DAOs are complex and frequently chaotic environments. As a new organizational technology, there are very few best practices that have permeated across the ecosystem. Everyone is rapidly experimenting and learning on their own. It’s a tumultuous and exciting time for those of us who are energized by the potential of self-managing organizations to fundamentally improve the experience of work for people across the world.

A useful analogy for understanding what is happening within any organization, even a DAO, is that of an organizational, or DAO, “operating system.” Without going too far down a technical rabbit hole I’m not qualified to lead us down, an operating system is the mostly invisible to the user layer that runs between your computer hardware and the software you interact with every day.  What if we extend that idea into our DAOs and how they function? What is the invisible layer of assumptions, principles, and practices that manifest the way we experience our DAOs?

While an imperfect analogy, it has been useful in our work at The Ready as a way to help crack open the typical black box of organizational culture. It gives us a series of levers and intervention points where deliberate decisions can be made about how we want the organization to function. Our current best thinking about organizational operating systems has led us to twelve different areas or modules that interact with each other to create the organizational experience. They are; Purpose, Strategy, Workflow, Membership, Authority, Resources, Meetings, Mastery, Structure, Innovation, Information, and Compensation.

Each field simply holds the space for the principles, assumptions, and practices related to each topic. You can think of each field as a lens through which you can analyze your entire organization to see it in a new light. It allows us to ask questions like: What do we believe about what good looks like in each of these fields? What is our current state within each of these fields? Have we made deliberate choices about how we do these things or are we on some kind of inertial path based on our historical experience in other organizations (or deep-seated assumptions about work and humans)? Are our beliefs and principles across these fields coherent? Or do we believe something in one field that is directly at odds with another (e.g. we want to push as much authority to the edges of the organization as possible but we hoard the most important information to a few key roles)? Are the challenges we’re experiencing in one field permeating across our operating system in unhelpful ways? Is there something we’re doing well in one field that we can translate to another field?

As you may be starting to realize, looking at your DAO through the lens of the operating system metaphor opens up a world of conversational and interventional possibilities. It’s like taking a crystal and holding it up to a boring old ray of sunshine. What was once undifferentiated white light is now a spectrum of discrete colors and intricate patterns. What may have once been a confusing amalgam of behaviors and conversations and conflicts and interactions in your DAO is now something that can start to be understood, and more importantly, interacted with in a productive way.

The DAO operating system and the OS Canvas are both value agnostic tools in themselves. Neither one tells you what your organization “should” be like. You can take the most oppressive organization from history and use the OS Canvas to understand its decidedly negative and harmful operating system. Knowing that DAOs have operating systems doesn’t mean you necessarily know what to steer that operating system toward.

Your intuition has some hints for you, though. As an early contributor to the crypto space, you’ve probably got some individual principles and preferences around openness, decentralization, and humanity that you expect to experience in the DAOs you’re contributing to. At The Ready, we’ve gone a step further and analyzed many organizations who seem to be making surprising and unexpected decisions about their own operating systems — to great effect.

We’ve collected these practices, principles, and assumptions and tried to better understand what unites them. We’ve landed on two major categories that most of these progressive practices and approaches can be sorted: People Positivity and Complexity Consciousness.

People Positive operating systems are built on the fundamental assumption that people are good, trustworthy, and willing to work hard without someone standing over them with positional authority to reward or punish them. These operating systems build structures and scaffolding that honor the humanity of the people who work within them. They push the envelope on what it means to trust people and they deeply question any policy or process that assumes people need to be monitored, coerced, or otherwise forced into specific behaviors. They expect a lot from people because they know people have a lot to give. People Positive DAOs understand that people will behave in the ways that the system expects them to behave: Trusted people act trustworthy, coerced people will be passive unless forced into action, people treated like pawns will treat the organization like a game to be won.

Complexity Conscious practices, principles, and assumptions are about honoring the reality that organizations are complex systems. Complex systems cannot be analyzed and repaired like complicated systems. Organizations are like weather systems or gardens, not broken watches or malfunctioning engines. Complexity Conscious operating systems allow for emergent and unexpected behavior by creating simple rules and guardrails that constrain behavior in useful, yet minimal, ways. They don’t try to overly predict and plan their way into a completely knowable state because they understand complex systems can never be managed like that. They try to create conditions, expertise, and pathways for more robust sensing, steering, and learning along the way. While humans tend to enjoy feelings of certainty, Complexity Conscious organizations understand that certainty is nearly always an illusion and that the only way to truly understand a complex system is to stay in constant, active, relationship with it.

