Are DAOs the Future of Agile Organizations?
In my Professional Scrum Training and coaching sessions with teams, I’m often asked about how to navigate organizations’ centralized planification. In this article, I'll share an alternative to traditional organizations’ top-down structures - DAOs. We will discover what they are, how they support Scrum teams to better achieve their goals, and why this is a game changer.
What is a DAO?
A Decentralized Autonomous Organization (DAO) is a team with a treasury organized around a shared purpose. Members self-organize through a shared set of rules enforced by a blockchain.
Every single transaction of the DAO’s balance sheet is registered on a blockchain - such as Ethereum or Solana. It means that all actions, ideas, transactions, values, decisions, and goals in DAOs are visible and understandable by anyone - inside or outside the DAO. Scrum teams have the privilege to work on their mission in a completely transparent environment.
Whether you are a stay-at-home mom or a 14-year-old teenager, nothing can prevent you from joining, working toward your purpose, and earning money. DAOs are inclusive and agnostic to gender, age, ethnicity, social status, religion, or sex. They welcome and encourage anonymity to foster inclusion and diversity.
As they are half human and half digital, DAOs welcome you wherever you are physically located in the world - you need nothing more than an Internet connection. Geographic borders don’t exist; you will get paid without having to worry about visas and work permits. DAOs are the nations of our emerging digital world. You no longer have to limit your collaboration to where you physically are.
How do DAOs support Scrum Teams?
The Scrum Guide states that “Scrum is founded on empiricism, which asserts that knowledge comes from experience and making decisions based on what is observed.”
We know that transparency plays a critical role here: “the emergent process of work must be visible and understandable to those performing the work as well as those receiving the work”. Without transparency, Scrum’s empiricism doesn’t work anymore.
As an agile coach, I support Scrum teams and leaders from different industries who are working hard to improve the transparency of their work environment. More transparency means empiricism can emerge, and this is critical for benefiting stakeholders. The structural lack of transparency in traditional companies is often a strong impediment that Scrum teams have to deal with. On topics such as recruitment, promotion, budget, or business strategy definition, they often struggle to find the accurate information they need.
By their intrinsically transparent nature and the clarity of their mission, DAOs support Scrum team’s efficiency toward their goals. They offer a transparent environment which allows Scrum’s empiricism to emerge and maximizes outcomes for stakeholders.
There is something I’ve noticed when working with DAO members: they are not only motivated, but they are also clearly inspired and passionate. They are nurtured and love to share their mission with the world. Many consider themselves as the authentic explorers of an unknown realm - a decentralized, transparent, and inclusive realm. Clearly, they are on a mission.
This can contrast with the results of the Gallup study (1) about traditional company employees’ engagement in the US: 51% of workers are "not engaged". It means that they are psychologically unattached to their work and company. Unfortunately, these employees spend so much unsatisfying time at work. And this is also a significant threat for the future of the companies they work for.
As members are free to join or quit a DAO, they are kind to each other and aligned toward the same purpose. They help each other to grow and are autonomous in their activities. DAOs are a space of autonomy, mastery, and purpose; they create engagement, and this is exactly what knowledge workers like you and me need to create better outcomes.
Let’s be honest – working in a DAO is revolutionary for Scrum teams. Low structure costs, high transparency, and clarity of purpose are unmatched with traditional companies and contribute to the high level of engagement of DAO members.
Why Are DAOs a Game Changer?
Fast-paced changes in society, the natural environment, market conditions, and technology are challenging companies to adapt at an unprecedented speed. Their centralized nature, inherited from the industrial age, seems to be a poor fit for this more and more complex world. Companies need to constantly inspect and adapt themselves, and the way they address this has to improve drastically. Let’s consider the time it takes to recruit talent, change contracts, make business decisions, or re-organize teams. It takes months or years, versus hours or days for DAOs.
Individuals join DAOs because they feel engaged by their mission. They are free to join and leave wherever they’re located on earth. They are self-managed and get paid based on how their efforts helped the DAO get closer to its goal.
Our world used to be a place where the big ate the small. We are evolving into a new paradigm where the more agile win.
Compared to traditional organizations, the frictionless nature of DAOs gives them a tremendous competitive advantage in a world that is becoming faster and more complex every day.
Since the COVID-19 pandemic, a secret that used to only be known by tech people has been discovered by every single employee - it’s possible to work completely online and break free of geographical constraints. Business centers are more and more empty as employees are less keen on coming back to the workplace.
Back in 2011, Marc Andreessen used to say, “software is eating the world” (2). The consequence of this is that complexity is eating the world, market by market, team by team. In their article “The New New Product Development Game”, Takeuchi and Nonaka demonstrated how the best fit for complexity is self-management toward shared goals, and they called it Scrum. This is exactly what DAOs foster as a supporting structure for Scrum teams.
We are early and more work needs to be done in the areas of law, security, and governance. DAOs are emerging and challenging the status quo in every field from climate change to finance, education, charity, media, consulting, and social services.