What Bitcoin Can Teach us About Decentralized Leadership
Decentralized leadership has evolved to include leaderless entities owned by shareholders and led through democratic processes written into code and regulated through smart contracts.
Three years after releasing Bitcoin’s famous whitepaper, Satoshi Nakamoto made an unceremonious exit from the digital phenomenon he created. In a message to a fellow software developer, Nakamoto simply stated: “Moving on to other things. It’s in good hands ...”
And while Bitcoin’s long-term value is central to debate, Nakamoto’s choice to rescind from the helm of the cryptocurrency, irrefutably altered the concept of decentralized leadership.
Once defined as a delegating leadership style — one where top level executives empower middle and lower managers to make key decisions — with the advent of blockchain technology, decentralized leadership has evolved to include Decentralized Autonomous Organizations. These leaderless entities are owned by shareholders and led through democratic processes written into code and regulated through smart contracts.
This extreme version of decentralized leadership may seem futuristic, but the reality is, the pandemic has only deepened our understanding (and appetite) for decentralized work: from our office spaces, to our working hours, to our ability to make key decisions, we’ve become accustomed to collaborating from a distance and managing our own professional workflow.
DAOs are still a far cry from the mainstream, but as distributed and hybrid workforces become commonplace, there are cues we can take from Bitcoin’s anonymous creator on how to decentralize leadership to thrive in the pandemic work era.
Operate from a place of trust
Most of us have adapted to leading from a distance by now, but how well largely depends on the level of trust within our organizations. Research shows employees in high-trust organizations are more productive, better at collaborating, and stay longer than their peers in low trust companies. However, building and maintaining trust in a distributed or hybrid workforce comes with a new set of challenges.
As a remote leader, I’ve struggled with not being able to read and respond to a coworker’s body language for instance, or experience spontaneous interactions that are less-transactional by nature. These physical benefits go a long way in building trust and rapport which softens the blow when conflict has to be addressed. So how do decentralized leaders operate from a place of trust without having physical proximity to employees?
Taking a tip from Nakamoto who outlined the vision and fundamentals for Bitcoin then trusted in the community to fulfill its potential, there’s a lesson to be learned in creating a clear picture with set ground rules. This formula offers structured autonomy, which allows employees the freedom to exercise their own judgement while giving leaders fair guidelines to fall back on when work gets derailed.
Don’t let geography be a barrier
Just as Bitcoin has no borders, businesses no longer need to limit hiring to the local talent pool. Whereas global hires used to be reserved for multinational companies, many SMBs like my own are now starting to make their first out-of-region hires.
While this adds diversity in talent, it also adds a layer of complexity for leaders, looking to streamline operations across varying locals. Not only do protocols have to be put in place to accommodate different time zones and holidays, but to offer access to senior leadership to avoid proximity bias, particularly in hybrid scenarios, where executives share physical space with a common group of employees.
Looking to Bitcoin, which has more than 100 million owners spread across the world, what ties its global community together amidst its challenges — from market volatility to ease of use and regulation — is a shared belief in its value. Likewise leaders have greater success when their organizations have a strong purpose and they hire employees who align with their mission and values, from wherever they are.
Seek to equalize the playing field
Bitcoin’s infrastructure has produced a micro economy of peer-to-peer financial services that benefit billions of underbanked people, often from low-income households or developing countries, representing new possibilities for financial inclusivity.
At its best, decentralized leadership also encourages inclusivity, empowering employees at all levels to voice opinions, problem solve, and contribute to the overall strategy of an organization. As we’ve seen with Bitcoin, an inclusive infrastructure can produce new market opportunities that benefit large populations that might otherwise be underserved.
So much of this year has been about embracing and adapting to the unexpected. As hard as it can be when faced with new challenges, learning to lean into the collective intelligence of our teams and empower those around us, is the next frontier of leadership and hardwired or not, it’s proving to be fruitful.
Entrepreneur Leadership Network Contributor