What the Rise and Fall of Crypto Can Teach Us About Managing Distributed Teams Decentralized autonomous organizations (DAO) present a new way to organize teams.
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The crypto industry has had a very exciting and tumultuous run over the past decade. Major corporations were founded using blockchain technology, and the promise of Web3 created a market currently valued at $2.86 billion.
While many look at the 2022 crypto bust as a strictly monetary pit of doom, there are some very interesting distributed team management lessons to take away from the industry's six-year bull run. Decentralized autonomous organizations (DAO) presented a new way to organize teams, new blockchain tools sprung up to enable greater collaboration, and the crypto boom proved that caffeine-fueled nerds can execute common ideas in ways that even Wall Street had trouble understanding.
Despite the misfallings of the Web3 market, you shouldn't write these accomplishments off as Web3 fairy dust. Business leaders and innovation-minded entrepreneurs should take note of the outlined workflows and processes that supported the Web3 growth of the last six years. Whether you believe in the underlying technology or not, these lessons provide insights on what entrepreneurs can replicate in the ever-evolving dynamics of team management.
Related: How DAOS Are Changing Leadership
What is a DAO?
One of the most interesting things to come out of the crypto boom — in terms of team management — is the Decentralized Autonomous Organization (DAO). A DAO is a democratized organizational structure running on the blockchain network. It is a collective of like-minded people with a shared financial account, working on a shared goal. It is similar to a digital cooperative, but instead of having select leaders on the board, every member has voting rights. DAOs can have equal governance for each member or weighted votes depending on how many tokens each member holds.
This type of organization presented a new way to organize and manage distributed teams around the world. It utilizes an automated and democratic system that blockchain technology can provide. Let's dive into some of the management lessons from crypto and Web3 companies, especially DAOs, that can be applied outside the blockchain industry.
Managing fractional workers
DAOs succeeded in bringing together thousands (even hundreds of thousands) of anonymous people to achieve a common goal. While this isn't a realistic or necessary goal for traditional organizations, business leaders can learn a lot about managing fractional workers in the future of work.
Web3 startups led the industry's growth vs. established enterprises because they were able to scale up and down easily to rapidly meet the demands of the market. Outside of the Web3 industry, every business is contending more and more with disruptive technologies. You can't expect your competition to give you six months to build a new team in order to capitalize on a new trend, you need to be able to act quickly.
Project-based or fractional hiring is a way to rapidly scale to meet new demands while also attracting top talent that is interested in working on a challenging project and doesn't want to get tied into a long-term agreement.
Related: How DAOs Can Transform the Business World
Leveraging peer-to-peer recognition
Peer-to-peer (P2P) recognition is super important in distributed and remote teams for helping to build culture and accountability and act as an incentive driver beyond monetary compensation.
Web3 companies did this really well because all data and transactions are publicly recorded on the blockchain and can be accessed by everyone. This ensured all recognition was public, inclusive and decentralized. P2P recognition could also be tied into incentive programs, which leveraged social and monetary recognition. Blockchains and smart contracts go hand-in-hand in promoting transparency and efficiency in governance and management that elicits trust from its members and community. However, every organization can endeavor to become more transparent with their employees and with the public.
Non-Web3 companies should endeavor to create a similarly transparent and public P2P recognition program. One study found that when an employee is recognized once per month, their employee engagement increases by 43%.
Offering shared ownership
Engaging employees and making them feel that they have some ownership in the project is another big driver in the future of work. DAOs achieved this because every member of the DAO was literally invested in the organization. Many companies also experimented with NFTs as a way to unlock benefits or as a reward containing a unique value that is aligned with the brand's vision, mission and strategy.
Companies can align their incentives for teams by looking at both the interests of team members and the goals and objectives of the organization. Examples of this can be profit sharing, equity ownership or performance-based incentive or benefit.
However, monetary incentives aren't the only way to offer shared ownership. They aren't even the most important.
It is more important for today's workers to feel like they have a voice and some stake in the game. Including employees in the decision-making process (especially during product ideation) and ensuring there is transparency in decision-making goes a long way toward making employees feel included and engaged.
Beyond engagement and ownership, distributed decision-making is simply better decision-making. Good leadership involves giving up sole ownership over decisions and valuing inputs from team members, which can lead to better decisions. This concept is built into the structure of a DAO as it directly applies the inputs and votes of all members in the decision-making process.
Even without DAO, businesses can adopt DAO-inspired procedures such as decentralized and democratic governance that can create a culture of collaboration that empowers distributed teams to be more effective and productive. Distributed decision-making allows you to scale and react faster by leveraging diverse backgrounds and inputs, A/B testing ideas quickly and getting feedback from larger groups.
Consider adopting a democratized organization, either by gathering smaller teams with like-minded members to achieve certain goals or even company-wide, to forward a singular mission or objective and include team members who believe in the same principles.
Related: 4 Reasons Decentralized Business Management Is Booming
We aren't recommending your organization make the switch to becoming fully decentralized. One of the big things that we see coming in the future for organizational management is the idea of hybrid DAOs, where there's a melding between traditional business structure supplemented with DAO mechanics.
While the massive growth of the crypto and Web3 industry changed considerably last year, the principles used to reach those heights are valuable for any organization. Blockchain technology isn't going anywhere, and companies will have to deal with a much more automated, agile and transparent marketplace full of disruptors going forward. Whether your venture uses blockchain or not, these principles will help you compete in an increasingly decentralized world.