engaged workers, supportive cultures, aligned values, and clear communication, among others. After reviewing the literature, we concluded that DAO Health can be sufficiently measured using similar psychometrics.

In partnership with the Ocean protocol, talentDAO is introducing our comprehensive DAO Health Survey – an empirically-driven psychometric tool to gain insights into the health of a DAO.

In this post, we provide details about how this tool was developed, how it should be used and understood, and what is next for talentDAO on our DAO Health initiative.

This write-up is organized as follows:

• Operationalizing DAO Health: how we defined DAOs and DAO Health in order to measure them effectively.

• Literature Review: a quick summary of how we conducted our review of the scientific literature to decide what to measure and how to design the survey.

• Survey Design: a brief introduction to the survey, what it is measuring, how to use it, and a few other good things to know.

• The Future of the DAO Health initiative: what is next for this initiative at talentDAO.

The DAO Health Survey is open-source and can be found on Github. Over time, talentDAO will conduct several studies to improve this measurement tool and new versions will be released.

Operationalizing DAO Health

When we talk about DAO Health, what we are really talking about is organizational health.

As researchers at McKinsey put it, organizational health is “...more than just culture or employee engagement. It’s the organization’s ability to align around a common vision, execute against that vision effectively, and renew itself through innovation and creative thinking. Put another way, health is how the ship is run, no matter who is at the helm and what waves rock the vessel.” [2]

It’s an elegant definition, and we would get away using it in any other context, but in order to come up with a way to properly measure DAO Health, we need a properly operationalized definition of a DAO.

After reviewing a wide range of literature on topics related to organizational health, organizational effectiveness, shared leadership, virtual teams, and worker well-being, we landed at the following operational definition: a DAO is a network of contributors coordinating in dynamic virtual teams toward a shared purpose by decentralizing authority and ownership.

With this as our framework, we arrived at the following operational definition of DAO Health:

The DAO's ability to coordinate teams toward a shared vision and objectives as a function of the contributor socio-psychological factors that drive collective productivity, performance, leadership, and individual experience and well-being.

Arriving at these definitions required consideration of the full range of organizational, behavioral, environmental, and structural factors present in DAOs.

Because DAOs come in many different shapes and sizes, some sharing many similar features with traditional organizations and others sharing few, they can be difficult to characterize. The technical conception of a DAO, based on the definition proposed by Ethereum co-founder, Vitalik Buterin [3], can be summarized as “automation at the center, humans at the edges”. Here, the only human tasks are the tasks that automation cannot do.

By Vitalik’s definition, many DAOs today would actually be DOs – ‘decentralized organizations’. But for today’s builders, DOs may not entirely reflect their ideals. The common denominator is the leveraging of blockchain technology. That is, the use of a custom-built protocol to function as the infrastructure for new technological systems. It may simply be that the range of human input needed to run all possible protocols was underestimated in Vitalik’s view. Alternatively, it was not at all anticipated that such strong connections would form within these networks, realizing in communities of active contributors eager to do more than just get rich off the next meme coin. Therefore, we retain the term ‘DAO’ in our definition as we feel it best reflects the current public interpretation regardless if it is a DAO or DO, by Vitalik’s technical definition.

Although they all vary in degrees of decentralization and autonomy, as human organizations, many DAOs operate within similar constraints. For example, the use of Discord as the dominant communication medium for DAOs, despite its criticisms, is largely recognized as standard practice. Similarly, the DAO ideology has created a culture of shared leadership, distributed functions, and high autonomy working environments sometimes dubbed 'permissionless' work.

With this in mind, we defined DAOs under the assumptions of human organizations.

Organizational Design theorist Richard Daft defines organizations as "social entities that are goal-directed, are designed as deliberately structured and coordinated activity systems and are linked to the external environment." [4]

Our view is that this definition of organizations holds for DAOs, albeit with different management models, cultural norms, and technical capabilities.

The activity and goal-directed behavior Daft is describing is the work – or ‘contributions’ in a DAO. These are the activities and behaviors performed to advance the organization's goals.

Our survey focuses on contributors, those doing the work and actively participating in the DAO’s goal-oriented activities. This includes paid and unpaid contributions as well as contributions from those with different membership statuses. However, this definition excludes people with DAO membership by way of financial backing or holding governance tokens solely, as well as presence alone in an open communication platform like Discord.