How to Get Started Evolving Your Organizational Operating System

As helpful as the operating system analogy can be, it has limitations. Namely, you might assume that a DAO operating system can be “installed” or “upgraded” like the operating system on your device. In the technical world, operating systems are built by skilled programmers that are released to the public in one fell swoop. With the push of a button we upgrade our devices with the latest software.

The way DAO operating systems change could not be more different. It’s tempting to think that a small group of skilled organization design practitioners or leaders can go off and figure out the ideal operating system on their own — eventually coming back to the rest of the DAO and “installing” it. I wish it worked that way since it would make my life as an organizational design consultant much, much simpler!

Instead, it’s useful to shift analogies and think of an organization as a species striving to survive and evolving over time. Organisms sense and respond to their environment, sometimes creating offspring with useful mutations that allow them to better survive and reproduce in its environment. These useful mutations persist over time while the unhelpful ones quickly drop away. Eventually, we see the species change over time, becoming more capable for its current context. DAOs and their operating systems operate in much the same way. Instead of nature’s random mutation, most of which are not helpful and don’t survive in the species, we can create intelligently deliberate mutations within DAOs by experimenting with aspects of our operating system. The experiments that help us function better are sustained, expanded, and spread across the organization, becoming norms, defaults, templates, rituals, and other cognitive or sociocultural structures. The ones that don’t help are ended and new experiments are spun up in their place. Over time, through a process of continuous and participatory change, the organization’s operating system evolves.

A process like this requires two things that traditional organizations often struggle with: quick iteration and freedom to try new things. Almost nothing happens quickly or easily in traditional organizations, including operating system experiments. DAOs, on the other hand, may actually suffer from the opposite problem – too much hectic iteration without codifying lessons learned and too many degrees of freedom, inadvertently pitting experiments against each other in a way that confounds the results of both. Despite those challenges, though, I will happily place my bet on the organizational technology that allows for rapid iteration, emergent behavior, and an ethos of innovation. DAOs have all of this, and more, in spades. 

Which DAOs will channel this energy into productive paths forward and which ones will spin around their own local maximum until the energy runs out?

Sam Spurlin is a partner at The Ready, a self-managing organization design consultancy dedicated to changing how the world works. He’s on Twitter and is ready to talk about  anything related to organization design, self-management, and DAOs. Prefer to use your voice? Grab 30 minutes on Zoom with Sam here.

Thank you to Alastair Steward and Tanisi Pooran for specific advice that made this article better. Thank you to all my colleagues at The Ready who have helped build these ideas over the past few years and to all other organizational practitioners whose ideas we’ve been inspired by, adapted, and pushed forward.

This article was written by Sam Spurlin. Sam is a Partner at the organizational change and transformation consultancy, The Ready, and is co-stewarding The Ready’s efforts to contribute to DAOs and the web3 space more broadly. You can reach him on Twitter at @samspurlin.

The Ready exists to change how the world works — to realize a more adaptive, equitable, meaningful, and human way of working. This has meant partnering with some of the world’s largest and most well-known organizations as they strive to remove decades of organizational debt to become better versions of themselves. It has also meant partnering with many smaller and lesser-known organizations who want to develop organizational operating systems that help them retain their nimbleness even as they scale. Not content to swoop in with broad proclamations or sexy PowerPoint slides, we’ve been working side-by-side with courageous leaders and teams who want to actually try new ways of working and are willing to get uncomfortable doing so.

Six years later we’re striving to keep our noses and brains firmly planted to the edge of the future of work. It’s important that we don’t grow complacent in the face of the success we’ve had so far. We work with too many clients who are on the downslope of influence and success after losing sight of the future. What might be next for us? Where are our blind spots? Where are the interesting things happening in the future of work that we aren’t involved with, or even necessarily understand, yet?

It’s impossible to be a future of work thinker and organizational practitioner without hearing about “web3” and “DAOs” over the past few months. As a company, we decided that we needed to get smart about this movement — and fast. It would be a complete dereliction of duty to ourselves, our current clients, and our future clients if we didn't work hard to understand what's happening in the world of web3. So, that's what we're doing.

Specifically, a colleague and I have committed to spending the vast majority of our time learning about, joining, and contributing to DAOs. The only way to have an informed point of view of this space is to participate. Behind this participation are a handful of foundational questions that we as a company who cares deeply about making the world a better place need to have conviction about:

• Are DAOs and web3 here to stay? Are we just dancing on the edge of an ephemeral bubble or is this the frontier of something important?

