Author: Samantha Marin
Original title: Its a VUCA world, were just living in it: a new way to evaluate DAOs
Its a VUCA world and we just live in it.
VUCA is a concept mentioned in the book The Power of Teams by General Stanley McChrystal.
According to McChrystal, when assessing 21st century conditions, social scientists"The term used is slightly different from the more optimistic interconnection. They use phrases like discontinuity, destruction or the more recent popular military acronym VUCA."- from page 64 (kindle version)
VUCA is an acronym that stands for:
volatility
Uncertainty
Complexity
Ambiguity
The central idea of VUCA is that our world is more interconnected than ever due to the rapid development of technology. And with this increased interconnectedness comes more unpredictability. past kind"command and control"The old-fashioned management methods are outdated and need to be replaced by more dynamic and flexible models.
McChrystal writes about the world in which his granddaughter Emilou grew up:
"The world in which Amy Lou grows up is not just slightly different from the world of previous generations, faster, more interdependent, and thus essentially an evolution that complicates things in entirely new ways. She lives in a vortex of willfulness, and in a completely different place than the current universe. When we try to patch the former with tools designed for the latter, we run into trouble."- page 64, kindle version
Here is a visualization of the world:
can be predicted"can be predicted". But its slower and slightly more predictable. If you wanted to start a social movement in the 1700s, you basically had to go around knocking on doors and talking in the town square. You might commission some messengers to try and get your ideas across to the next town. But you sure dont have the lightning fast spread of information that we have today.
Today, someone with an idea can send a tweet and ignite a movement. Maybe someone on the other side of the world saw the tweet and made a thread about it on Reddit. The idea spread, giving it a whole new life. This idea may change and change in ways the original sender did not anticipate or intend. Perhaps, just a few hours after that first tweet, the thought was completely different than it was when you sent it.
This is just one example of the VUCA world in action.
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The advantages of DAO in navigating the VUCA world
There are three ways DAOs can have the flexibility of VUCA (this list is not exhaustive, and I believe there are many more areas of flexibility):
distributed leadership
open information
Token independence
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Distributed leadership: DAOs do not rely on a single CEO
Traditional corporations rely entirely on a chief executive or a small board of directors. But the essence of a DAO is leadership distributed over many people rather than concentrated in one person.
This notion of distributed leadership is critical to resilience under VUCA. Different leaders will find different problems to solve and recognize new threats to the health of the DAO. Not everyone can see everything, and it takes a lot of people. So the leaders act like scouts, getting information about the impact of the VUCA world on the DAO, and what they should do next. And, without the oversight and red tape of the management stack, they could theoretically move faster too.
I said"in theory"Because when DAOs need to go through a lengthy consensus process to make decisions, they tend to be slow to move. However, if contributors are given reasonable leeway and their teams are equipped to optimally respond to changing circumstances, DAOs will be the most resilient type of organization in existence.
In this diagram, the light-tan circles are threats, opportunities, or other"Outside of DAO"s things. The dark blue circles are things that were left out.
In a traditional organization, the CEO only sees one threat/opportunity/thing and misses the others. In a DAO, the leader sees all sides, as there are multiple leaders with different perspectives doing the scouting. The more key contributors with different perspectives lead the DAO, the more threats and opportunities they can identify, and the more nimble the DAO can be in response to turbulent situations.
Challenges of developing distributed leadership:
Leaders with a variety of perspectives, but still united by a single mission.
Decisions on what level can be made without the need for a vote or broad DAO approval.
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Open Information: Everyone can get the information they need
One of the problems with centralized decision-making that McChrystal describes in Teams of Teams is that many teams need information that they dont have access to. When higher-ranking generals dont think a team needs a piece of information, they dont get it. But that can backfire when operating in the ever-changing world of modern warfare.
The reality is that in our VUCA world, there isnt a single"omniscient"of CEOs or managers can predict which team needs what information. Therefore, information must be available to all, not to some.
