DAOs and Their Evolving Operating Systems
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 chat? 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.