Unlike voting behavior or event attendance, the state of the contributor experience is not something that can be captured on-chain. If we aim to measure the health of a DAO, we must supplement on-chain activity metrics with off-chain “contributor metrics”.

We refer to contributor experience as an overarching term that encompasses a breadth of varying factors, each with its own moderating effects and various outcomes at each level in the organization.

Contributors provide talent, the collective human capabilities that add value to the organization and make up the working groups of the DAO, also referred to as 'guilds' or more generally, 'teams.'

From this perspective, there are three organizational levels our tool focuses on: individual, team, and organizational. We discuss the relevance of this classification further in the section on Survey Design.

DAO Characteristics

While each level is important in its own right, the team level is an especially important distinction for DAOs. Not only is there evidence to support that the effectiveness of an organization is largely influenced by the effectiveness of its teams [5], but in a DAO, the default modes of teamwork are decentralized and highly virtual.

This doesn’t mean DAOs don’t ever coordinate in proximity. But the technology underlying DAO governance and financials is unrestrictive of time or space. This opens up all possibilities of distributed coordination from local to global geographies. Yet regardless of geography, when two or more people in a DAO work towards common goals, they use computers and the internet as their primary tools to achieve them.

This results in DAOs with a tendency to be:

• high in temporal distribution — teams are geographically and temporally distributed.

• high in boundary-spanning — teams work cross-functionally and cross-culturally.

• dynamic in lifecycle — teams may be teams for short periods or long periods.

• dynamic in member roles — roles in teams shift depending on the current needs. Leadership is also dynamic. [6]

However, like any other organization, all DAOs are unique in their own ways and fall somewhere on a spectrum between pure DAO — high virtualness, dynamism, and decentralization [referring to both leadership and governance] — and traditional organization.

Traditional organizations may have recently adopted remote work, but they also tend to be geographically and organizationally centralized and with members in contractual employment agreements with the firm.

Decentralization of authority is another key characteristic of DAOs that makes them unique. Again, the exact model a DAO subscribes to will vary, but part of the ethos of being a decentralized autonomous organization is that no single party is in control. Without this feature, DAOs are simply high technology organizations on the high end of the virtualness spectrum.

In a similar vein, DAOs are also open source organizations. By this, we do not mean that all intellectual property (IP) developed by DAOs is made freely available — although it often is — but that the organization itself is open to anyone to join, contribute to, or fork.

DAOs openness has spawned a new kind of working modality akin to independent contracting and emphasized by the frequent utility of bounties. This kind of one-off project-based work arrangement as an entry point to the organization is part of what makes DAOs highly dynamic. Contributors can pop in and out of the organization freely, and will often contribute to multiple DAOs at once.

It is with this understanding that we arrived at the operational definition of the DAO as we initially described: a network of contributors coordinating in dynamic virtual teams toward a shared purpose by decentralizing authority and ownership.

One of the core benefits of this view is that although DAOs have distinct characteristics, they still share many similarities with traditional organizations. Of the most significant is the use of teams and the fact that human capital acts as the mediator to the DAO achieving its goals. Therefore, we should still expect psychometrics adapted from traditional organizational settings to be applicable in the context of a DAO. The psychological factors still exist, albeit with likely different outcomes and baseline levels.

Thus, we arrived at our operational definition of DAO Health: the ability of a DAO to coordinate teams toward a shared vision and objectives as a function of the contributor socio-psychological factors that drive collective productivity, performance, leadership, and individual experience and well-being.

With a now operationalized definition, we began our research into the psychological factors associated with these outcomes and how those have been previously measured.

Literature Review

The first step of our research initiative was to understand the current body of research in order to first operationalize DAOs and DAO Health. The second step would be to determine which psychometrics were appropriate. We reviewed 25 research papers, 11 of which were meta-analyses on subjects pertaining to organizational health, organizational outcomes, teams, virtualness, information sharing, leadership, and performance. To determine the psychological factors appropriate to measure, we evaluated an additional 24 psychometric measure validation studies on various factors for contextual fit. In some cases, multiple versions of scales were reviewed and added to a repository of scales for review.

Expert Panel

Four organizational scientists at talentDAO formed an expert panel of reviewers which served to a) deliberate on operational definitions, question selection and revision, and b) follow an item elimination procedure to reduce survey length to a practical standard of ~50 questions.