• To what extent do DAOs offer a framework for more equitable, adaptive, and human ways of working? 

• Assuming every DAOs is not inherently positive in every circumstance, how can we encourage them to evolve in better ways? What role can a company with our values have in making sure the next system doesn’t simply recreate the worst parts of the current system?

• What aspects of self-management and new ways of working are DAOs unnecessarily re-creating from scratch? What roadblocks can we help them steer around as experienced practitioners who have been wrestling with many of these same ideas for a long time?

• What can we learn from what current DAOs are doing and trying that is actually useful to bring to our more traditional organization clients? What bidirectional learning between the “old world” and the “new world” can we facilitate?

• How can we help DAOs get better at all the messy “human stuff” that cannot be abstracted away by technological innovations and always emerges when human beings come together to solve problems (whether there’s a blockchain involved or not)?

• What do we need to understand about web3 and DAOs in order to help legacy organizations effectively bridge their current reality into one where DAOs and other blockchain-enabled approaches become a larger part of their internal and external ecosystems? What do we need to know to advocate for this when it makes sense and to caution against it when it doesn’t make sense?

I’m sure I’ll look at this list of questions six years from now and shake my head at the naïveté of some of them while simultaneously being impressed with how prescient some of them ended up being (it’s definitely something I’ve done before). Either way, the only way you become fortunate enough to look back at your previous work and cringe is by taking the first step to actually put it out there right now.

Perhaps even more important than articulating what we need to do to start figuring out this world is articulating a few things that we don’t need to do. We don’t need to swoop into an ecosystem that has existed for years and act like it’s brand new. We don’t need to bust in the front door and start offering a bunch of advice and platitudes about how things should or could be different than they are right now. We don’t need to come in and immediately impose our own view of the world, as enlightened as we like to think it is, into a context where others have been doing a lot of hard work for a long time.

Instead, we are trying to do a few things:

First is to simply learn as quickly and as deeply as possible. Web3 is notoriously difficult to grok for the non-technical and onboarding practically, and conceptually, requires serious effort. This has been my work over the past few weeks. Reading everything, watching everything, joining Twitter Spaces, watching videos, lurking in Discords, taking notes and thinking thinking thinking.

The trick, especially for someone like me who truly enjoys the solitude and individual experience of learning on my own, is to not get stuck in this posture. I will never feel like I learn or understand “enough.” There is always more to learn and if I wait for perfect understanding I will never move beyond the lurking and learning stage. Instead, I’m trying to remain in a learning posture while also engaging in small ways with the movement I’m learning about. It’s about making small connections between what I’m seeing in web3 and what I’ve learned and experienced as a progressive organizational practitioner over the past six years. It’s replying to Tweets, it’s writing my own threads trying to articulate things I’m noticing, and it’s about asking more questions than making declarative statements about how things are.

Next, and I hope to gradually transition to this phase soon, is identifying specific pain points and tensions in DAOs where I’ve cultivated relationships and offer my expertise in service of solving those challenges. In some cases I think the things we do with our current clients will translate extremely well to DAOs. In other cases, I think we will need to innovate new tools, practices, and processes that are truly custom designed for the unique DAO context. We will inevitably co-create these with other folks — probably many we haven’t met yet — who are bringing shared values and principles to this work, too.

After that the future gets increasingly murky. How does our work with DAOs and the people who do that work at The Ready interface with the rest of our organization? Should The Ready itself create a DAO that brings together progressive org designers and other practitioners? How can we do what we’ve done in the world of regular organizations with DAOs? Murky, murky, murky –  but exciting.

For now,  it’s back to listening, learning, provoking, and looking for opportunities of helpfulness. Let’s change how the world — and DAOs — work. Let’s make them the most adaptive, equitable, meaningful, and human they can possibly be and not unnecessarily carry over the assumptions, practices, and ways of working that have made traditional organizations so detrimental to so many people.

Today, I’m excited to announce a new partnership for The Ready. As you’ve probably noticed, we’ve been diving deep into the world of Web3 to better understand what role innovations like the blockchain, tokens, NFTs, and DAOs might play in the future of work. And while it’s early days, it’s easy to see that there’s something unusual and interesting happening in this space. But, there’s also a clear need for more accessibility and thoughtfulness when it comes to the systems that underpin this movement. And that’s why we’re working with Jack du Rose and Colony, with whom we co-wrote this piece.

