Why are many blockchain companies organised to be slow? Is there a solution?

Most companies are organised by function, e.g. finance, sales,... Some larger ones have products or business units sitting on top. Matrix organisations are even used by very large companies, of which multiple are no longer that large because they were not able to adapt to change. The way businesses were structured has been defined for decades based on economies of scale and efficiencies. One marketing budget that is efficiently managed. One global sales team. One.... In the digital world, one app can out-sell, out-support, out-market, out-operate,... armies of "analogue experts". So focusing on digital speed is important.

We are now entering the era of the decentralised revolution. You would expect the next-generation of blockchain companies to be structured differently. Nothing is further from the truth however. Most decentralised companies are still structured very centralised. Most have chief finance, product, technology and marketing officers. Each of these chief officers has people reporting into them that have similar skill sets.

The problem for most decentralised companies is that unless they are truly decentralising, their crypto tokens might be considered securities and without the right licenses [most have none] can result in jail time and big fines for these chief x officers. So why have decentralised organisations not adapted their structure?

The biggest reason is that structure is irrelevant in the early days. If a company has 10 employees and a disaster happens then there is no discussion around whose fault it is. Either the problem gets solved or everybody is without a job. This makes for a hero structure in which heros solve "the disaster of the day".

If and when 50 or more employees come onboard, you will start to see cracks in the hero culture because synchronising between 50 people and firefighting is no longer practical. Many just move towards the traditional chief X officer structure and keep on going. What happens next is a slowing down of the company speed. Lots of processes are put in place. Approvals, status meetings, reports, roadmaps, queues,... All the “boring things” that large companies are supposed to do. Launching a new product in a 100 people company is often very similar to a 10,000 people company because each new product needs to make the same journey from department to department, through endless inter-department meetings.

In the decentralised world however blockchain companies ' roadmaps each quarter promise what traditional companies would take years to do. So slowing down the company is very bad for cash flow, the token valuation, adoption,...

How to better organise decentralised organisations?

Amazon’s Jeff Bezos wrote a famous email in 2002, the API Mandate. The API Mandate obliged each team to expose an API and offer all its services through the API only, independently if they were dealing with an internal or external team. This single email resulted in Amazon’s biggest profit maker getting born 6 years later: the Amazon Cloud.

Decentralised teams should think along the lines of the API Mandate, let's call it the DAO Mandate, especially given that the DeFi market is like Lego blocks of financial products that have synergies when used together. How would you structure a decentralised organisation if employees, customers, partners, external contributors, even competitors would all be able to interact equally?

Let’s start with an imaginary DeFi company called UniCompoundMaker or UCM. UCM offers two products, one for investors and one for liquidity providers. There is a liquidity pool token and a governance token. The logical way would be to divide teams into investor and liquidity focused. If a third product, i.e. lending, would be added, then a third team would be needed. Each of these teams would offer their API, dApps, token, graphs and other embeddable components. They could have a business person looking at the tokenomics, a marketing expert telling the story, developers, designers, a lawyer,... By having an autonomous team per product, integrations between the liquidity and lending team would be equally quick as between an external liquidity pool and the lending team. The end result will be that the lending team is able to integrate with hundreds of liquidity providers. The same for the other two teams.

If each product team grows beyond 10 people then it is time to split the teams again. Not according to function but along the lines of the API/DAO. The lending liquidity, lending pricing, lending collateral, lending repayment,... could all become different teams. Perhaps the lending repayment team comes up with new ways to simplify repayment by integrating into the centralised world, e.g. bank standing order, salary deduction,... This could open up new product categories for the company which result in more autonomous teams being formed.

Imagine a product fails. The teams get dismantled and can join other growing teams. Marketing, development, design,... skills are needed in each team.

What about shared services like finance? Expenses, salary payments, accounting,... There are three choices. Externalise to others whatever is just a cost. There are many SaaS products for expenses, payroll, accounting,... as well as great bookkeepers. Another choice is to create an API/DAO team as well. The last choice follows up from the previous choice which is: "Can you commercialise a new decentralised product?". What if handling finances for a decentralised organisation is hard with existing tools? UCM is probably not the only one having this problem. Why not make a decentralised product out of it? Potentially it does not fit the core business? Can it raise its own token and become a decentralised organisation? Other shared services like governance, managing chain operations [ChainOps, the equivalent of DevOps],... can all become decentralised teams offering solutions to many decentralised organisations.

What about top executives and middle management? In a truly decentralised organisation, we need a lot less operational management. Each decentralised team will be focused on something of value that ideally is expressed in tokens and given they are empowered and autonomous, they can run fast without requiring multiple approvals and endless meetings. Top management’s task is a strategic and initial funding role. What new areas should be explored? When to pull the plugs on certain teams or change direction? When to launch teams into separate ventures? Middle management’s role is about leading individual teams and organising multiple teams and their strategy, e.g. the director of lending oversees all the heads of lending teams and focuses on synergetic strategies and direction.

Conclusion

The decentralised revolution is happening now. DeFi and next-gen blockchain companies who grow beyond 30 employees, should think hard before they start hiring the Chief Marketing Officer, Chief Technology Officer, Chief Product Officer,... Instead they should think along the API / DAO lines and structure into autonomous teams that are responsible for part of their business. Perhaps only two CxO roles are needed: the CEO and the CDeO. Where the CEO is looking at where to go and the Chief Decentralisation Officer [CDeO] is accelerating the journey towards becoming fast moving truly decentralised autonomous organisations that redefine the future...