Speaker: Jeff Mark Schatten, Assistant Professor of Business Administration, Washington and Lee University, USA
Watch the Session: https://app.knowmia.com/COzO
Session description: How Distributed Autonomous Organizations (DAO's) Are Changing Leadership and Firm Governance Since the industrial revolution there has been a one-way secular trend toward more centralization and consolidated power within corporations, based on the idea that when power is distributed too widely it becomes increasingly difficult to for a company to act in an agile manner and make necessary sweeping changes. Hence, we empower a strict hierarchical system of board of directors, CEOs, executives, etc. each a cog in a pre-set wheel designed to maximize efficiency and accountability—though some organizations are flatter or steeper than others. Over just the last few years we have seen a new form of organization develop out of the crypto ecosystem, the DAO, a distributed autonomous organization. These new entities do away with a two century old system with a clearly defined leader at the center whose power derives from a series of legal contracts, rights and obligations that allows for centralized authority. In the DAO code sits at the forefront of the organizational structure. Decisions are democratic, but far more chaotic. Whereas in a traditional corporation you take marching orders from on high, in a DAO you are in charge of taking part (or not) in the projects and needs of the organization as you see fit. For many crypto organizations, the DAO pays its contributors in tokens, not in cash, so the renumeration makes everyone incentivized like a CEO where compensation comes in equity form. In the traditional company, base level employees receive almost all pay in currency (USD, Euro, etc.), which causes employees to have reduced concern about the company. By paying people in tokens (equity) all contributors are part-owners of the project they are working on. Likewise, we see DAOs doing air-drops of tokens, which builds community from both the contributors and users of the DAO product. One of the largest challenges of DAOs concerns governance issues within a democratic system. We see some models where the DAO is able to allow bottom-up processes to come to decisions on contentious issues. However, the question of authority, delegation, setting direction for a project has been shown to stall out many crypto projects. In this presentation, I will walk through the organizational changes that are occurring through the DAO, the benefits and costs of running a company as a DAO, leadership and governance opportunities and some of the best practices that are popping up in this space. Finally, I will touch on how I think the traditional corporate structure will eventually adopt many of the DAO practices. I hope that this will be interesting, given that so much of the crypto focus is on how crypto is changing finance, while in this process, the foundation of organizations is changing as well
Bio: Jeff Schatten Ph.D. is a business professor at Washington and Lee University. In addition to classes on organizational behavior, he also teaches classes in cryptocurrency.