Rethinking the value of work

Even if you’ve never sat within the taupe confines of a partitioned desk, it’s not difficult to envision the existential desolation of life as an office drone. The image somehow encapsulates the essence of what is wrong with work in the modern world. Perhaps it’s so unpalatable because within those walls you are reduced from a self-sovereign individual — with hopes, passions, and aspirations — to a fungible cog in a great mill of bureaucracy. You feel like your time and mental energy are being leached by a faceless corporation, exerted upon a pursuit with no compelling goal, and all to the disproportionate benefit of those higher up on the ladder.

The feeling many have as a result of working life is one of profound powerlessness — the inability to change one’s circumstances or exercise will over how one directs their effort. In western cultures where individuality is championed, it’s common for a person to feel trapped in a job, unable to escape the necessity of meeting ever-increasing financial obligations their salary has afforded. What makes the struggle of office life so “soul-crushing” is not only the need to sell your time and effort to survive, but also the indignity at having so little choice over how that time and effort is spent. The degree to which a job “sucks” is related to the amount of effort we’re forced to expend. It’s an affront to our innate expectation of agency. Agency is dignity — and dignity is a human need.

With that reality as a backdrop, it comes as no surprise to those who spend their days thinking about the future of work that the pandemic has catalyzed “The Great Resignation,” an ongoing wave of people voluntarily leaving their jobs in search of more rewarding and meaningful ways to live.

For most, having agency is essential to experiencing engagement and fulfillment in a role. In a “dream job,” we would set our own hours, work only on tasks we chose, and see the fruits of our labor result in meaningful production. In a “dream job,” work might not feel like “work,” because work would be an extension of our own will.

Some people get close to that. They might be a freelance designer, writer, or software developer who has somehow managed to find their niche and bend work to their will. But such individuals are the exception rather than the rule, and often have a trade in which they do not need to work on a team or collaborate with others too much to produce value. A freelancer chooses not to be a part of “the firm,” and instead works independently, choosing which projects to accept or reject. We can also imagine a dynamic entrepreneur who possesses a maximum amount of agency. They choose exactly when and where to direct not only their own effort, but also the resources of their firm.

From corporate hierarchy to value-creating networks

Hierarchy has been the traditional mechanism by which an entrepreneur directs or leads their firm. Hierarchy has enabled human collaboration for tens of thousands of years, and it does a great job of handling two facts of work: Some people are better than others at doing certain tasks, and more can be accomplished collaboratively than individually.

Corporate hierarchies allow us to overcome problems like division of labor, coordination, and quality control. They also provide an alternative to the market-price mechanism for labor. Companies increase in size once they reach a threshold where it’s more cost-effective to employ someone to be available all the time rather than paying an external supplier to do what’s required when factoring in the “transaction cost” of finding and managing those suppliers.

Within hierarchies, authority is concentrated at the top and cascades down. Power is delegated and divided amongst ever more numerous and less-influential subordinates. In an ideal world, people could ascend a hierarchy, because those higher up would identify their quality and modulate their influence on the basis of merit. In hierarchical organizations, management strata should be staffed in strict order of competence.

This isn’t how it works.

Primacy often comes to the most dominant, vociferous, or politically savvy candidates and not the most capable. Bottlenecks and single points of failure are key characteristics of hierarchies. Politics, conformity pressure, groupthink, and multifarious biases jeopardize effective management and decision-making.

As companies scale, it takes longer for information to travel up and down the chain of command, for decisions to be made, and for ideas to be implemented. This lack of agility can mean an inability to adapt to changing market conditions, and is ultimately why incumbents get disrupted by faster and more responsive upstarts.

Today, many organizations recognize these increasing problems and, as a result, are applying more progressive approaches to management and governance. The Ready is a leading organizational change consultancy at the forefront of the growing movement towards more responsive forms of organization. Our client list — from Roche to sweetgreen to the Federal Reserve Bank — includes some of the most influential and interesting global organizations. And we partner with companies of all shapes and sizes to help them usher in new ways of working that focus less on command-and-control and more on self-management, less on hierarchy and more on distributed authority.

Our approach comes from a fundamental understanding that the corporate hierarchy is “legacy code” in humanity’s operating system. It is a relic of the industrial age, a time when organizations were complicated but predictable. Processes were linear, information traveled slowly, and change was gradual.

Today, technology and increased connectivity means information moves at the speed of light, change happens rapidly, and businesses that were once merely complicated are part of a complex global network of commerce that produces unpredictable emergent opportunities and threats that were inconceivable when corporate hierarchy was developed.

