The world feels as if it’s changing faster, and technology seems vaguely to blame. In what was predicted to be the “age of discontinuity,” (Peter Drucker, 1969) we were told that the 21st century would present “too much change in too short a period of time” (Toeffler) and that society would “never be stable again,” requiring organizations (both profit and non-profit) to be “constantly learning” (Donald Schon, MIT, 1973).
Despite the efforts of activist investors, corporations today are struggling to move as fast as consumer tastes, culture, and the public narrative. Once strictly hierarchical and stack-ranked, the largest Western corporations have begun reorganizing to work in smaller, more autonomous teams, and reducing the amount of decision making made at the top. However, only the highly automated ones (read: tech cos) have been able to make this transition successfully, in part because the “open allocation” work style originated in the post-academia software development culture of 1990s silicon valley.
Outside of the technology sector, the fastest-moving and most relevant organizations aren’t organizations at all; they are also “leaderless” groups organizing on the fly. But unlike the employees inside a company, these ad hoc social groups organize according to common values, counting volunteers and paid contractors alike as constituents. Examples include Occupy Wall Street, the spontaneous protests of the 2011 Arab Spring, BLM/Antifa, Proud Boys, and other real-life mass gatherings coordinated on social media.
“Leaderless” doesn’t imply equality; there is certainly a hierarchy of influence even in the most amorphous groups—something that can devolve into the tyranny of structurelessness. It implies that leadership is just that—influence—and is not conferred by any formal process, title or tenure. It is a “king of the mountain” style game in which the most-respected leader sees the others fall in line behind them, their ideas, and their arguments in a community chat or email thread. In software, this person is a software engineer and architectural thinkers; in political groups they are social engineers and archetypal thinkers.
In both groups, work is accomplished by internal leaders delegating authority to the very margins of the organization; that is, the individuals decide their own allocation and workload, without formal central agenda-building or even a predictable schedule. Cooperative businesses, social media #movements, open allocation startups, and gig worker platforms like Uber operate by these same principles.
Ad hoc software groups lack the social cohesion of real-life groups, and scale poorly without an attached corporate hierarchy. Bitcoin is an example of a leaderless software movement which has found a way to incentivize its enthusiasts to stick together despite disagreement. It’s a way to make volunteer software teams scale to the level of a corporation, political party or trade Union. It has elements of all three.
What is bitcoin software for? While may not look like a traditional financial network like Fedwire or Swift, Bitcoin is indeed a cooperatively-owned, ad-hoc value transfer network, comparable to central bank gross settlement systems. Instead of sitting inside one bank’s basement, Bitcoin’s servers are distributed throughout the world, and run by volunteers. Anyone can program their computer to join and help validate signatures and transactions on the network. Some of these roles are compensated automatically in the network with bitcoin payments (mining).
Bitcoin’s unusual design is a result of the way its engineers organize themselves. In software, it’s common for engineers to collaborate on an unpaid basis to create mutually useful tools. These libraries are maintained by a rotating and diverse caste of very loosely organized volunteers, and make up most of the foundation of the internet. As a leaderless organization, Bitcoin’s software network lack a traditional central server interface, known commonly as an Application Programming Interface. Instead, computers can use the Bitcoin network via a protocol, or a set of machine instructions, similar to HTTP, also known as the World Wide Web.
Free and open source software dominates the foundations of the Web and software world because the efficacy and productivity of leaderless enthusiast groups belies their chaotic outside appearance. When engaged in skilled, self-directed work, studies report volunteers are able to learn new skills and get in “the zone” more easily, conditions which are beneficial for emotional and professional wellbeing alike.
Responsive technology companies try to mimic free and open source projects as much as they can within their traditional hierarchies. However, this “open allocation” organizing is only possible in the technical parts of the company; the need for non-technical, centralized bureaucracy is predicated by the business’s need to interact with other centralized bureaucracies, namely banks and law firms, whose services are required by the regulatory monopoly surrounding the US dollar system. This traditional bureaucracy that exists, even inside open allocation tech companies, is known as the “technostructure.”
The technostructure’s commodity needs—to appeal to the traditional capital markets; to satisfy traditional reporting requirements; to measure the business using common heuristics—often run roughshod over the true potential of the intellectual property being developed inside the company. Setting the company free from its technostructure, and the accompanying US dollar settlement system and capital markets, would allow the engineers creating the value to operate in a completely ad hoc, self-directed way—which is their preference.
Building a business on top of bitcoin, and using bitcoin in lieu of the USD as an instrument for payroll, capital raising, value store, and exchange, is one way that a group of loosely-organized engineers can monetize their private, centralized software service without the need for a traditional technostructure.
However, Bitcoin infrastructure is immature, and lacks many common enterprise business applications (such as payroll systems, retirement planning, tax planning, and resource management). Commercial enterprises that go “full Bitcoin” may find themselves facing incredible bottlenecks where interactions with the USD system are still necessary. An example would be using USD to buy the Bitcoin needed to pay employees or counterparties, or using USD to pay for utilities at a common office space, or data center, who do not generally accept Bitcoin as payment due to its volatility.
What’s needed is a new organization design which can bridge the future potential of FOSS-style commercial organizations and today’s convenient USD-based services and systems.
Professor John Kotter of HBS has developed a “Dual OS” organizational structure which he claims will help organizations to move faster and adapt to the future. In Dual OS, a company has both a traditional hierarchy and a large network of contingent or volunteer employees, where each half of the business handles what it’s best at. For the hierarchy, this means financial planning, creating USD budgets, defining full-time roles within the hierarchy, doing related HR functions, and measuring results. For the network, that means identifying the most important hazards and opportunities early enough, formulating creative strategic initiatives, and implementing them quickly.
Dual-OS is a hypothetical framework that was conceived without knowledge of Bitcoin, according to Kotter. However, he acknowledges that challenges exist to implementing dual-OS in a global corporation today, because there is little infrastructure to support the “network”. That is, there is no corporate payroll system, accounting system or ERP suite that is built to handle a two-sided company, one side of which includes thousands or tens of thousands of individuals, working variable hours on their own schedules, being compensated according to variable formulae, paying out across 190+ countries. Bitcoin could be the infrastructure for the “network” half of the Dual OS. We might call companies that work this way “Emergent Organizations.”
Emergent companies would use Bitcoin as the basis for their “network,” and whatever software required to connect and use the network would be built by FOSS style engineers paid bounties. The bounties are created by the few full time engineers that work for the hierarchy half of the company. In this way, full time workers can augment their skills on a pay-go basis by using an open, low-cost market for high skilled labor.
What sort of companies would want this infrastructure? Global IP businesses that are collecting and distributing revenue worldwide, at various intervals and amounts, will like doing business using crypto rails. This would include trading businesses and exchanges; ecommerce businesses; remittance businesses; and lenders.
In short: the Internet needs to be reinvented to accommodate emergent groups who want to coordinate financially the way they do socially—en mass, instantly, and without permission.