Optimizing Business Decisions With Blockchain Technology | Industry
When businesses fail to make better decisions, they are bound to fail. In fact, studies have shown that most firms fail at strategy formulation and execution rather than product development. Simply put, a business may have the best product in the world, but if it fails to make the right implementation decisions, it is doomed. Better decision making involves teamwork and for a team to be at its best, there is a need for leadership.
Leadership is needed at all levels and they must collaborate to share information and deliberate on every next move. When businesses are small, they have a manageable team and therefore it is easier for the management to make better decisions. However, they must grow faster to keep out competitors and thus must increase the size of their teams.
But when the size of the organization and team becomes big, decision making becomes complex and erratic. This explains why the majority of big corporations spend an enormous amount of money in hiring third-party management consulting firms for strategic advice and implementation. Even with these measures in place, the decision making is still prone to error given the fragmentation of the process.
How Blockchain Can Help
The number one goal of the blockchain technology is to do away with the centralized systems including centralized management. With the technology, all decision making and strategy implementation are automated and enforced through smart contracts.
Decentralized Autonomous Organizations (DAO) is the name given to the organizations where decisions are made electronically through the blockchain and smart contracts system.When a business operates in such a system, it is governed by rules established through open voting with the weight of each vote being determined by the number of tokens held by the voter.
The tokens are earned depending on the contribution made to the business either in finances or services. Here are examples showing how this concept has evolved since its inception.
The DAO Project
In 2016, an Ethereum based project known as The DAO was introduced with the aim of decentralizing venture capital. The project was designed to allow investors to pool their funds together and then vote on which projects to invest.
Once an investor joined the platform, they would receive awards in the form of tokens. The voting power of an investor would be determined by the number of tokens in their possession. Likewise, businesses would be required to write proposals on the DAO platform and the token holders would vote on which projects they would like to be funded.
The decisions made through voting would then be translated into rules and executed through smart contracts. While the project kicked off well managing to fundraise over $150 million, it later crashed after hackers identified a loophole in its code allowing them to siphon over $70 million from investors.
Even though the attack was stopped and the lost money returned to owners, the incident marked the beginning of the end of the project. The SEC hammered the final nail in the coffin on July 25, 2017, after the ruling that the tokens offered and sold by The DAO were securities and therefore subject to the federal securities law.
A new project known as DaoStack aims to eliminate the security and compliance issues identified in The DAO while enabling collective decision making at scale.
The DaoStack Project
Think of the DaoStack project as a blockchain-powered operating system that provides a comprehensive framework which makes the creation and maintenance of DAOs simpler and more feasible. The goal is to make the decentralized organizations more secure, viable and practical.
With the DaoStack project, parties in autonomous organizations can collaborate efficiently without the need for technical expertise or intermediaries. Businesses can create their own decentralized applications on it with ease and build and manage teams where the contribution of the members to the project determines the value of each.
The goal of the DaoStack platform is to enable smooth decision making in organizations where teams can collaborate and make decisions on an open platform, at a minimal cost, and with high accuracy.
The Future of Business
With the advancement of DAO platforms, the future of business decision making is bright. Organizations in the near future will be able to choose where to place their projects from a variety of options, saving on cost, promoting transparency and driving efficiency. With more DAO innovation, businesses will be able to offer a better work environment for both employers and employees alike.