The Ready rejects binary thinking that work can only mean waging everyday battles between chaos and bureaucracy. Using guiding principles like consent, autonomy, transparency, participation, and decentralization, we help organizations examine their dominant assumptions and practices; shed traditional, inflexible patterns and pyramidical thinking; and design new, ever-evolving models that embrace continuous change. If the future of work we want to create and step into is more human, adaptive, equitable, and regenerative, we won’t get there using old tools and clinging to old trappings.

Org design expertise + DAO tech = the future of the firm

In 2021, DAOs have blazed to the forefront of the crypto consciousness. DAOs are software arrangements that use incentives to trustlessly and permissionlessly coordinate economic activity in a network of rational, self-interested agents. Put simply: software that financially incentivizes people to do stuff.

Arguably, all tokenized cryptosystems are DAOs. DAOs can be very narrow, as in Bitcoin’s case, where the protocol incentivizes people to do one specific task: provide it with computational power. But DAOs can also be maximally broad, existing to trustlessly coordinate and incentivise arbitrary human work.

What we mostly see right now are DAOs sitting somewhere in the middle of those two extremes. Common use cases are DAOs that exist to pool assets to makes investments in things that its members would lack either the bandwidth (as in the case of deal-flow through venture DAOs like The LAO) or the wealth to purchase individually (as in the case of ConstitutionDAO’s valiant but recently thwarted attempt to purchase a copy of the US Constitution).

There are also DeFi DAOs, like Yearn Finance, and social DAOs, like BanklessDAO and Friends With Benefits. These are operating at the broad end of the spectrum, though they’re weakly coordinated and participation and incentivisation is neither particularly permissionless nor trustless.

Nevertheless, they hold within them a promise of Shangri-La in the future of work: to enable a group of people to collaborate on a shared project without needing to trust or even know one another. This is a new paradigm for coordination without centralisation; not a firm, but a fluid.

That’s where Colony comes in. Colony was one of the first projects to start building on Ethereum back in 2014, and to see the full potential of blockchain smart contracts as the basis for new kinds of on-chain organizations that resemble the open, participatory, and adaptive organizations The Ready helps enable in meatspace.

Instead of being monitored and evaluated by someone higher up a hierarchical food chain, an individual’s merit within a colony is calculated through a systematic peer review of completed work and represented numerically on the blockchain. This number, by virtue of being rooted in trustless consensus, entitles the individual to direct shared resources of the firm within the remit of their expertise.

Like the freelancer, a worker in a colony has the ability to move between projects at will. Unlike the freelancer, however, there is no longer the restriction of independent work for other people. Instead, she may work on projects and tasks that are part of a larger, shared endeavour — and in which she acquires ownership and influence proportional to the value of her contributions.

Colony’s ambition is audacious to say the least. They aim to catalyse nothing less than a “Cambrian explosion” of previously impossible organizational forms that blur the boundaries between companies, platforms, workers, and users, and engender new paradigms of occupation and income.

“DAOs are to companies as video games are to board games,” says Colony founder Jack du Rose. “To play a board game, you have to understand the rules. If you don’t understand the rules, it’s hard to play the game. Software is good at enforcing rules — so in video games, you can’t not play by the rules. That’s why video games are so much easier to play than board games.”

“Companies are basically just rules for managing resources and distributing authority. Most companies today define those rules in documents and legal contracts. Financial transactions, even trivial expenses, require admin and intermediaries. Employment is inflexible, roles are rigid, and power is opaque. Colony helps organizations define and enforce business rules. That makes the rules easier to create and easier to follow, with less admin, greater transparency, and in places they couldn’t before, like between strangers on the internet.”

Today, Colony and The Ready announce a partnership that aims to combine The Ready’s deep experience of bringing self-management to the world’s leading companies with Colony’s best-in-class tooling for self-management of DAOs.

“The momentum in the DAO space to decentralize and distribute ownership and authority is perfectly aligned with The Ready’s purpose and expertise in self-management,” says The Ready’s founder, Aaron Dignan. “For DAOs right now, accessibility to the right combination of ideas and tools is the key challenge. Colony is the DAO tooling best poised to address those challenges and we’re excited to work with them to bring our knowledge of effective self-management practices to DAOs: the next generation of world-leading organizations.”

You can discover more about how The Ready helps organizations eliminate bureaucracy and adopt better ways of working by reading our book, Brave New Work; subscribing to our podcast and our newsletter; and following us on Twitter. Ready to shake things up at your own organization? Please reach out to get a conversation going. We’d love to hear from you.