Sam Spurlin on Optimizing the DAO OS

Apr 14, 2023

When it comes to building decentralized companies and communities, how you manage, coordinate, and communicate is one of the most important factors in determining the success of an organization. We sat down with Sam Spurlin, a Transformer at The Ready, to talk about their DAO practice, and what the future of work looks like in an on-chain world.

Ryan Anderson: Tell me a bit about The Ready, and what you do there.

Sam Spurlin: The Ready is a future-of-work consultancy that designs organizational transformation. Over the past few years, we've used different words to describe our work, but essentially, we help organizations make their ways of working visible to themselves so they can make informed decisions about potential changes. That can range from very tactical workflow-related things to more cerebral or conceptual aspects like strategy and purpose. I'm a transformer at The Ready, which just means I'm a consultant. I work with our clients, partnering with them on projects. 

For the past year and a half, I've also had an internal role focused on figuring out The Ready's place in the world of DAOs and web3, and leading experimentation around it. We're trying to figure out things like: should we have a place in this world? What might it look like? Where is this all going, and how do we get ready for that opportunity as opposed to chasing the puck?

What drew you to starting a DAO practice within The Ready?

Honestly, it's because The Ready is a self-managing organization. While we don't necessarily turn all our clients into self-managing organizations, many of the principles of self-management show up in our work. We use a homegrown mix of Holacracy and Sociocracy to run our internal system of 40+ full-time employees. 

We're just very into thinking about non-traditional ways of organizing people to do things, and if you're deep in the world of self-management, and if you become aware of a phenomenon called “decentralized autonomous organizations,” that’s going to catch your ear. All three of those words are words that we care about and think are interesting. So we said, “let's just go figure it out.” 

Our initial foray was driven by curiosity, wanting to understand these concepts and see if there's a role we could play. As a result, some of our colleagues, including myself, were given the opportunity to temporarily step away from client work and just go show up in DAO land and see whether there's a role that we could play. 

That's interesting. Do you think it's because The Ready is a self-managed organization that you were able to respond quickly to something new happening?

We take our self-management really seriously and have our own internal processes for spinning up initiatives. Not to get too deep into the weeds, but three times a year, we come together for an in-person retreat. We're currently fully decentralized, so very few Ready members live near each other. We take this time seriously to come together and, as part of our retreats, we have a process for making sense of what's happening in the world around us, developing and brainstorming initiatives, which are essentially small experiments, and then actually putting some money behind them to make them happen. 

So, what have you seen so far? What has your experience been moving from the traditional organizations that you usually work with to the DAO world?

It's not a simple answer, I think about my traditional clients that The Ready normally helps – often very old organizations with a ton of history, very large, very bureaucratic, like central reserve banks, defense contractors, and government entities. Much of our work is about trying to create a little bit of space so that we can actually try something new, and the pace of change is just so slow. 

When you hop into the world of DAOs, it's almost the exact opposite, with very little codified and no traditional bureaucracy. The degrees of freedom in terms of ways of working and the organizational operating system in DAOs is really exciting for someone who is always thinking about the most radical or interesting thing we can do with our ways of working. You don't normally get to do a lot of that with traditional clients, but with DAOs, there's more opportunity.

That being said, one of my most poignant memories in my early days of gaining experience in DAOs was joining a working team call, and sitting there as an observer, realizing it was exactly like any of my other clients. It was never really on the rails to begin with, and it went fully off the rails about 20 minutes in. I wasn't sure what we were trying to accomplish, and I don't think anyone else was either. It seemed like we were just going to fill these 60 minutes talking to each other, and that would be it. I had this moment of realization that I could make this so much better. 

The Ready is good at helping organizations think through things like meetings, and what it means for us to come together, what we're trying to get out of a meeting, and if we have the right structure to achieve those goals. That's when I realized that, while DAOs seem like a radically different world, in some ways, it’s just groups of humans coming together to work on things, which is what we've been doing for a long time. So it felt very familiar as well. There are two sides to the coin, I guess.

Chaos is its own flavor of bureaucracy.

In DAOs, there's often chaos as they try to move quickly. You mentioned different types of bureaucracy in this world. What kinds are unique to DAOs?

I think chaos is its own flavor of bureaucracy, right? Like if you have an idea and there's no real sense of what you have to do to bring that idea to life, who has the decision right to say yes or no, or how to get resources, the chaos is felt as a type of bureaucracy, especially for those who haven’t been around from the very beginning. 

