From Our Discord: "A Hidden Superpower of DAOs?"

This is a cleaned-up version of a Discord thread I posted on 2021/11/11. The intent with posting this here is to make this material easier to find, reference, and share as appropriate.

Appt Pupil 11/11/2021

Let’s dig into something that doesn’t seem to be getting a lot of attention when it comes to DAOs…

There has been a lot of focus on how smart contracts can reduce the burden of governance and administration of DAOs. It’s right that this get a lot of attention, because the easier a DAO is to operate, the better.

One aspect I haven’t seen discussed, though (and as always, I’m probably just ignorant of it so any pointers are greatly appreciated) is how important it is to make it easy to start and stop a DAO.

Why does this matter? Many of our assumptions about how to run organizations are predicated on a notion that it is expensive and time-consuming to start one. After all, if you decide you want to open a restaurant, you can’t just open a burger joint the next day, and then change it to a steakhouse the day after that.

There is a body of knowledge called the Theory of Constraints (TOC) that is highly relevant here. The essential premise of TOC is that we need to know what our greatest constraint is of what we want to do, and if we want to make things better, we must focus improvement efforts there.

Theory of Constraints (TOC) | Lean Production

It started in manufacturing, but it’s since been applied to all sorts of activities. For those of you familiar with DevOps, the folks that started DevOps are well-versed in TOC and it informed this work a great deal.

How this applies to organizations is that since kicking off an organization is so expensive and time-consuming, the organization gets optimized around that constraint. The result is that in addition to whatever an organization’s stated mission(s) are, there is another one in the background - survival.

This hidden mission leads to a lot of the misery in a traditional organization. Filling out expense reports, budget processes, restrictive policies, audit and compliance teams, and a ton of other things that have nothing to do with the organization’s purpose all exist because of the need to avoid the disaster of having to shut the doors.

One of the key lessons of TOC, though, is that when a constraint has been broken, everything changes. Or at least it should - but it often doesn’t for a while.

Consider the electric motor. When it was first commercialized, factories were organized into building with many levels, so as much of the machinery as possible could be close to the power source (such as a water wheel). Many factories just dropped a big electric motor in to replace the old power source and just kept going as they were.

But eventually, people realized that electric motors were better suited to be smaller and more distributed. Thus, factories were redesigned to be flatter and eventually helped to enable the assembly line we are familiar with today.

DAOs risk being those factories that are just using a big electric motor if they don’t take advantage of the fact that the constraint on starting up an organization has now been broken.

Traditional organizations operate on a survival paradigm. DAOs will operate on a reproduction paradigm.

When a new org can be started in minutes, we can rethink everything about how an organization operates.

For example, imagine we have two options for how to approach a strategic question and no consensus on how to proceed. In a traditional organization, at best we’ll make a choice that the majority supports. But in a DAO, we can also consider the option of just creating a copy of some or all of the DAO, assigning all members to both, and letting them each take action.

We can then see which DAO gets more promising results, and ultimately come to a consensus on which approach is better. We can then shut down the less effective DAO and continue with the winner.

We can quibble on the details, but my key point is that we are so geared towards the survival paradigm that it will take us a long time to unlearn all the lessons from it that don’t actually apply in DAOs.

This is another reason I’m bullish on Orca Protocol. Providing the capability to break this constraint will be a game changer!

1 Like

Interesting! I like that this is pushing us to think out of the box of old habits.

I am wondering if it is also taking into account the very real community aspect of all human organizations. If there are reasons to split, the ease of doing so should be taken advantage of.

My experience is that we are social creatures that who once we form groups, we want to stay in those groups, because even if creating the structural organization of DAOs is a lot cheaper and quicker, the reality of building understanding and trust in community will always take a certain amount of time. And, the cohesiveness of those social bonds will not want to be so easily dismissed, even if the relations are based on based ano/pseudonymity. I may not know who you are IRL, but once I know who you are by choice, and have established a positive working realtionship with you over time, that does not transfer with the ease of creating a new DAO.

1 Like

I agree with your point, yet am curious how much of that need can be met at the pod level rather than the DAO level. In the same way that a town may not change that much even if it is now part of a different country, if my focus is on 1-2 pods, would the movement of those pods to a different DAO really affect its members that much? Much to be explored here!