Lessons from Experiments in Decentralized Autonomous Organizations (DAO) – The Human Dynamics of Voting

“As man advances in civilization, and small tribes are united into larger communities, the simplest reason would tell each individual that he ought to extend his social instincts and sympathies to all members of the same nation, though personally unknown to him.” (Charles Darwin in The Descent of Man) 

This is the second article in a series exploring the opportunity for professionals and developers in exponential and decentralized autonomous technologies, such as blockchain and crypto-currencies, to take into consideration research and expertise from domains such as social sciences, for example anthropology, behavioural economics, psychology and neurosciences in the creation of their platforms and coded governance to achieve the full vision of the potential of democratic autonomous organizations.

The creation of the Ethereum DAO project, the predicted plausibility of and then actual problems, with subsequent hard fork decision dominated the public discourse during the summer of 2016 . This is a social experiment and digital economy case study that provides valuable lessons about future decentralized platforms of digital asset value exchange, leadership, governance and decision making processes.

Even in centralized systems, humans have some degree of choice over what they do

“The aspirational goals for The DAO are to utilize the wisdom of the crowds for this decision-making process, and to eliminate the risks posed by middlemen using a programmatic approach to corporate management.” (Dino Mark, Vlad Zamfir and Emim Gun Sirer)

This includes rethinking the “innovation eco-system, which comprises disparate organization and sometimes even competitors that join together for the purpose of developing something new.” (Collective Genius by Hill et al) 

Central governance was created with the theory that it would create more efficiency in the flow of information, improve markets and lead to more effective solutions and ultimate economic growth. If engineered and coded to perfection and precision, these costs are reduced while control is gained across the value chain, and market dominance obtained by creating barriers to entry to maintain sustainability.

Bonnitta Ray from APP Associates points out that such organizational designs therefore need to create direct-reports dependencies, which authorizes certain people to use disciplinary power over others to constrain their activities or leverage their motivations. She provides examples of these direct report structures as demonstrated in the image below:

This inevitably creates challenges in attempting to coordinate actions by communicating over an unreliable link – human beings. Unlike the living organizations described as agents in complex adaptive systems, according to Ralph Stacey the sciences of complexity of human action “needs to be interpreted in a manner that takes full account of the attributes of human agents, namely, that they are conscious, self-conscious, emotional, often spontaneous, often thoughtful and reflective beings who have some degree of choice over what they do”.

“Human agents are basically interdependent, they respond to each other and their choices and intentions play into each other producing unpredictable, emergent patterns over time. To signal the move from the domain of natural sciences to the domain of human action, Stacy and colleagues refer to these processes as Complex Responsive Processes of Relating. These responsive processes take the form of:

  • communication understood, drawing on George Herbert Mead, as conversation;
  • patterns of power relations which take the form, drawing on Norbert Elias, of the dynamics of inclusion-exclusion and identity;
  • ideology as a combination of values and norms, drawing on the work of Hans JoasWilliam James and John Dewey; and
  • evaluative choices.”

It is in these local responsive processes that there emerge population-wide patterns of activity, culture and habitus. Organizational life is though of as the game people are invested in and organizing processes are understood to be the ordinary politics of everyday life.” (Wikipedia)

Centralized leaders are unable to see the whole picture and therefore under-utilize the innovation eco-system and collective wisdom that exists at the bottom of the “pyramid”

“In a world of increasing access to data, knowledge, resources, collaborative enterprise, and technological innovation, there will always be some people tracking data sets that managers don’t see, some people tossing around ideas that managers think are impossible, some people playing around in creative spaces that catalyze imaginative thinking, some people experimenting with their friends in a co-working studio or a backyard garage…” (Collective Genius by Hill et al)

According the Myrna Lewis, founder of Co-Resolve Management and the Lewis Method of Deep Democracy, we can use the metaphor describing the human psyche as being like an iceberg – a small part of our behavior is conscious and above the water level, while most of our behavior is below the water line in the unconscious. This metaphor can be expanded to group and group behavior – “the unconscious below the water line holds the potential of the group”. It is this promise of collective wisdom and inclusivity that draws so many people to decentralized platforms and models of organizations.

