DAOs and the Future of the Enterprise

I’ve written about DAOs (Decentralised Autonomous Organisations) before but I want to toy with the idea of DACs — Decentralised Autonomous Communities.

What’s the difference?

I see DACs as the actual reason the web3 construct should exist — in a way, the DAO acts as a holding or governance structure, and multiple subsidiaries, or communities, operate autonomously underneath with either common or separate mandates but each with their own sets of code, token strategies, etc.

It’s the Crazy Idea of Becoming a DAO of DAOs

The problems with DAOs are becoming evident outside of the regulatory issues, like jurisdiction and tax. Voter apathy, voter fraud or manipulation, lack of real governance or direction, and the fact that “code is law” means there’s very little fluidity or leeway.

This is extremely ironic given that the lack of hierarchy and rigidity is touted constantly as a benefit.

But what if you had a set of autonomous communities, structured the same way but ultimately responsible to the main DAO itself?

You could argue that this is already the case in some DAOs with huge reserves to dish out on projects voted upon, forming groups around each initiative. But they’re all bound by the same code — and therefore also prone to the same issues.

By creating further decentralization and autonomy, or nesting, there may be some benefits and protections afforded, as well as clear goals and the means to execute.

How This Translates to the Enterprise

Over ten years ago, I wrote a series of blogs that examined the restructuring of organizations toward a less formal hierarchy and more akin to social structures.

Today, we call them DAOs, driven by the need in web3 to decentralize power and governance using smart contracts and tokenization.

But a DAO is still a human problem to solve. I’ve already written in a previous post about the concept of DAOs within DAOs; which made me resurrect my old blog and go over some of the ideas I had before.

DAOs can become pivotal to digital transformation. Agendas are normally set at the top — people in the boardroom with no idea of how life is on the shop floor. What if digital transformation programs became DAOs where funds were allocated depending on the voting of the people it is likely to affect — i.e., the working community?

DAOs are also pivotal to rethinking just how employee performance should be measured. KPIs or OKRs can no longer be the defining factor in appraising someone in an organization — DAOs are driven by communities, so reputation and influence matter more.

I wrote before about how HR could use social structures to uncover where the real information networks and subject matter experts existed, so why can’t a DAO?

What if DAOs could redefine how salaries are calculated to become more fair and equitable? What if DAOs could remove inequality or gender pay gaps?

What if DAOs integrated more web3 components as part of compensation structures? NFTs as your career history, NFTs as a bonus, NFTs as an alternative to sharing options, NFTs as a loyalty scheme?

A DAO — in whatever legal structure it eventually takes — can potentially solve some fundamental problems that are purely human in nature before the blockchain technology is factored in.

I said before that the smart thing is to start with the customer experience and work backward to the technology — in this case, start with the org structure and work backward.

Also published here.