The expert panel began with a survey of 126 questions measuring 32 different psychological factors and ended 3-rounds of voting [7] with 50 questions measuring 23 factors. We approximate the full survey to take ~20-25 minutes to complete.

Survey Design

The main goal of this survey is to gain an understanding of the health of the organization so that DAO leaders can take corrective action to positively influence the contributor experience and resulting outcomes for the DAO. To do this, we mapped each factor according to its theoretical underpinnings and attempted to visualize the ways in which they ultimately contribute to organizational outcomes.

Understanding the measures

From a psychometric perspective, each structural level [individual, team, or organizational] acts as its own class with certain applicable properties. Sometimes these properties have applications at multiple levels. However, measures used and insights gained at each level for the same psychometric property may be inherently different. For example, communication at the team level may refer to the interactions between team members, but at the organizational level, it could refer to the messaging and information received from the core team. [8]

We measure several factors at each level, knowing that some of them overlap in their domain coverage.

The table below lists each factor with a brief definition, clustered in its level of analysis. We will expand on each one of these in-depth in future blog posts. For now, feel free to hop over to the talentDAO Discord server at any time to get answers and support on interpreting results.

Deploying the survey

DAOs are in their early stages and are constantly growing and evolving. If at all possible, it is best to conduct this survey at least twice a year. However once a year is sufficient to track changes over time.

It is generally good practice to add additional questions in the survey for open feedback [qualitative responses]. These can be general feedback questions or specific matters of concern at the DAO. For example, “Do you have any additional feedback about this DAO?”. Open feedback questions on organizational surveys like this tend to be some of the most insightful data sources.

Including some demographic items in your survey is a good idea as well. Data points that you can pivot and slice on can have a big impact on how that data is interpreted, such as examining how individual opinions and perceptions differ across groups within the DAO.

While we often think of race/ethnicity, gender, age, etc., as demographic criteria, we encourage expanding this view to include any criteria that may influence results in the survey including part-time or full-time contributor status, financial investment status, core team status, bounty hunters vs active contributors, education experiences, previous work experiences, web3 tenure, etc.

Assessing results

Our current recommendation is that you compute the composite health score by following the instructions in the Github repository. Then, repeat this survey on a regular cadence and discuss the results. Ideally, in a forum accessible by all members of the DAO.

We recognize some DAOs may want to use only part of the survey. If you choose to do this, apply the same formula in the repository to each independent factor by reviewing the associated questions as outlined in the file.

For further guidance on how to analyze your results, join us on the talentDAO Discord. We will be happy to answer any questions.

talentDAO and the future of the DAO Health initiative

This overall work represents the first part of a larger research initiative to develop a scientifically validated DAO health survey. Such a process [as is the way of science] takes time.

The survey is meant to be open-source for all DAOs to utilize. However, there will be future iterations of this survey that will be released as we continue our effort to produce a scientifically validated survey by conducting several validation studies over the next few years. Once a scientifically validated survey has been achieved, talentDAO will encourage participation from the entire DAO ecosystem to submit their results for a comprehensive annual report on DAO Health.

Further, along with the report talentDAO intends to list the anonymized data on the Ocean marketplace, where royalties will be distributed to participants for any sales.

It is important to note that this first iteration of the DAO Health survey is an empirically-driven pre-validated survey. That means that the research methodology necessary to confidently claim this survey measures what we say it does has not yet been fully conducted. As we conduct the research necessary to demonstrate scientific validity, we will release updated versions of the survey if we have confidence in a more precise measure.

That said, given that the context that these measures have been adapted from is not completely different — both DAOs and traditional organizations are human organizations — we have a good reason to believe that the validity of these measures should still hold.

As an open-source tool, DAO leaders can access it free forever. While it can be modified for your own DAO, we recommend consulting with one of our organizational science experts to help you make the best decision.

talentDAO intends to continue conducting research and providing scientifically-backed tools and insights to the DAO ecosystem.

Footnotes

1. Harter, James, Schmidt, Frank. 2002. Business-Unit-Level Relationship Between Employee Satisfaction, Employee Engagement, and Business Outcomes: A Meta-Analysis. Journal of Applied Psychology.

2. Gagnon, Chris, John, Elizabeth and Theunissen, Rob. Organizational Health a fastrack to performance improvement. Mckinsey & Company.

