Sunday, December 26, 2021

Companies Run By Code: Using Blockchain for Better Business

Blockchain has many applications beyond the financial

As we all know, blockchain has a key role in how cryptocurrencies work. The currencies themselves are disrupting traditional payments, but blockchain has proven that it has many applications well beyond this.

While digital currencies have expanded their influence, the number of applications of blockchain technology has only continued to grow. Blockchain’s merit lies in openness, transparency, and accountability, which are incredibly attractive traits.

In fact, you’d hope to see these policies in any corporate organization – but unfortunately, they aren’t always put into practice. By its very nature, the existing top-down business model prioritizes the interests of the few over the many. But what if this incumbent model could be transformed by blockchain, and how would this disrupt the way that organizations are run?

companies run by code

Reorganizing organizations

Despite many companies today claiming they are collaborative, this is often far from the case. For the most part, business culture is dominated by a top-down structure. Those at the top have masses of power, and the decisions they make dictate the fate of the entire organization.

The success or failure of the leader is directly linked to that of the company, but as was demonstrated by the forced resignation of Uber’s Travis Kalanick, unsuitable CEOs can be weeded out. What if, though, companies never had to be in that position? What if a decentralized, open, shared structure could replace authoritarian models?

Enter Digitally Autonomous Organisations, which are not to be confused with Decentralised Autonomous Organisations (DAO). Digitally Autonomous Organisations refer to companies that are run by code. There is no leader or executive board – instead, business associates contribute as equals until they earn a bigger say in decision-making.

The system is facilitated by blockchain tech, bringing meritocracy to traditionally authoritarian environments. Although the concept of a code-run business may sound alien, a number of companies are already using a similar approach called Holacracy.

This involves self-management, distributing instead of assigning tasks, and binding everyone to the same rules. If Holacratic organizations can work, then perhaps Digitally Autonomous Organisations can too.

companies run by code

Will Digitally Autonomous Organisations disrupt business hierarchies?

Digitally Autonomous Organisations have the potential not only to disrupt hierarchies but to completely remove them. However, as they are meritocracies, somebody will always have a greater say than somebody else.

On the one hand, using blockchain to create digitally run companies could be largely positive and create equal opportunities for everybody within a firm. On the other hand, if Digitally Autonomous Organisations do begin to gain popularity, then it won’t just be CEOs that they replace.

There are a plethora of high-ranking executives that would also have to give up their roles. Those who have worked to achieve a certain position will be incredibly reluctant to give it up, which is a major barrier to adoption. That being said, economic mindsets appear to be changing.

companies run by code

People increasingly want to share, foster open development, and collaborate. Whilst an egalitarian economy is far from likely, a sharing economy is far more realistic. Digitally Autonomous Organisations are well suited to this economic model, and could paradoxically facilitate its adoption. In order for Digitally Autonomous Organisations to work as intended, though, it looks like a company would have to be formed with a blockchain-based platform already in mind.

Ultimately, blockchain presents a new platform for running organizations, but it won’t kill off CEOs any time soon. It’s still uncertain as to whether employees would prefer this over a structure where they can blame a higher authority. Whilst CEOs may benefit the most from business success, they are also the ones who have the furthest to fall.

Sometimes having a single accountable leader is far easier than taking personal responsibility. Even so, companies have already started to adopt blockchain-based tech in the form of smart contracts and Holacratic systems. When it comes to the corporate world, it looks like blockchain means business.

Could digitally autonomous organizations offer a viable alternative to top-down organizational structures? How important are CEOs to the success or failure of a company? Are sharing economies a viable economic model? Comment below with your thoughts.

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