The 2020s thus far have been a tough decade for optimism. However, according to a new report on Canvas8, we’re witnessing the emergence of an optimistic new world, with growing numbers of “community architects” conceiving alternative models of collaborating. This vigor for redefining how we work is centered around shared values like care, transparency, and inclusion—principles prioritized by a growing percentage of the workforce.
Recently, we’ve witnessed more organizing on the ground with the growing prominence of unions, co-ops, and mutual aid groups. Meanwhile, out of the embryotic world of Web3, Decentralized Autonomous Organizations (DAOs) are experimenting with new ways of using collective power to meet the modern challenges of today.
What are DAOs?
DAOs are organizations that are owned and governed by the people who create their value, instead of being led by a small group of people at the top. What makes them unique from more familiar collectives, like co-ops, is that all decisions are decentralized and made transparent on the blockchain. Cryptocurrency tokens dictate how much say each DAO member has over the collective decisions. Essentially, individuals use their crypto tokens to vote on the direction they want the DAO to take.
The benefit of the DAO structure is that members play a driving role in the activities of the organization. Unlike traditional companies in which those lower down the hierarchy have less involvement in decision-making, a DAO’s collective ownership and governance encourages each member to be invested in the DAO’s success.
We are in the early days of DAOs and as such, we are still learning about how they will evolve to overcome potential weaknesses in their structure and governance. But their popularity is clear—there are hundreds in existence. VitaDAO members can vote to fund longevity research that is based on human need rather than profitability, as opposed to big pharmaceutical companies that only develop treatments that will be profitable. Dirt is a media DAO whose journalism is steered by DAO members rather than outside capital. HerStory DAO is an art collective dedicated to incubating and preserving art by Black women in the NFT space, addressing the historic marginalization of Black creatives and Black femmes in contemporary art. DAOs like these are challenging how we think about who gets to have a seat at the table when it comes to shaping society and culture.
What can traditional organizations learn from DAO principles?
Lesson 1: Meaningful employee engagement
As humans, we typically have two overarching life pursuits – happiness and meaning. Work is central to many of our lives, and workers, especially Gen Z workers, say they want to join companies that align with their values and whose organizational goals contribute to their overall sense of meaning. As such, employees are growing increasingly discontent with feeling like a cog in a wheel – fueling the organization yet lacking any input regarding the decisions that are made by (and benefit) those at the top.
The structure of a DAO is, in a way, a direct response to the traditional workplace structure. At their core, DAOs promise a reformed, democratic approach to decision-making, collaboration, and collective ownership. DAOs give anyone the means to shape the direction of the organization’s evolution from the inside. This ties to our basic human need to be a part of something – to find meaning in the significant contributions we can make to a group.
What might it look like if everyday employees could shape an organization’s initiatives? Turns out, it’s not that hard to imagine. Patagonia already has an initiative called Patagonia Action Works that gives millions of dollars to grassroots environmental activists. If Patagonia Action Works were to become a DAO, its resources could be placed into a shared cryptocurrency wallet and its members given tokens to vote on where and how those funds are deployed in the real world.
- While collective ownership may be unrealistic for your organization, can you democratically share some key decision-making with your employees?
- How might you allocate a percentage of your operating budget to go towards programs, campaigns, or activities that are employee-driven?
- How might you institute an employee board that can share input on the direction the company is headed?
Lesson 2: Inclusion and intentional community engagement
Traditional companies are exclusive by nature—someone within the organization must select you from a pool of dozens of other candidates. Employees and consumers now demand companies examine the ways they’ve excluded people of color, women, disabled people, and other marginalized groups, especially within leadership positions.
In theory, DAOs are open to anyone who wants to join and participate, giving them the potential to be radically inclusive. This makes co-creation an integral and powerful part of how a DAO operates. For example, if a brand formed a DAO, it would give the brand the opportunity to bring their consumers in to co-create the vision of its products and legacy—essentially, future-proofing the brand. For foundations, forming a DAO would empower community members themselves to play a driving role in how to fund activities that help their communities flourish.
While DAOs and traditional organizations may seem to be at odds philosophically, they can in some cases work together to assure more inclusive collaboration. In a real-world example, Cherubim Labs is a venture development company that oversees Cherubs DAO, a bio-DAO that accelerates brain longevity research. Cherubim Labs takes two percent in exchange for overseeing Cherubs DAO’s scientific advisory board, which analyzes all proposals so that DAO members can make an educated vote on proposals. This allows the DAO to be more inclusive of members who are not scientific experts but may care deeply about the issue.
Alas, in practice, DAOs are not always as radically inclusive as they aspire to be. There are several barriers to joining a DAO—you need familiarity with crypto, access to the internet and technology a DAO uses to organize, education around things like Web3 and the blockchain, and of course, the privilege of time to participate. Nevertheless, the philosophy behind DAOs – that anyone may be welcome to join and contribute value—is an important lesson for traditional organizations.
- If you are creating products or campaigns for a specific group, how might you practice intentional inclusion and co-create with that group?
- How might your products, services, or campaigns benefit from a community board or paid community consultants?
Lesson 3: More transparency
Increasingly, employees are holding their companies accountable, demanding atonement for the various closed-door decisions that have prioritized profits over values. We’ve seen this with employee walkouts when employees disapprove of decisions made by company leadership. Unions are growing in numbers to hold companies accountable for how they treat their workers. And consumers are in support of the fight for employee rights—approval of labor unions is at its highest point since 1965.
Without equal decision-making power, the effectiveness of hierarchical organizations is vulnerable to corruption. DAOs attempt to overcome these challenges by writing all rules, member agreements, and decision-making right into its code, making all transactions public on the blockchain for members to see. Such radical transparency holds anyone making decisions within the DAO accountable—breaking down the figurative closed door behind which decisions would typically be made in a traditional organization.
In this way, DAOs offer an alternative way of working that is less likely to be plagued by the declining trust facing traditional companies and institutions.
- Are there certain decisions being made behind closed doors because that’s how things have always been done?
- How might more transparency contribute to holding ourselves accountable within the organization? And how might we benefit from more accountability?
- How might more transparency build trust up and down the organization?
As collectivist sentiments and shared values continue to define the next decade for workers, this is an exciting time for traditional organizations to reimagine how they operate at every level. How might companies rise to meet this emerging way of working to support employees and the communities they serve? If DAOs have taught us anything, it’s that we can be optimistic that this approach is indeed possible.
This article is the seventh in a series spotlighting trends produced in partnership with CANVAS8.