Adaptive Decentralized Organization

Many of us are driven to enable wide-scale human collaboration or solve global problems. While such an effort requires effective coordination among many participants, building global organizations is hard:

• To become a legal entity you have to start in some country and then painfully extend into other legislations, paying lawyers and gatekeepers along the way to gain access to local banking and courts.
• Whenever success materializes human agendas and politics will try to exploit the organization from within to achieve personal gain. Authority and hierarchy can keep these tendencies in check while crippling the organization's agility.
• Authority and hierarchy can keep these tendencies in check while crippling the organization's agility

While these problems seems disconnected at first, they address the relationship of the organization with its stakeholders - contributors, customers, shareholders, suppliers, government, and the public at large.

Building Blocks for Global Organizations

Decentralized Organizations (DOs) have shown a way to gain sovereignty by encoding rules as computer programs and have them execute transparently on blockchains. When the rules are enforced by a global ledger, the organization becomes independent of any national legal system and is instantly global.

Participation, while remaining limited to asynchronous channels, can scale widely though tokenization. As every interaction with the DO is formalized in code and transactions are publicly broadcasted, transparency is enforced naturally. This prevents corruption and hence closes some alleys of influence that external powers could take to capture the organization.

Yet, the rules that we can encode on blockchains are limited, they can not interpret the purpose of the organization or translate it into actions or strategies. Much less they can make judgements about values or integrity. For effective execution, human leadership and teamwork is required.

Holacracy is a method of decentralized management and organizational governance, in which authority and decision-making are distributed throughout a holarchy of self-organizing teams rather than being vested in a management hierarchy. Its processes protect an organization from human agendas, egos, and politics. Instead of politics driving the organization, holacracy empowers people to make meaningful decisions. Hence, it delivers an operating system for collaboration around a common purpose.

A holacratic team organizes in circles and has defined roles, domains and accountabilities. In tactical meetings purpose and tensions are translated into action-items and projects. While in regular governance meetings the structure of the organization is adapted to be best suited to achieve the purpose in the respective market environment. This gives holacratic teams the agility to adapt faster to changes than traditional hierarchical organizations.

However, the synchronous nature of Holacracy meetings limits the scale such teams can achieve. The voice of a wider community or set of stakeholders has no way to affect the meeting outcomes or influence the purpose of the organization.

In summary, the table above shows how DOs, implemented as computer code, can help to create autonomous and transparent organization while lacking conscious purpose-driven execution. On the other side Holacracy, a variant of team organization, helps teams to collaborate and adapt rapidly to different environments but is still limited to synchronous and opaque environments.

Example

In this example there is a smart contract that creates value through users interaction. The users are part of a bigger group of stakeholders that hold a token dedicated to the contract.

Governance of Contract

A set of developers that fix bugs and develop new features are added. Their work is deployed as contract libraries to the blockchain. The developers then propose to upgrade the contract to use the new library through a MultiSig wallet which they control together. To avoid concentration of power the developers organize in the Anchor Circle with different roles and sub-circles. Rep Links of sub-circles and selected roles hold a key in the MultiSig wallet. The Lead Link role of the anchor circle is occupied by a set of smart contracts.

Lead Link Domains and Accountabilities

• Veto on Contract Upgrades - Once an upgrade is proposed by the MultiSig, it will execute if not at least x% of the token holders veto it within a certain period of time. This accountability of the Lead Link role is implemented as simple token voting contract. x% of votes should be sufficient to cancel an update.

• Meeting Participation - A tension-TCR is deployed that curates an unordered list of tensions paired with proposals. All tensions are processed by the roles of the anchor circle during the tactical and governance meetings. The TCR filters the tensions beforehand and appoints a representative that answers questions during the meeting.

• Purpose of Organization - "The Lead Link role of the Anchor Circle is accountable for discovering the Purpose of the Organization, and controls this Purpose definition as a Domain of the Lead Link Role" [PIP002]. The Purpose is product of the purpose-TCR, an ordered list of potential purposes for the organization. The top-most purpose is the current and active purpose.

• Governance Participation - New entries to the purpose-TCR can be introduced as tensions during the governance meetings and have to go through objection rounds as any other tension.

• Lead-links of Sub-circles - On a regular basis (every x month) a Voting or TCR contract confirms or assigns a new lead links to sub-circles.

• Set MultiSig Address - with a majority vote of 100-x% the stakeholders can declare a process breakdown in the Anchor Circle. By this the ability to initiate upgrades to the contract is transferred to another address.

Conclusion

The Example achieves the following Benefits:

• a synchronous public sphere for effective decision making:
  • tactical meetings.
  • governance meetings.
• an asynchronous public sphere for wider participation:
  • tension-TCR and purpose-TCR.
  • stakeholders can veto contract updates.
• balance of powers:
  • anchor circle meetings can object proposals that would harm the organization.
  • majority of stakeholders can fork away to another MultiSig.

Weaknesses

• token distribution plays key role in success of org
• lead link election for sub-circles seams invasive.