Enterprise of the future update: More disruption ahead

One thing about the enterprise of the future that never changes is that it never stops changing. By definition, it’s engaged in a continuous process of self-renewal built on a cycle of innovation and learning. This is driven by the accelerating pace of change and growing complexity in a highly connected global marketplace. Many large organizations, finding it increasingly difficult to keep up, are responding by decentralizing, downsizing, and even divesting.

The ebb and flow of civilization Human civilization, including nation states and their respective means of commerce, has always exhibited a cyclical ebb and flow of expansion and contraction. Families merge and grow into tribes, which expand to form villages, principalities, kingdoms, and empires. The same goes for a single tradesperson or merchant forming partnerships, companies, guilds, unions, all the way to global conglomerates. Inevitably, the expansion becomes  unsustainable, at which point it collapses under its own weight, often chaotically, breaking up into smaller pieces. This happened in ancient Greece, which reorganized itself into smaller groups called phylae. For our purposes, we’ll use the more
modern term “phyles” (pronounced “phy-lees”). In KM, they’re somewhat analogous to communities of practice or communities of interest (CoPs/CoIs).

Recently, the concept of a phyle has experienced a resurgence, not based on family or geography as they were in ancient Greece, but based on common interests and goals. This resurgence is driven in part by the frustration people are feeling about being forced into making binary choices regarding the groups with which they want to be identified: public versus private, capitalist versus socialist, and liberal versus conservative.

However, with phyles, the choices are essentially infinite. Any and all varieties of shared values, and approaches for promoting and realizing them, are fair game. It’s Adam Smith’s invisible hand working in a completely non-Industrial Age way. Economies of scale have given way to the idea that less is more. And in a less-is-more world, a new framework for organizing and governing the activities within a phyle has emerged: the decentralized autonomous organization (DAO).

In a DAO, the traditional hierarchy all but disappears. In its place is an intelligent, adaptive, self-organizing network. And it’s no surprise that much of the intelligence within this new type of network is machine-based.

Today’s global telecommunications infrastructure lends itself well to phyles self-organizing, setting up rules, and conducting commerce as DAOs. As long as the channels of communication and other functioning, the number of DAOs interacting and collaborating with each other naturally expands, supporting commerce on a local, regional, national, or global level. Facebook, Amazon, and Alphabet are major enablers of this transformation. But many are worried that these large platforms are taking on monopolistic behavior. That’s where disintermediating technologies come into play.

Enter the blockchain

Part of the ebb and flow mentioned earlier is the unprecedented control of the world’s largest economies over the value of currency, along with the concentration of fiduciary trust in the hands of a few large institutions. Whether it is intellectual property protection, or the recording of bank balances, transactions, deeds of trust, stock ownership, and contracts,etc., the formation of blockchain-enabled DAOs is part of a grassroots movement to return control of assets to individuals and small groups.

For instance, you can build and operate your own DAO by drawing from a growing assortment of open source code. Written mainly in the Solidity language, much of this code rides atop the Ethereum blockchain. Some key functions available for download include business proposal preparation, submission, and evaluation; smart contracts for organizational governance and decision making, including voting, token creation, and exchange—and many more are on the way.

DAOs exemplify the concept of a reduced “trust footprint,” with full transparency. Traditional “backroom politics” simply does not exist. The upshot is that business ecosystems will become stronger and more viable than ever, due mainly to the removal of barriers and restrictions imposed from deeply entrenched institutions outside the alliance.

The downside is that, technically speaking, DAOs currently have no legal status. In certain cases, every member is potentially liable for damages should they occur. However, the use of blockchain technology makes it difficult to perform traditional remedies such as asset forfeitures and the like. You can expect to see an onslaught of challenges and debate as traditional institutions fiercely resist any attempts to circumvent established norms.