Blockchain Technology Opinion

Ditching Boardrooms for Distributed Governance with Blockchain Technology

Blockchain can revolutionise the way society works far more then just money.

Have you ever noticed how long it takes for your company to process and approve your expenses claims? Now compare that to how quickly redundant meetings with top management – to discuss the same repetitive issues – gets approved. A laptop purchase using company funds that would boost your working efficiency takes longer to approve than a pointless hour long meeting. The notion is almost as ludicrous as waiting at a red light at 2am in the morning when there’s not a single car using the adjacent crossroads.

Thomas A. Kayser described board room meetings as “a gathering where people speak up, say nothing, and then all disagree.” Empirical Studies support Kayser’s statement and reveal that meetings are not only unproductive but also costly; yet most corporate executives spend almost 80% of their working life in boardrooms. Then there is the plethora of management sciences backed up by troves of consultants trying to tell how an organisation should run for maximum efficiency. Practices for good governance is often fixated on either people and processes. This is mainly because governance was only framed in the context of management of people and their hereby action.

There’s a limit to that approach especially when little attention was paid, on how people currently behave in an environment where we are perpetually connected and surrounded by technological devices. We have gradually grown accustomed to ‘virtual’ meetings facilitated by video conference calls, or an arsenal of  startup’s glorified management apps from Slack to Trello. Granted, it has improved organisational efficiency tremendously just by banking on how we communicate and engage with one another.

Despite the deluge of apps and technological services that aim to smoothen human engagement, whether it be making conversations less painful and more task-driven. The truth is nothing much has changed on how we deal with the core element of governance — the exercise of rule and power. Why? Because power is almost always consolidated, accumulated and clustered to uphold rules that are flawed, biased and unfair — a common in all form of governance we have today from supranational organisations such as the United Nations, right down to community of soccer moms attending the parent-teacher conference. As humans, we ALWAYS have distorted and relative perspective of truth. Ideas, speeches and words can always be misinterpreted or maliciously twisted. Actions can always be misrepresented and wrong-doings concealed. What we have is the constant unresolved issues of governance revolving around trust, immutability of information and transparency.

Distributed governance not anarchy

One way to attempt to solve the problem sanely is to deconstruct and redesign the exercise of rule and power. It is actually relatively easier than it sounds (and doesn’t necessarily require a change of regime through revolution, burning torch and pitchforks). Well at least with technology such as blockchain, it really is just about that – changing how we do things ESPECIALLY by putting the conventional power structure on its head.

Enter distributed governance. Amusingly, this is not a new and novel concept. We have it all around us to show that it works. Just ask yourself, who keeps the internet running? Who owns the internet and how are rules about it being conveyed? Despite the much heated debate and camaraderie of the recently deceased net neutrality, the internet is governed with different sets of rules, run by various players built on the basis of network consensus (at least in theory). 

the-internet .gif

Blockchain came about to revolutionise the internet by bringing in the age old technology of peer-to-peer and cryptography to disrupt centralised databases – essentially disrupting power structures. Therefore, there is a legitimate case to be drawn from this technology in regards to governance. In that if you design and build the systems ground up, you might actually achieve a more suitable way of managing people and decision making. We are now moving beyond the realm of improving efficiency to effectiveness of governance.

New Way of Doing Things

So how do we go about figuring out a new effective way of governance? Before jumping into the technology, let us redefine the context of governance for organisations, particularly on how people interact and make decisions. Joe Lubin, an entrepreneur who founded ConsenSys, a venture focusing on developing decentralised applications (DApps) coined Holacracy – as a credo for organisations who wishes to thrive and operate in a collaborative environment. This doesn’t mean employees should hold hands around a bonfire chanting kumbaya, and far from just flattening organisational hierarchies by introducing beanbags in fancy Google-esque offices. Holacracy can be defined in an organisation with the following characteristics :

  • Dynamic roles for stakeholders rather than traditional job/role descriptions.
  • Distributed, not delegated authority
  • Transparent, consensus built rules rather than top down commandment
  • Rapid iterations rather than big reorganisation

Holacracy when applied with blockchain ends up not being such a lofty idea at all. The building blocks of the distributed ledger technology are the right ingredients to distributed governance through principles of Holacracy. They are :

The Who – Digital Identity

Organisations are made of people; and who they are and what they do matter. It is common today that people are ‘tagged’ with a device such as access card assigned to each employees entering and exiting a building. But why stop there when that can be the basic tool for how people behave and interact within an organisation. With blockchain, identities can be more meaningful because it can carry a “. . .persistent digital identity or persona and reputation systems will keep us more honest and well behave toward one another.” says Joe Lubin. (Read more on digital identity here)

The What – Tokenisation of Decision Making

Once digital identities are set up, it is important that what people do are captured and being made transparent. Organisations will require an immutable log of information on decisions being made and things being done linked to a digital identity – all tied together and effectively ‘tokenised’. It is essential for a consensus mechanism to work with the help of tokens, making each and every decision valuable to the person who’s made it.


The How – Smart Contract

Now both digital identities and tokens need to be bound together with smart contract – the rules or constitution agreed by all participating members of an organisation. Joe Lubin framed this succinctly in that “the watchwords are agility, openness and consensus . . . then codify these rights in an explicit, detailed unambiguous, self-enforcing agreements that can serve as the glue to hold all.” (Tapscott D. – Blockchain Revolution 2016)

We believe that the first step to making BCE a functional and effective especially with its wide range of independent citizens, patrons and ambassadors (that makes up the members of BCE) is to design a foundation built on distributed governance. This mechanics of decision making may not only be modular, but scalable whilst ensuring cost and time efficient ways to engage, communicate and achieve the organisational goals together. Nick Dodson, the Founder of Boardroom mentions that “the larger the organisation the more modular they could go, as more resources are available and the potential need for future interchangeability is more present. We can think of this dilemma of modularity as the cost of future proofing.” Indeed, BCE is here to grow and stay, and it’s okay to leave the boardroom after all.

Zayan is a VC INSIDER NEWS columnist. Zayan, together with the team at Blockchain Embassy Asia, works to educate and promote blockchain governance as a method for collaboration between organisations, entities and existing communities across Asia.

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