“A simple example to demonstrate these group dynamics are that, when a community meets, there is a stated agenda – which is what is above the water level.

However, we all know that “before important meetings smaller groups often lobby and discuss issues before the meeting. These smaller groups are the only ones who are aware of the ‘under the waterline’ agenda. In that way their lobbying is therefore in the group’s unconscious”.

Even when there is a majority vote, with almost 100% of all voters casting their vote, we still need to be mindful that the experience of the minority voices could be felt as the ‘tyranny of the majority’.

As the leader or leadership team “leaves the room” (virtual or physical) the unconscious (that which is underneath the waterline) of the group is still with the group. “We have all seen how, when a leader is not present, a group will start talking. These conversations are often informal such as a late night dinner or over a cup of coffee.”

“Often the true sentiments are expressed and include negative emotions such as resentment, frustration, hurt, feelings of not being included or being discounted.” It is easy to see this on sub-groups, for example, in Reddit.

If the leaders continue to dismiss the “minority” vote or do not listen to the silent or “voiceless” majority, these feelings do not go away; they stay in the unconscious and over time build up, manifesting as “resistance/dissent” activities – these activities which specifically could obstruct the status quo or go against the decision. These actions are initially overt but eventually become covert.”

Studying the Resistance Line helps to understand how voting mechanisms can create dissent

 A key mechanism to include the collective wisdom in groups is through voting, such as also deployed in the Ethereum DAO, where the primary governance means offered in the business was voting by the shareholders.

 The following describes the some patterns in the behaviors that we see when participants have lost the vote (or right to vote), which we can describe as a Resistance Line as described by Myrna Lewis of the Co-Resolve Leadership Program and depicted in the image below:

Lewis emphasis that, the longer people remain on the resistance line, the greater the risk of issues exploding, and of course the more efficiency and effectives is reduced. The model is therefore valuable to use as a diagnostic to identify potential hidden conflict or unexpected actions.

  1. Jokes and then Sarcastic jokes

According to Lewis, “Loosing the vote is covert and is usually seen as unthreatening, even fun. Our first reaction is to make jokes about the decision as a way we communicate our decision.

After a while, if the voices stay unheard, the jokes will start to have an “edge” to it as the example below. “This stage is often seen if clever bantering, sparring, wit, and raconteur in groups. Bantering become a way for people to express feelings that need to be expressed but should they express these directly, they would be uncomfortable.”

In the DAO hack and debate to address it, for example, a controversial video emerged which initially had less than 100 views. Since the hard fork and now three months later it has more than 27,000 views. This needs to be compared to 11,195 views of the video of Gavin Wood presenting the hack of the DAO smart contract.

2. Excuses

Change management experts know the emergence of “excuses” to not participate in activities after a decision was announced, is often a familiar sign of resistance when a new technology or other change is being introduced into an environment. For example, people will “forget” to attend meetings, or suddenly have to play golf with a client when an innovative idea is to be presented to them. When you observe more than three excuses for not acting on a decision, you are experiencing the next phase in the resistance line.

3. Gossiping/lobbying

Lewis describes gossiping is part of human nature and fulfills an important role in relationship dynamics as outlet for our feelings with friends. When our views are not heard or when we are not given a chance to express our views, our gossiping escalates. Savvy change makers know that the true and real important reactions to decisions can be heard outside the formal meeting room at coffee machines.

For example, when the Ethereum DAO was established, various experts were authoring white papers to describe their concerns and trying to gain support in community forums for influencing the community to become more cautious while continuing to support the vision towards a more peer-to-peer economy and leaderless organizations. Many conversations were overheard at conferences around dinner tables to find out about the mood and how people felt about the situation.

4. Communication breakdown

Communication breakdown is when people, parties, sectors or divisions stop talking to one another. This is when we observe shakespearean squabbles that can last for months and years, creating high inefficiency and ineffectiveness.

Lewis provides an example where someone emails or texts a person as a way of avoiding them. Research has proven that people are more open to lying when texting or emailing. We can observe this behavior in “trolling” and flame “spats” in chat rooms or even public Twitter feeds.

