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You’ve probably heard of Decentralized Autonomous Organizations (DAO), which have become a dominant force in the news and have emerged in various industries. They originated in the blockchain, sports, politics and entertainment industries.
DAOs unite people around a common goal or interest. On closer inspection, DAOs show how large groups of people can be organized as a decision-making entity — something that will ultimately disrupt the way companies operate.
DAOs will affect the way companies are structured and the way individuals lead and are recognized within companies. Ultimately, DAOs will create a happier and healthier work environment for everyone involved.
Related: How DAOS is Changing Leadership
What are DAOs?
DAOs are decentralized entities that control projects or companies. The DAO community makes decisions rather than one person who has all the responsibility and power. This creates a distributed and transparent governance and enables all stakeholders to participate directly.
In the United States, Wyoming, Vermont, and Tennessee have already passed legislation recognizing DAOs as legal entities. At the API3 DAO where I lead the marketing team, we strive to operate as a flat, radically transparent community that is efficient, productive and empowering for team members.
DAOs create fair and transparent decision-making processes
Since DAO’s allow members to vote on changes made, the decision-making process is decentralized and democratized. This provides greater transparency around decisions, giving everyone greater visibility and no one feeling left in the dark about why changes are being made.
Another important implication is that the fair and democratic voting process makes for a healthier and happier work environment. Decisions made by leaders who disregard employee feedback can generate resentment and anger, especially when perceived as unfair. By giving members more say in the changes made, companies can create a more welcoming and sustainable environment for everyone.
The decentralization of the decision-making process can also be seen as safer because there is no longer a central point of failure in a central authority figure. Since much importance is no longer given to a single person, the impact of a person leaving the company does not have as much of an effect as a CEO leaving a standard company.
Related: The Strengths and Weaknesses of 4 Different Leadership Strategies
DAO voices move slower, but efficiency isn’t always better
By implementing a decentralized governance structure, you give many people a voice in the future of the company, all of whom have different perspectives. Making sure things move forward can feel like herding cats and be less efficient than a centralized authority structure.
Efficiency comes at a cost. Business leaders don’t always make the right decisions. As mentioned above, when a leader leaves a position, the company is hit hard, while the DAO structure allows for greater resiliency and flexibility.
DAOs are driving a shift in internal leadership
A traditional corporate structure appoints managers to take control of teams and, as the title implies, manage people. Within the DAO structure there is less people management. Since they can no longer lead others by force, individuals must educate, influence and motivate others. This ensures that everyone feels sufficiently informed to make decisions and provides support around a particular proposal being voted on.
This means that strong leadership skills are critical to building support and having influence in the community, similar to what we see in other democratically run organizations.
Related: 3 Ways to Decentralize Management and Increase Productivity
DAOs recognize contributions in the workplace that are often overlooked
In the DAO structure, things tend to be more visible, meaning all individual contributions are seen and acknowledged. Individuals who do an excellent job, but are humble and quiet, often go unrecognized in the traditional corporate structure, as many of their efforts go unnoticed.
Everything is visible in a DAO organization, which means that individuals are not overlooked and they receive well-deserved recognition for adding value to everyone else on the team.
Imagine a workplace where employees are a community of people, where individuals are more self-directed and openly recognized for the work they do. The result is a happier and more productive workforce. If employees have a share in the success of the company, they will produce the best quality work. This workplace culture of fairness and transparency is facilitated by DAOs.