Hierarchy and Leadership in DAOs

Why leaders will still play an important role in decentralized organizations

"Companies have a vertical hierarchical structure where the bottom actually does the real work but is the top that extracts most of the rewards."

That is a naive and misleading concept that I'm seeing a lot in DAO explainer contents out there.

When you say the most company value is generated by operations, you're actually disregarding the value of good decision-making and leadership.

Think about. Just one bold CEO decision that may have taken some hours or days of "work", like when Zuck bought Instagram, could add billions of dollars in cash flow to the company years ahead.

The financial result of this type of call is not related to the number of hours or the effort one puts into some activity. It is directly related to vision, good judgment, and risk tolerance.

Associating hours spent and effort necessarily with value generation is a 19th-century idea.

Labor is valuable, and so do leadership.

DAOs are important not because eliminate leadership but because loose hierarchies, give transparency and automation to processes, create open and permissionless interfaces to the organization, and distribute a lot better the capital between stakeholders.

But ‘bosses’, in general, are not useless middlemen on top of the power structure sitting with their feet on desks that can be replaced by on-chain code. 

The organizations of the future still need macro vision, coordination skills, and good decision making, even more so in the high leveraged environment of the digital economy.

Although we are updating the current social organization’s infrastructure and our mindset for a more decentralized environment, some human traits, such as following good leadership, will keep existing for a long time.

So, when thinking about DAOs think more of a centralized-decentralized spectrum where DAOs are moving from left to right, than in a binary way.