Leadership in the decentralized world of work.
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March 8th, 2022

Leadership means something different to each person.

In the past, people could look at an organizational chart and point to leadership - it was narrowly viewed as a person or position. A modern take sees leadership as a process situated in a specific context. Leadership has become a set of capabilities and behaviors. Anyone and any group of members can enact leadership simultaneously and in various moments over time, versus a fixed label.

At the heart of nearly every definition of leadership is the notion of influence (Yukl, 1998). Within decentralized settings, there is a greater emphasis on influence at the group, and organizational levels, in addition to the more traditional individual relationships.

The ecosystem of decentralized autonomous organizations (DAOs) has been rapidly evolving since 2016. Today there are over 4,200 DAOs, with an estimated $7.7 billion dollars in treasury holdings.

DeepDAO homepage (March 8, 2022)
DeepDAO homepage (March 8, 2022)
DeepDAO homepage (March 8, 2022)
DeepDAO homepage (March 8, 2022)

DAOs are reinventing how people work together, and are perhaps less mindfully rethinking what leadership looks like in the decentralized world of work. This is the reason why at talentDAO we plan to study leadership in DAOs.

In stark contrast to traditional command-and-control hierarchies where a few people exercise top-down power over the majority, DAOs are emerging as new organizational structures that can radically reshape organizational dynamics.

A DAO is a blockchain-enabled organization with shared community, purpose and capital. And while most organizations have shared community and purpose, the differentiators for DAOs are the shared capital, executed through various tokenomic strategies and unique social and technological advances enabled by blockchain

Claims about leadership in decentralized autonomous organizations abound: DAOs are leaderless, have no bosses, and code is law.

Even though these claims may be accurate if you refer to governance, whereby any member can put forth proposals that other members vote for or against in a democratic process, the ground starts shaking if we talk about operations or politics.

These are some of the questions that so-called leaderless organizations need answering. 

The central argument against the concept of leaderlessness came in the 70’s from an essay by Jo Freeman: ‘there is no such thing as a structureless group’. 

To bring an idea to reality any group, whatever the idea, needs structure. 

This ‘may be flexible; it may vary over time; it may evenly or unevenly distribute tasks, power and resources over the members of the group’.

Recently, in his talk ‘The case for hierarchy in DAOs’ at ETH Denver 2022, former SushiSwap CTO Joseph Delong echoed this idea: ‘structurelessness isn’t really a viable methodology’

Basically, leaderless organizations don’t exist or hardly survive.

In fact, the solution for DAOs may be more structure, not less. 

DAOs need to deliberately create organizational structures to optimize for desired outcomes: autonomy, agency, accountability, ownership, stewardship, cohesion, collaboration, recognition, wellbeing. 

Preventing the dysfunctional behaviors typical of traditional organizations means making explicit choices over organizational structure and dynamics. After all, the structure you have, is the culture you get. Nothing must be left to chance.

For many inhabitants of web3 hierarchy is an outrageous term. Reminiscent of how it motivates individuals to climb up the ranks and think zero-sum, and ultimately lead to conflict, DAOers oppose the idea of hierarchy. 

In organizational science there is a line of thought, the so-called functional perspective, asserting that by giving a structure to guide roles and contributions, hierarchy may benefit team effectiveness as it facilitates and coordinates member interactions. 

However, pulling data from over 14,000 teams in a meta-analysis, Greer et al. (2018) found little support for this claim: hierarchy is a double edge sword, it harms coordination more than it helps it. 

Hierarchy tends to provoke contests and conflicts over the rank order in a team. These conflicts can harm team outcomes, distracting members from the task accomplishment and harming interpersonal relationships. 

Hence, paradoxically, DAOs promise to create a new work culture in discontinuity with traditional organizations, where one element of disruption is hierarchy. Yet, structureless organizations seem to be a short-sighted mirage. So, how to reconcile these seemingly opposing forces?

Ideally, leaderless does not mean without leaders. Instead, DAOs distinctly hold the promise and incentive capabilities to cultivate leadership within each individual and within the collective. So the idea of leaderlessness may be misleading because distributed leadership doesn’t imply less leadership, but more. Our preliminary research, has led to some initial hypotheses for our continued work on understanding leadership in decentralized autonomous organizations:

Our continued research will explore questions like:

How might we reconcile hierarchy and decentralization? 

What can we learn about and apply to DAOs from existing leadership literature?

What does DAO leadership look like?

We are setting out to answer these questions through empirical research on leadership and organization design in decentralized contexts. We will base our inquiry on evidence and logic rather than hunches. 

We know there will not be a single solution that works across the board, rather a blueprint, a composable set of practices to design an organizational structure to optimize for desired outcomes at the individual, team, and organizational levels.

Our approach:

Step 1:

As the first step of our research we will conduct rapid reviews of the available leadership literature (secondary research). A rapid review aims to answer clearly defined questions with the best available evidence defined through explicit criteria. The questions we aim to answer are the following:

  1. What are the most relevant theories about leadership emergence/effectiveness?  
  2. What do we know about their predictive validity over individual, team, organizational outcomes?
  3. How can we measure different leadership dimensions/constructs? 
  4. How do leadership principles, practices and behaviors apply in the context of decentralized work?

Step 2: 

The second step of the research will investigate leadership and organizational structure in DAOs using mixed methods research designs (quali-quantitative). The aim is to understand different DAOs structures, identify which leadership principles, practices, and behavior apply in the context of decentralized work, and highlight emergent leadership practices. The research will involve both interviews with people holding leadership roles in DAOs, surveys with targeted organizations, and analysis of public organizational handbooks, datasets, and thought leadership coming from the ecosystem.

We know leadership already exists in DAOs. We need research to help us understand why and how it is or is not different from traditional organizations.

Ultimately, our goal is to research, learn and provide DAOs the means to build effective structures for leadership that can bring about positive social change.

References

Freeman, J. (1972). The tyranny of structurelessness. Berkeley Journal of Sociology, 151-164.

Greer, L. L., de Jong, B. A., Schouten, M. E., & Dannals, J. E. (2018). Why and when hierarchy impacts team effectiveness: A meta-analytic integration. Journal of Applied Psychology, 103(6), 591.

Yukl, G. (1998). Leadership in organizations (4th ed.). Englewood Cliffs, NJ: Prentice Hall.

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About us: we are Pietro Marenco and Lisa Wocken.

Lisa holds a PhD in organizational leadership, is a founding member of talentDAO and an educator in the DAO ecosystem. She has 15 years experience in leadership development within large corporate contexts, specialized in solution strategy and innovative design and is an experienced qualitative researcher. Her DAO research and ecommerce start-up, Bolster Leadership, focus on developing leaders for the decentralized world of work. Pietro is an organizational psychologist, member of talentDAO and former Deloitte consultant, with 7 years experience conducting rapid reviews in the field of leadership, management, and organization and translating research findings for practitioners, gained as Co-Founder and Head of Content of the no-profit ScienceForWork.

About talentDAO: talentDAO is a community of organizational scientists, strategists, and researchers with a shared mission to unlock human potential in the decentralized, digital economy. We conduct scientific research that helps DAOs thrive while educating the public on the greater decency and agency offered from this decentralized future of work.

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