Photo by Cyawan

This week’s curator, Lee Bryant, takes a look at what the failure of the first blockchain-powered Distributed Autonomous Organisation (DAO) can teach us as about decentralised organisations, and shares some links about this emerging topic.

Decentralised Organisations: a failed experiment

We owe a huge debt of gratitude to gifted technologists who are pushing forward the boundaries of the possible, but sometimes they design systems or take decisions that have implications way beyond their domain of expertise. The failure of the first major blockchain-powered Distributed Autonomous Organisation (DAO) is a case in point.

I have written up a basic overview of the story that suggests a key design principle for distributed organisations is that they connect people in a way that builds mutual trust and accountability, rather than creating a purely technocratic system that incentives exploits and bad behaviour.
I think decentralised organisations have a great future, and we need to explore the technologies that can underpin them, such as smart contracts, but the wilfully naive approach of The DAO has done more harm than good. Even if no bug had existed in the code, the social dynamics promoted by the design of the system were highly problematic, and not really conducive to building an organisation of any kind, and its governance model was clearly inadequate.

I think we will see many more examples like this where a development team should ideally include a social scientist, psychologist, lawyer and perhaps even a historian 😉

Shift*Base Guides

There are many ways in which new technology can support decentralised organisations and operating models, short of a full-blown DAO. See our overview of decentralisation in organisation design and also the importance of decentralised decision making. One of the main problems we see in promoting decentralisation in existing organisations is the centralised nature of many shared services, such as IT, HR and procurement. Re-factoring these into sets of micro-services accessible through a shared services platform is a useful first step for any organisation wanting to enable decentralised working. See our overview of the Connected Company for more this.

Weekly Linklog

Interested in what we do?

The field of people and groups working at a practical level to transform organisations and build better business structures for the Twenty-First Century is small but growing fast. If you would like to work with us, for us (or against us!), please say hello 🙂