I think there's a lot of hand waving in DAOs around things like structure, because the attitude can be “we trust emergence to create what we need here,” or that any structure is somehow synonymous with people trying to capture governance control.

And of course this isn't true. It's very difficult to talk about DAOs as a single entity, because DAOs can be incredibly different and have different philosophies around structure and how they perceive themselves as compared to more traditional organizations, and how allergic they are to the more corporate aspects of organizing. 

I think the tensions that arise from chaos are very prevalent in a lot of DAOs just due to the tyranny of structurelessness.

In your experience with working with DAOs, is there a unifying factor that everyone's getting wrong out of the box or a problem that is endemic to this space?

I think it's a challenge of bringing humans together to solve complex problems, whether it's a traditional organization or a DAO. In my experiences, I think most DAOs could benefit from clearer roles, decision rights, and interactions. When I was talking about chaos before, it's often through the lens of complete opacity around roles within the organization. I think most could benefit from improved operating rhythms, structured meetings, regular retrospectives, and quarterly-ish strategy meetings. 

The point about clarity really resonates, clarity of purpose, governance, and knowing what we are doing here. I wonder, does that come from a lack of communication or reticence to make decisions as a group, or even not knowing how to make decisions as a group? Because that's something I see come up quite a bit.

Yeah, it can come from any of those things. The work I did with Gitcoin was around clarity of strategy and purpose. If you don't have that, you don't have anchors for tough decisions about resource allocation. It's a recipe for frittering away a treasury quickly. The bear market meant treasuries were no longer infinite, so a lot of the work was creating structure around what we're going to pay for and what we're here to do. On the flip side, what are we not going to do anymore that maybe we did before, and why is that? Strategy and purpose is definitely something DAOs should care about.

In a lot of DAOs, votes are the consensus mechanism, and majority rules. You talk about consent versus consensus. Can you help me understand the difference between those two things and how they apply to DAOs?

Consensus-based decision making involves a group of people agreeing it's the best thing to do. If it's an innocuous decision, it's easy and feels good because everyone can leave the conversation in agreement. However, when the proposal becomes complex or contentious, it's difficult and time-consuming to reach consensus. It can result in an endless circling conversation where the most interesting parts of the proposal are shaved off for everyone to agree.

Consent as an alternative way to make decisions changes the bar of acceptance for taking a course of action. Instead of everyone agreeing it's the best course of action, we all agree it's safe to try. If we make the decision, it won't cause irreparable harm. We can potentially change our minds later. As long as it's not going to cause harm, let's operate with that decision and learn. Instead of sitting in a room for days trying to reach consensus, make a decision, bring it to the real world, see what happens, and use new data to modify the decision later. 

Consent-based decision making isn't appropriate for every decision, but it's suitable for many things within organizations. If everyone can agree it's safe, move forward and make things happen. This approach allows for a higher cadence of decision making instead of grinding to a halt when trying to reach consensus all the time.

If a team working on marketing has to put every decision to vote to the entire DAO, that's a recipe for doing either nothing or nothing interesting.

One of the challenges of DAOs being so large is that you end up in a sort of management by democracy. If everyone has a say, can you be strategic? Can it improve things and are there ways to make it more efficient?

To put up a straw man that I'm going to quickly knock down; everybody focusing on everything is not the way forward. So for example, if a team working on marketing has to put every decision to vote to the entire DAO, that's a recipe for doing either nothing or nothing interesting. I don’t think many people would be arguing in favor of that.

It's really about where you draw the line between what has to be brought to a larger group for a vote versus what we can trust people to take action on in their areas of expertise and allow folks who have the relevant context to actually weigh in on that decision. 

One way to think about this is deliberately creating and delegating areas of concentrated authority within a self-managed organization. Can we carve out an area of decision making and have it be the property of the people who are in that team or circle? That way, as long as the decision is within that constraint, they can just go.

Say we're going to have a group of people doing marketing. Let's give them the authority to make decisions about marketing, with some guardrails, maybe around spending, and then trust that we have the right people in those roles to make good decisions. If they need more money or if they're considering something that falls outside their area of concentrated authority, that's when they should check in with the larger group to either get that authority or get the advice they need to make a decision. 

And if you can create these areas of concentrated authority, we trust that we have specifically carved out areas for people to be smart, use their judgment, and do what they need to do within guardrails that allow us to stay in a zone of safety. That's when you start to see the actual benefits of a self-managing organization. You don't need to continually bring everything back to a larger group to argue over things that people don't necessarily even understand.