5. Go Slow and Disruption

Lewis’s Resistance Line model indicates that, by the time communication becomes ineffective, the dissent and resistance is becoming overt. As the desire of the group to be heard becomes ever more desperate, they may begin to disrupt the process that was decided on.

When people become disruptive in the workplace, they tend to block the process and can even behave in an unruly and disruptive manner. Some people sabotage the process by creating bottlenecks or creating workarounds to new solutions they must use.

Most of us have been at the receiving end of bad service from a person who is creating roadblocks for us or take forever to complete a standard service. Their go-slow or unwillingness to help us is a disruption on the Resistance Line.

In the crypto-space this manifests through using mechanisms such as a simple denial of service hack.

6. Strike

 The go-slow phase will heighten and lead to overt activity such as a strike – a refusal to work in an organized way (such as refusing to mine when asked).

According to Lewis a rebellion might now openly start to the surprise of the group who won the vote, as they were unaware of all the “under the water line” behaviors (they cannot be present at all the gossip and informal meetings and discussions) and the hidden “under the ice-berg” support for what appeared to be a minority group.”

An example of a “strike” is the decision of some exchanges to trade both ETH and ETC creating a black swan event in blockchain technologies.

7. War and/or Separation

If the minority’s voice is still not heard and the issue is sufficiently important to them, they will withdraw from the process altogether or, as a last resort, go to overt resistance and dissent. By this stage all contact between the parties has broken down.

The final consequence is that people leave. This is the time when teams, initiatives or companies dissolve or are up for acquisition. It equates to divorce in a marriage, or in a worst case scenario, the  “war of the Roses” where ultimately no-one wins.

In the example of the Ethereum DAO project this has resulted in two competing chains, a situation that continues to evolve in the public domain.

Decentralized autonomous organizations have an opportunity to rewrite the traditional “voting” operational models to harness the wisdom of the collective

Inclusivity and diversity brings difference and therefore also conflict. With conflict there is a growth opportunity and the potential for uncovering wisdom and innovation by intentionally lowering the waterline. This can be seen in community forums such as Reddit and Steemit. With difference comes tension because there are differences of opinion.

Unlike centralized systems where friction and difference is seen as disruptive and to be engineered away, we can continue to be mindful to not shy away from continuing the quest for peer-to-peer economies, decentralized platforms and leaderless organizations because we discover these bring about conflict, emotion, chaos, disruption and unpredictability.

In shifting our worldview to see such conflict as part of life there is an opportunity for growth and a potential for uncovering a piece of wisdom and novelty that would usually not be available.

Instead of looking towards models such as “classical” democracy which focuses on majority rule, decentralized communities are encouraged to study research and models from human dynamics that aim to include all voices, states of awareness, and frameworks of reality as important.

“If you want to produce something truly new and useful, you cannot know — by definition — exactly where to go. Instead of trying to come up with a vision and make innovation happen themselves, a leader of innovation creates a place – a context, an environment – where people are willing and able to do the hard work that innovative problem solving requires.” From the book Collective Genius: The art and practice of leading innovation by Linda A Hill, Greg Brandeay, Emily Truelove and Kent Lineback

About this article

The purpose of this article is to support the cultivation of meaningful thought processes and encourage action based research to learn from real events to develop decentralized systems and organizations.

Notes on the Lewis Method of Deep Democracy

In 2006, the United Nations recognized Deep Democracy as one of eighty leading African innovations. “Deep Democracy suggests that all the information carried within these voices, levels of awareness, and frameworks is needed to understand the complete process of a system. Deep Democracy is an attitude that focuses on the awareness of voices that are both central and marginal.”

“Deep democracy has many aspects, but at its deepest manifestation refers often to an openness towards the views of other people and groups. It also embraces emotions and personal experiences that are most often excluded from conflict and rational public discourse.” ( Deep Democracy Institute)

MaRi Eagar is a co-founder of Digital Futures and the Voice of Mindfulness in Blockchain and Decentralized Technologies and trained in Deep Democracy and the Co-Resolve Participative Leadership.