Scale vs. Speed: Why organizations slow down and the State of DAO Tooling

Kazuki

Hatched by Kazuki

Jul 24, 2023

5 min read

0

Scale vs. Speed: Why organizations slow down and the State of DAO Tooling

In today's fast-paced world, organizations face a constant struggle between scale and speed. As they grow and expand their reach, they often find themselves slowing down and losing the innovative edge that propelled them to success in the first place. This article will explore the reasons behind this phenomenon and delve into the evolving landscape of decentralized autonomous organizations (DAOs) and their potential to revolutionize the way we work and collaborate.

One of the main reasons organizations slow down as they scale is due to a shift in customer expectations. As companies cross the chasm and attract a larger customer base, these new customers are less interested in cutting-edge innovation and more focused on trust, reliability, and efficiency. They want promises kept, a lack of surprises, and reasonable prices. In order to meet these expectations, organizations need to prioritize predictability and consistency in their offerings. By shipping improvements on a regular schedule and bringing a sense of reliability to their products or services, companies can reach more people and make a bigger impact.

Interestingly, many successful big companies started with only a handful of employees. Giants like Apple, Google, Slack, and Instagram all began with a small, dedicated team. This highlights the importance of starting new initiatives from scratch, even within established organizations. Refactoring code and spinning off cash cows to assemble a new team can lead to fresh ideas and innovations. While these new ventures may not work immediately, the experience gained and persistence shown will eventually pay off. It is crucial for organizations to recognize when the pace of innovation is slowing and take proactive steps to reignite it.

The rise of DAOs presents a new paradigm for organizational design and collaboration. Built on web3 technology, DAO tools allow us to design and manage incentives that maintain positive-sum relationships between stakeholders. These tools enable alignment on shared goals as the product or community grows. Lowering the barrier to meaningful contribution is one key aspect that DAOs address. By using tools that qualify and quantify different types of contributions, such as bounties and DAO-specific metrics, a shared understanding of priorities and rewards can be created. This fosters a sense of ownership and belonging within the community, leading to increased participation and impact.

Operational efficiency is another challenge that DAOs tackle. As they decentralize, DAOs can maintain efficiency by progressively decentralizing decision-making. This allows the initial team to search for product-market fit while moving towards credible neutrality. Decision-making at scale is crucial, and DAOs leverage analytics tools and data aggregators to make information relevant and accessible. These tools surface meaningful insights from raw on-chain and off-chain data, enabling informed decision-making for the community.

The core difference and value proposition of DAOs lies in the openness of opportunities to contribute. Decentralization doesn't mean leaderless; instead, it empowers more people to take initiatives towards shared goals. This creates a contributor journey that fosters a sense of ownership and belonging, motivating individuals to make a larger impact towards the DAO's vision. Reputation plays a crucial role in this journey, as it acts as a proxy for trust and helps individuals allocate their attention within the DAO. It also signals to outsiders who to approach for support or partnership opportunities.

While DAOs have made significant progress in terms of incentivizing and coordinating contributions, there are still areas that need attention. HR is one such vertical that is often overlooked in DAOs. Offering web3-native solutions for "meatspace" benefits like health insurance, retirement plans, and tax compliance could greatly enhance the appeal of DAOs for contributors.

Additionally, the next generation of governance tools will bridge the gap between off-chain voting and on-chain execution. This will ensure that execution, even if initiated from a multisig, aligns with the outcomes of off-chain votes. Transparency in treasury management is also a challenge that DAOs are actively addressing. Providing more visibility into asset allocation and spending allows for better assessment of performance and financial health.

In order to keep up with the evolving needs of communities, DAO frameworks are becoming more modular, flexible, and extensible. This allows for the development of composable tooling that can adapt to the ever-changing landscape of DAOs. Similar to the ecosystem of open-source software packages, the ecosystem of DAO plug-ins is expected to grow, offering a wide range of functionalities and options for DAOs to leverage.

The rise of DAOs also calls for a shift in our mental models of organizational design. Many of our current models are rooted in the assembly line-centric workplaces of the 20th century. Innovation in the realm of DAOs requires unlearning outdated ideas and embracing new possibilities for human coordination. The web3 organizational tool stack is designed to accommodate many-to-many relationships, fluid participation, and, most importantly, ownership.

In conclusion, the tension between scale and speed is a common challenge faced by organizations. However, by prioritizing predictability and consistency, companies can maintain their innovative edge as they grow. The emergence of DAOs presents a new frontier for organizational design, offering tools and frameworks that incentivize meaningful contributions and enable efficient decision-making at scale. To fully embrace the potential of DAOs, organizations must recognize the importance of HR solutions and bridge the gap between off-chain governance and on-chain execution. By embracing modularity and flexibility, DAOs can adapt to the evolving needs of communities and revolutionize the way we collaborate and coordinate.

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