3. Buterin, Vitalik, 2014. DAOs, DACs, DAs and More: An Incomplete Terminology Guide

4. Daft, Richard L., 1983. Organizational Theory & Design

5. Guzzo, R.A., & Dickson, M.W. (1996). Teams in organizations: recent research on performance and effectiveness. Annual review of psychology, 47, 307-38.

6. Bell, Bradford & Kozlowski, Steve, 2002. A Typology of Virtual Teams: Implications for Effective Leadership. Faculty Publications - Human Resource Studies.

7. The expert review panel adapted the Delphi method for the item reduction process.

8. We did not operationalize the core team as it was not a prerequisite to operationalizing DAO health, however, we view core teams as both contributors themselves and facilitators of contributions from others. Typically, core team membership is explicitly assigned so there is little ambiguity about it.

A comprehensive list of references and reviewed literature can be found in the Github repository for this project.

This work was authored in a collaborative effort by organizational scientists at talentDAO: k3nn.eth, Nemo, Mr. Nobody, Sherifoz.

About talentDAO — talentDAO envisions a future where 1 billion people have access to ‘decent work’ through self-sovereign work arrangements offered by thriving, successful DAOs. We leverage organizational science to conduct research, build products, and offer talent strategy consulting services to the DAO ecosystem.

Have you ever wondered why scientists are so often underpaid? In an optimized society, those that contribute most to the advancement of civilization ought to be rewarded most fruitfully. Not only do scientists contribute to the advancement of their fields, but they also represent some of the only resources we have for higher education.

This doesn’t stop at scientists–the transition away from fossil fuels shouldn’t be made difficult because those with the power to change the industry are heavily incentivized to maintain the status quo[1]. Harmful algorithms shouldn’t be so difficult to change because those that control them can choose profits over social responsibility.

If we want progress at the current stage of human civilization, we’ll need to drastically rethink our incentive mechanisms.

A technological solution

Over the past few years, decentralized autonomous organizations [DAOs] have emerged as a novel vehicle for mobilizing human beings around shared objectives. Using DAOs as a new model for human organization, we have the potential to do something drastically different.

The key distinction between DAOs and traditional organizations is the programmability of rules and incentives. Rules are defined in open source code making them impossible to game[2]. Decentralization happens through on-chain governance mechanisms, enabling democratic [or meritocratic] systems.

DAOs take all the best features of a blockchain and encode them into org design. While there are many distinctions between DAOs and traditional organizations, the vast majority of these derive from programmability. In essence, DAOs are an example of how technology is becoming an extension of ourselves–the next development in the organizational hive mind where decisions are immutably embedded in the database.

This is further emphasized by a DAOs ability to facilitate *community entrepreneurship–*where entrepreneurship is the effect of value creation/extraction and the community is the organizing force behind it.

Typically, we think of this as a single person with an idea who goes on to form a business. But this can work differently with a DAO; not a single person, but a community can start a venture.

This is functionally unique–traditional organizations form top-down; founders set goals and objectives at the start and only involve new people when there is work for them to do. DAOs organize from the bottom-up; goals and objectives are set by the community and they figure out who can do what after.

I’ve been amazed at what this can achieve for effective altruism. The early days of OpenAccessDAO [OADAO] have been a fascinating experiment on how a single idea and passion-fueled community brings their minds together to forge the way forward for decentralized science.

Other DAOs, like ConstitutionDAO, have demonstrated how we can quickly raise large amounts of capital for such agendas without having to operate as a non-profit.

DAOs provide freedom from a system that tends to lack the organizational metabolism needed to be optimally effective. Non-profits must abide by the rules of a centralized authority, which is mostly incentivized by the government. In other words, we put altruistic work at the bottom of the economic food chain.

Not only do DAOs break away from legacy incentive structures, but their breadth of utility empowers them to create entirely new ones.

Take KlimaDAO for example, which seeks to battle climate change by participating in the carbon credits market, effectively working to offset emissions while issuing returns to token holders. To ELI5 , KlimaDAO is paying people to fight climate change[3].

What an incentive.

Or maybe your cause is to fight homelessness, so you work with NFT creators that help generate revenue for the cause like GoodWorkDAO. Or maybe you're interested in longevity, so you form a DAO to* 'collectively research, finance and commercialize longevity research in an open and democratic manner'* like vitaDAO. These are among many hypothetical scenarios where DAOs create novel incentive structures for their communities.

We are now seeing the beginnings of how DAOs enable brand new ways of incentivizing progress. And there is still so much more potential to be realized.

