DAOrayaki DAO Research Bonus Pool:

Funding address: DAOrayaki.eth

Voting progress: DAO Committee 2/0 passed

DAOrayaki DAO Research Bonus Pool:

Funding address: DAOrayaki.eth

Voting progress: DAO Committee 2/0 passed

Total bounty: 80 USDC

Research Type: DAO, Organizational Culture)

Author: Andrew Beal

There is a famous saying in the business world that culture can eat strategy for breakfast. Organizations are made up of people, and the culture of the organization determines how they behave. The best strategies in the world cannot overcome behaviors that are contrary to the organization's mission and values. At least not for long.

Now, culture is a nebulous thing. You intuitively know what it is, but it's hard to define.

I admit that I didn't fully understand what culture was until I read Ben Horowitz's book "what You Do is Who you are". This is a great read for anyone looking to better understand the hows and whys of culture.

Your organizational culture is how you make minute-by-minute decisions day in and day out. How long does it take to respond to customer emails? How do you welcome new employees to the team? Who speaks during the meeting?

It's also a fluid thing, always mixing in different directions. This is why great cultures are so powerful and why toxic cultures are so destructive.

Culture is obviously an important part of any company. But what about decentralized projects... is culture a thing? Does it matter? Now that I work in DeFi, I start to think about a lot of these questions.

My conclusion is that culture is actually more important for decentralized projects than for traditional organizations.

Let's zoom in...

Why does culture matter in decentralized organizations?

Reason 1:

Culture is important to DAOs for the same reasons culture is important to traditional organizations. They involve people.

There is a misconception that DAOs specifically don't need people because smart contracts govern everything. This is clearly wrong.

The best comparison I can think of is that smart contracts are to DAOs what internal regulations are to traditional organizations. Bylaws describe how an organization operates. What they don't do is run a business. You can have a perfect set of regulations and a failing business. Similarly, smart contracts describe and execute the DAO's operating mechanisms. What they don't do is make business decisions.

How should the network develop? Should charges increase or decrease? Which assets should be supported? Who should we hire?

People make these decisions. Smart contracts execute and enforce the decisions made.

Here's a long introduction to the first answer to this question... culture matters because people participate in it.

When you have a group of people working together to get something done, culture dictates how those people work. This is how a successful organization can be distinguished from a failed one, centralized or decentralized.

Reason 2:

Culture matters to DAOs because it is the most enduring and pervasive force in the absence of traditional leadership structures.

In traditional organizations, culture starts at the top. The founder or executive sets the cultural tone and leads by example. Whatever culture their actions create is gradually accepted by the rest of the organization, for better or for worse.

A culture that reinforces the mission and values ​​a team needs to succeed can be a good one. A culture that reinforces behaviors that run counter to the team's mission and values ​​is likely to be a bad culture.

If a company along the way finds its culture is off course, there is a leader or leadership team that can correct the boat. In 2017, we watched Uber's navigation very publicly. Being able to make changes quickly is one of the main benefits of a centralized governance structure.

Truly decentralized organizations are usually flatter. They lack the hierarchy and leadership structures we see in traditional organizations. In these cases, the role of culture and values ​​is elevated. In the absence of a CEO and management team, DAO contributors take their cues from the mission, values, and culture established early on. People will come and go, but the community culture remains.

How is the culture formed in DAO?

Spoiler... Any decentralized project, whether it's a public blockchain, a DeFi protocol, or a DAO as a service, doesn't start out decentralized. Everything has a creator. This means that for a period of time, the project is managed by one person or a small group of people.

Bitcoin, Ethereum, MakerDAO, Yearn. They all start out this way.

Another spoiler...even after many projects are "decentralized", most projects are still controlled by the original insiders (because they hold a large token supply).

This is not a bad thing. In my opinion, this is actually the best way to bootstrap and scale something new.

Because decentralized projects often start the way traditional companies do, cultures are formed in the same way.

Culture begins with the founder. The way they behave on a daily basis establishes a benchmark for others. As a company grows, it can be difficult to lead by example because founders don't interact with everyone on a daily basis. To encourage certain behaviors, leadership adopts a set of values ​​and institutionalizes them. They write them down, communicate, and hopefully reinforce them.

The same thing happens in decentralized organizations.

People who start a decentralized network or DAO have a certain way of behaving. As the network or DAO grows, newcomers take cues from early contributors.

Now, this model is thwarted by truly decentralized organizations, as founders end up taking a step back from the control they exercised earlier. So what happens to the culture?

Ethereum is a good example. Vitalik Buterin, one of the founders of Ethereum (but actually the leader of the project), gradually stepped back from the role of founder, knowing that it was in the long-term interest of the Ethereum network. Fortunately, Vitalik's mission and culture, as well as the team created early on, were so strong that they not only survived the decentralization process, but have become the most valuable assets of the Ethereum ecosystem.

With intent, culture can be strengthened and made permanent as the number of contributors increases.

Sometimes the opposite is true. Without intent, cultures can divide. Contributors to the decentralized organization revert to its default mode of operation. Everyone is autonomous, and it's easy to lose sight of the collective purpose and values ​​that drew people to a project in the first place.

What is a good DAO culture?

Believe it or not, the ingredients of a good DAO culture are the same as the ingredients of a good company culture.

1. The task is clear. People need to know why they are contributing. A clear mission gives everyone purpose, and purpose is the basic need of all people. This also helps keep contributors. As long as you are making progress toward your mission, the most committed and passionate contributors will continue to support your mission. Without this, people tend to jump at the first sign of trouble, or when something new comes up.

2. Strong values. What behaviors would you like to define in your community? Establishing a set of core values ​​that serve as standards of future behavior is important not only for existing DAO contributors, but also for new contributors.

3. Come early. Timing is important. Establishing a clear mission and a strong set of values ​​early in the life of DAOs will give you a cultural foundation that won't diminish as the number of people grows. If you're not aware of these components early on, you'll end up with the mission and values ​​of the loudest voice in the room (rule of thumb, these are usually not the values ​​you want).

4. Reinforced by leaders. Establishing a mission and values ​​is only half the battle. Values ​​need to be continually reinforced in the actions and decisions of community leaders. Sometimes that's the founder. Other times are working group or committee members, or contributors with large social media followings.

5. Ownership Every DAO contributor should feel like an owner, responsible for the success and culture of the project. This is a surefire way to maximize the value you get from each.

One of the best examples of these ingredients at work is Index Coop, a decentralized asset management firm that creates and maintains crypto index products. Index has a community handbook outlining the principles of co-op business, the co-op community, and the people involved in co-ops.

The existence of this document demonstrates its intent and serves as a north star for existing and new contributors.

This kind of documentation is uncommon in decentralized projects, but I hope it becomes standard for DAOs, especially in the future.

Other decentralized projects with great culture include: Friends with Benefits, Yearn, SushiSwap, KrauseHouse, and Llama. All of these projects have very clear, simple missions and strong values. In Krausehouse's case -- referring to former Chicago Bulls general manager Jerry Krause -- the mission was to acquire an NBA team (one of the most ambitious DAOs to date). One) For Llama, the mission is to help manage the crypto treasury.

Fragmentary thoughts

Thinking about the future of DAOs from a cultural perspective raises many interesting topics.