Open information means that everyone in the DAO can access all information at any time. They dont need the permission of their superiors, and they certainly dont need to go through a long, cumbersome process to find information. Instead, all the information is right at their fingertips.
This might look like a searchable database to which all contributors can join. Or, it can look like a well-created, easy-to-browse Notion database.
Challenges of opening up all information:
Determine who is the DAO"member"(Who has access to this information? Just the contributors, or the internet as a whole?)
Catalog this information in an easily searchable manner.
Establish simple workflows for DAO contributors to update information so resources are never out of date.
Encrypt personal data and highly sensitive information (anything about individual contributors) and determine who has access to it.
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Token Independence: A Diversified Treasury with Diverse Payment Options
A DAO with a diversified treasury is immune to the VUCA forces that drive these token price changes and inflationary spikes. Think of a traditional company holding fiat currency, which is vulnerable to inflation. A DAO could hold a mix of Bitcoin, Ethereum, small cap coins, and (some) stablecoins. Heterogeneous libraries make DAO more resilient in VUCA scenarios.
Elasticity builds further if contributors can choose what types of tokens they want to pay in and the amount of each token. This creates significantly more overhead for secretaries, financial managers, and anyone else who does the accounting in your DAO. But thats what a resilient DAO is: Contributors can be paid in tokens with their acceptable level of volatility.
Not everyone should ride the wave of highly volatile tokens in order to work in a DAO. In my opinion, the DAO is paying for what"required volatility"would effectively keep women out of cryptocurrency, and the same goes for other groups that are currently underrepresented in DAOs. Having the option to pay people in different tokens creates room for more diverse contributors and a healthier DAO overall.
Challenges of building a diverse treasury:
Generate income in a variety of tokens, not just a few.
Have a trusted financial manager who operates in an open environment.
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Where can DAOs work to build the resilience needed to face a VUCA world
Here are a few things I see in DAOs today that make DAOs more vulnerable, resulting in less resistance to the VUCA world. This list is not exhaustive:
Contributors"personal uncertainty"。
Information storage and access.
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resolve the contributors"personal uncertainty": job security, stable pay, legal framework, healthcare, benefits, retirement, etc. (also known as"boring stuff"）
If DAO contributors are constantly worrying about whether to take that extra bounty so their salary will be high enough to pay their rent, or wondering how theyll pay for their next doctor visit because they dont have health insurance, then the DAO is Not resilient to VUCA situations. Or, do they need to worry about, if their DAO is sued, they will be held accountable, and the safety of all their assets.
all of these"personal uncertainty"Problems can both erode the DAOs resilience and the mental health of its contributors. Because most DAOs today dont have any legal structure, its hard to find a quick fix for these personal uncertainties. This is a tricky problem that will take a long time to solve.
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Make information storage a priority
When no one is responsible for updating, storing, and maintaining a DAOs information, it can quickly become outdated and rendered useless. This is why I am in favor of DAOs having an information architect role, managing digital information in a way that is useful to everyone. Because outdated, incorrect information can cause enormous harm.
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Beyond Homogeneous Treasury
Some DAOs are more vulnerable to market declines, and this is a prime example of the VUCA concept at work, ie undermining the success of a DAO. This is a case where DAOs are less adaptable to VUCA than traditional organizations (feels true at the time of this writing).
We know that many DAOs rely on one or two tokens, and the world of VUCA in May 2022 is creating massive pain. Will we see an explosion in efforts to diversify the coffers in the coming months? Perhaps less risk-tolerant contributors will revert to traditional work structures? These questions remain unanswered.
Resilience trumps efficiency in the world of VUCA
I like this quote from Team of Team about efficiency:
"...all the efficiency in the world is worthless if it remains static in an unstable environment."——page 80 (kindle version) Team of Teams
Businesses of the last century have relied on efficiency to make profits and outperform their competitors. But 21st century businesses and DAOs will need to rely on resilience to turn a profit and outperform their competitors. Efficiency is no longer as important as flexibility.