The death of hierarchy

For thousands of years, dating back to antiquity, hierarchy was the predominant structure for human organization. So dominant in fact, you saw almost no other form anywhere in the world until now.

Even today, hierarchy remains prevalent in organizational structure. But as the seed of bureaucracy, hierarchy led to losses in productivity, innovation, and everything in-between.

We tried adopting flatter organizational structures with less hierarchy and more trust in middle management, but every founder who tries to retain that startup-like flexibility learns that hierarchy inevitably creeps in. As if there was no other trade-off between efficiency and complexity, we simply cannot fathom how to organize ourselves without hierarchy.

Some say hierarchy is older than the trees, embedded in our genetic code–driving our behavior. In fact, hierarchy is one of the most natural structures in the universe. It exists in major biological systems and physical ones too. Your internal organs follow a hierarchy from molecules to cells to tissues to organs. Most multi-star systems follow a hierarchy in which stars can be divided into two groups, each orbiting a system's center of mass, while those smaller star groups can then be divided into even smaller subgroups which themselves can be divided, and so on.

In human systems, hierarchies are a function of authority. For the system to operate, it must abide by rules. A system that doesn’t abide by rules, whether explicit or implicit, isn’t a system at all–it’s randomness. Rules must be enforced in human systems. We make mistakes and need feedback mechanisms that allow us to correct them. At the same time, we must incentivize desired behaviors.

This results in the occasional paradox: sometimes what constitutes good behavior is actually rule*-breaking; *because sometimes, the rules themselves are broken.

This happens when rules are designed by a centralized authority: they are inherently biased.

This isn’t to say that decentralization is always the best solution. Sometimes there truly is only one person [often a founder] who knows exactly what needs to be done to achieve an organization's mission.

That doesn’t mean they can’t be wrong sometimes.

Centralized authorities have their advantages. They're the reason China could execute COVID policy so much more efficiently than the U.S. The same spectrum of governance that predicts nation-state behavior predicts organizational behavior as well.

Traditional organizations document rules and standard operating procedures, requiring employees to sign and agree with them [something they rarely do their due diligence on]. But it's a formality–the rules can still change at any time, with little to no notice at all, for better or for worse. And usually, by a select handful of individuals; typically, executives.

DAOs change all of this.

In a DAO, rules don't require a centralized authority to dictate, change, or enforce. Rules are not documented, they are *programmed, *providing an alternative to traditional hierarchical organizations. Work becomes trustless, open, and optimized for equity.

Traditional organizations won't be going away any time soon. DAOs might even offer improvements over legacy structures implementing governance systems on top of them. A best of both worlds scenario may be possible by trading efficiency for meritocracy.

Imagine a company where decision power is weighted on merit rather than politics.

DAOs make this possible through governance features–issuing tokens or NFTs that allow members to vote on collective decisions. The distribution of governance power can be even further defined by its own set of rules, making it possible for DAOs to optimize their decision-making process.

Most people don’t like the corporate world because the system robs us of our agency. DAOs empower people to take back their agency, slash hierarchy, and incentivize progress. They fundamentally alter the meta-rules of human organization.

Equity, democracy, and social responsibility might be important org values on paper, but somewhere along the way, we lose our capacity to shift things in that direction. Centralized authority modeling Friedman capitalism might be a reason this is hard, but organizations of a certain size might be too complex for humans to make good collective decisions using traditional models. DAOs offer us the features required to change this.

Shifting to technology-first governance models means the ability to form more equitable, sustainable organizations with vastly more potential for human progress.

Many thanks to Phil Mohun and Stanley Bishop for sharing their thoughts with me on this essay. Thier expertise working with DAOs like Bright Moments [which helped me break into this space and learn about these promising capabilities] gave me the confidence to post this without fear of sounding like a congressman interrogating Mark Zuckerberg.

Footnotes

1. How the oil & gas sector incentivized politicians in 2020.

2. DAOs are based on programs called smart contracts running on the Ethereum blockchain. Gaming these systems is actually a non-zero probability. Just like a lawyer with a physical contract, if a smart contract is poorly designed, a good hacker might find a loophole. Though this will get more difficult with time as smart contract security & development grow as a field.

3. For the best in-depth explanation of KlimaDAO that I could find, refer to this Twitter thread. Their website and blog are also good resources.

4. Additional resources for learning about DAOs.