How do decentralized groups create those units of authority and areas of responsibility?

There are lots of ways to do it, with inspiration taken from systems like Sociocracy and Holacracy, which have processes for specifically doing that. At the end of the day, we're talking about making agreements within an organization. These agreements can be between two people about how we're going to work together, or between a team and the larger organization. 

A good way to get started is to work through figuring it out. What are the biggest areas of work within the DAO happening right now? What authority does this group need to pursue the best version of what they’re doing? With that, guardrails can be put in place to create safety for the rest of the organization, ensuring that, for example, a marketing group won't spend 75% of our treasury on some asinine thing that nobody needs.

The idea of agreements is interesting because it's a simple idea, but it's different from how we often think about organizational constraints, which are typically seen as rules or policies. The idea that we come together and agree on how we can be governed, and that we can change those agreements as needed, is particularly interesting in decentralized organizations.

I would love to see agreements play a huge role in DAOs. If we’re building an organizational language, agreements are the words of that language. Some are simple and not relevant to everyone, while others are foundational and broadly define the edges of our beliefs and how we do things. 

You can use agreements in a fine-tuned way and in a broader way to make the implicit explicit. When you make the implicit explicit, now we have something to argue about, change, and agree to. Until you've written it down, we're probably arguing about slightly different versions in our heads. One of the most powerful things about having an agreement-making culture is that we can just put something down in black and white, and now we can be specific about what we need to change to make it safe or better. This is a shift from how most organizations work or think about how they work.

That goes back to an idea that is in the book Brave New Work and that I've heard on the podcast quite a lot, and that’s the idea of “doing the moves.” Managing an organization is a bit of a workout; you have to put in the reps.

Absolutely. Sometimes we do ourselves a disservice by thinking it should be straightforward. Like you can read the book and think “okay I conceptually understand this now, so I should be able to do it intuitively,” and it’s just not like that. It's much more like going to the gym and learning a move. 

And the first time you do it, you feel awkward and stupid. The second time you feel a little bit less awkward but still pretty awkward. But by the time you've been doing it for weeks, weeks and weeks, it just becomes a thing that you're good at and you can actually experience, you can feel the subtleties in the move that you couldn't as a beginner.

Over time, it becomes something you're good at, and you can feel the subtleties that you couldn't when you first started. It's similar for many ways of working and managerial patterns that can exist within organizations, including DAOs.

One of the things The Ready is known for is the Operating System Canvas. What role do you see the operating system play in DAOs? What are the tensions that seem particularly prevalent in DAOs?

Source: The Ready

Yeah, that’s one of the things I was curious about when I first started. We have a tool called the OS or “Operating System” Canvas, and it has 12 different fields on it. They describe aspects of an organization, and we developed this prior to knowing anything about this world. 

At that point, I was wondering, is this OS canvas going to feel relevant to DAOs? Almost immediately, I realized it is incredibly relevant, even though DAOs are very different types of organizations. They still need clarity on purpose and need to make decisions about how resources are allocated for membership. That's a huge one. What does it mean to be a part of a DAO? Compensation is always a hot topic. So, all 12 fields of the canvas I think are relevant to DAOs.

The most relevant field is membership, which involves everything around how we think about being in community with the other people who are part of this organization. Honestly, in a lot of my traditional client work, we do almost nothing in the membership field. It's clear in a traditional organization whether you're in or you're out. There are other subtleties like teams, but very rarely are they feeling a lot of tension around membership. 

At least early on in some of the DAO work we're doing, the membership field was very alive for a lot of people trying to get clear. What does it mean? Are we permissionless? Can anybody show up? What rights do people have, and what accountabilities? I think that's interesting. Resources have become more and more relevant, especially as the market has worsened, and suddenly we have higher stakes decisions to make with a lesser amount of money. 

Even in better times, the resources field is still interesting because a lot of DAOs are about how a group of people make decisions about a shared pot of money, essentially, and the mechanisms for making those decisions very much lay in that resources canvas. Then the mundane ones, like meetings, are super relevant. Meetings in DAOs often suck, just like they do in regular organizations. 

The last one, that comes to mind because of the truly decentralized, often completely distributed nature of DAOs, is information and how information flows in a DAO. Does it flow or is it scattered everywhere? Where do we have those sources of truth on anything? Those types of things are particularly relevant.

Ryan Anderson is a brand and marketing strategist and founding member of Bankless Consulting.