Do you feel underappreciated at your job? Do you think you have a dictator for a boss? Do you think corporate bureaucracy is stifling your creativity?

Or maybe you have a different set of problems. Maybe you’re a startup founder who’s finding it difficult to motivate your employees to produce better work. Maybe you wish your job was much less stressful and your startup much less reliant on you. Or maybe you find it a hassle to acquire angel and venture capital funding but instead would like the option of crowdfunding with ease.

Well, what you need is a technology-enabled revamp of traditional corporate and startup structures – one that is more robust, inclusive, empowering and free of bureaucracy.

Such a disruption is happening as we speak, with more and more startups increasingly adopting a radical new governance structure called a decentralised autonomous organisation or DAO for short.

Let’s deconstruct the concept, shall we.

A DAO is first and foremost, decentralised. This has one enormous advantage over a traditional company or startup – it is leaderless. Instead, it functions according to the incentive structure coded onto the blockchain. Being leaderless means there is no central point of failure, nor is there a decisional bottleneck. It also means taking out a single person (the leader) is unlikely to destabilise the entity, making it inherently resilient.

This is especially useful for startups that are heavily reliant on their founders who are expected to constantly be on the ball. If the founders flounder, as often happens, the startup becomes rudderless and joins the 90% or so of all startups that eventually fizzle out.

Instead, a DAO functions on the thesis that collective, collaborative intelligence is better than any single individual’s and makes decisions in a directly democratic way, instead of by decree or behind closed doors, which is often what happens in traditional CEO and management-driven corporations. Decisions are voted on by members of the DAO and the option that garners the most support is pursued.

Such a corporate structure ensures that an incompetent or corrupt CEO or upper management can’t derail the company and jeopardise the lives and livelihoods of the companies’ many employees (or a DAO’s many members). Instead, since the DAO has a relatively flat and non-hierarchical structure, if the DAO votes to eject a member/employee, it can do so as long as there is majority support for the decision.

One way to allow the members and stakeholders to have voting rights and make collective, democratic decisions could be to issue cryptocurrency tokens to all those involved in the DAO. Vote weightage can be made proportional to token ownership or the duration of time they have staked their tokens in the DAO’s staking pool.

However, this could backfire if a high net worth individual decides to assert his/her dominance by simply buying up a majority of the tokens and making decisions that go against the will of the majority.

To counter this, there could potentially be a reputational credit system that is used to decide voting weightage. Those who are deemed to provide more value to the DAO would have more reputational credit and hence a larger say in the direction of the DAO. This would greatly incentivise all DAO members to not only strive for excellence but to also be nice to each other as being deficient in either of these fronts would be reflected negatively in their reputational credit, which in turn would impact their influence in the DAO.

In addition, since all participants in the DAO will be given its cryptocurrency tokens, as the DAO becomes more successful, the value of the tokens that they hold will rise. The more these tokens are bought up by believers of the DAO’s vision and team, the more the value of the tokens will appreciate.

This ensures that the members of the DAO have skin in the game. If they perform well and the DAO attracts customers or accrues value, their tokens will rise in value. If they perform poorly and the DAO’s performance declines, their tokens depreciate in value.

This is at odds with the incentive structure of most corporations today. Besides some sales professionals, most are given fixed salaries irrespective of their and their companies’ performance. With a DAO, all the members would still get paid (a fixed salary or an amount pegged to the performance of the DAO) but in addition to that, their tokens will rise and fall in value in tandem with their DAO’s performance.

Such a structure will also greatly lubricate the funding process. Instead of long months spent fundraising from venture capitalists, angel investors and the public, anyone would be allowed to invest in the startup by buying the token at any point in time, irrespective of their financial standing (if the specific DAO allows it in its constitution, that is).

But decentralisation alone is inadequate for a company or organisation to qualify as a DAO. it also needs to be partially or fully autonomous. This is where smart contracts come in. A smart contract is a piece of code on the blockchain that self-executes when a preordained condition is met.

For instance, a smart contract could be written up to automatically buy a certain asset at a certain date or when it hits a predetermined price point. Currently, such an exercise would be done manually by employees of the company and depending on the complexity of the process, with the aid of some lawyers as well.

However, in a DAO, such activities are automated, greatly reducing employee bloat. With this incredible leverage that smart contracts provide, DAOs can provide outsized value. For instance, Uniswap is a crypto protocol-turned-DAO that has a mere 33 people in its development team and yet manages a gargantuan RM14.5 billion treasury. This is thanks to the many thousands who own the Uniswap (UNI) token and hence, vote, invest in and help govern the DAO.

Another major pillar of a DAO is its radical transparency. Since all transactions and funding information are completely transparent and updated in real time on a public and immutable blockchain, it is inherently corruption and censorship-resistant.

This is at odds with today’s private companies which only have to self-report by providing a snapshot of their financials during tax season (and even then, only to regulators). If you invested in a company, wouldn’t you like to know how your funds are being used in real time? This is exactly what a DAO enables.

In a nutshell, DAOs are to traditional companies what self-driving cars are to normal cars. Sure, both a normal car and a self-driving car have the same aim: to get you from point A to point B. However, a self-driving car would be able to do it much more safely and with little effort from you.

Similarly, both a conventional start-up and a DAO could aim to achieve the same predetermined goal. However, a DAO would be able to do this in a more democratic, transparent and robust way. This should theoretically result in a better-run organisation and there is reason to believe that this is indeed the case. The crypto space has seen an explosion of DAOs and many are thriving.

In a sense, even Bitcoin, the premier crypto asset, is a primitive version of a DAO, albeit without smart contract capability. It was invented by the pseudonymous Satoshi Nakamoto in 2009 and has since grown exponentially. It has no employees (only a geographically-dispersed core development team), no office and no CEO, and yet is now rivalling the market cap of tech giants such as Google and Facebook.

Bitcoin has proven that a DAO with the right incentive structure can bring millions of people together and empower them.

And even though the crypto industry is the only one which has fully embraced DAOs for now, I see a future world where non-crypto DAOs proliferate and thrive.

For instance, I can definitely see a ride-hailing DAO emerging to compete with the likes of Grab and Uber. And as it is with DAOs, thanks to its low member/employee count, lack of physical infrastructure and partial automation, it will be a lot cheaper to operate. This would invariably result in cheaper rides.

The writer can be contacted at [email protected].

The views expressed are those of the writer and do not necessarily reflect those of FMT.