Wednesday, January 19, 2022

Invisible Hierarchies

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The office is not the only corporate edifice fighting for its life in 2021. The corporation itself is under threat. But whatever replaces it might not be more equitable or benevolent.

In 1997, a McKinsey analyst started a war. Well, he didn't really start it, but he gave it a name. In The War for Talent, Steven M. Hankin and others described what's ahead:

"Companies are about to be engaged in a war for senior executive talent that will remain a defining characteristic of their competitive landscape for decades to come. Yet most are ill prepared, and even the best are vulnerable."

In the two decades that followed, the war turned out to be even more intense. It did not just affect "senior executives," but practically all urban professionals that had non-routine jobs, including software engineers, project managers, designers, and dealmakers. Power seemed to shift towards workers and away from corporations and their owners.

At the same time, another dynamic was intensifying: the War on Talent, an effort to routinize more jobs and make human workers interchangeable. This dynamic was most visible in fields like transportation, food delivery, and some professional services — where human labor came under the control of apps and algorithms.

In the process, workers in these fields earned a certain degree of freedom to opt out of work (by logging off Uber or not accepting a ride on the app). But this came at a cost: workers also lost the freedom to drive around without being monitored and ranked, the freedom of having a personal connection with their colleagues and dispatcher, and the freedom of a stable job that pays for one's sick days or annual leave.

But the most significant innovation of platforms like Uber and Taskrabbit is not the new bargain they offered workers. The most important innovation was their ability to aggregate a vast number of people under one app and make these people interchangeable. When you book an Uber, you don't care who the driver is. You step into a stranger's car because you trust Uber, not because you trust the actual owner and driver of the vehicle.

In the context of basic service jobs, this dynamic doesn't seem like a big deal. After all, did we know any of the taxi drivers we hailed before Uber was invented? Did we know the handyman the furniture company sent to assemble our cabinet? We did not.

But this dynamic did not stop there; it proceeded towards other, more specialized, more personal jobs. Companies like UpWork and Fiverr enabled customers to "book" on-demand design, engineering, and other professional tasks. On these platforms, customers do care about the specific provider, but the providers are still interchangeable.

That last point is very important, so let's unpack it. It boils down to the relationship between the words "unique" and "interchangeable." This relationship is tricky. To get to the bottom of it, let's look at another popular online platform, Airbnb.

One of Airbnb's early slogans was "Belong anywhere." The company set out to offer an authentic, personal experience. Instead of the industrialized, cookie-cutter hospitality offered by large hotel chains, Airbnb offers something unique. But Airbnb also enables customers to easily find alternatives that are equally... unique. By aggregating millions of options, Airbnb offers customers something unique and interchangeable at the same time.  

In essence, Airbnb is industrializing uniqueness. It enables mass-market, efficient access to a never-ending supply of unique assets.

Platforms that aggregate knowledge workers do something similar. They allow companies to tap into the cognitive resources of talented individuals, but they pit these individuals into intense and ongoing competition with millions of other individuals that have comparable skills. Individuals who provide services on these platforms are Unique but Interchangeable, or UbI for short.

And it gets more complicated. And yes, crypto is involved as well.

Corporations are fighting two wars in parallel, the War on Talent and the War for Talent.  The key objective of War on Talent is to convert U into UbI — to turn unique talent into an interchangeable resource. The key objective of the War for Talent is to recruit individuals that cannot be easily replaced. The War on Talent is waged with technology that aggregates, monitors, and assigns workers. The War for Talent is waged with higher salaries and office perks.

But companies are starting to run out of perks. Salaries for top talent are at an all-time high. And companies are now offering the best office perk of all: the option to work remotely and avoid the office altogether. Still, this is not enough, and it only intensifies competition: working remotely, the best employees can access more job opportunities than ever, dragging employers into bidding wars.

If Capitalism is a battle between capital and labor — between investors and employees, then it looks like capital is becoming increasingly dependent on a small but significant minority of laborers. Tennis tables, kombucha on tap, flexible schedules, and remote work are no longer enough to pull these laborers in. All these efforts attempt to make the company disappear, make the office feel more like home, make the schedule feel more spontaneous, get everyone to dress up as if they're out with friends, and move work itself to where the employees live.

But what if there was a way to really make the company disappear? Wouldn't this be attractive to the most talented employees?

Crypto offers such a way. And the consequences for investors and employees are not yet clear.

Decentralized Autonomous Organizations (DAOs, for short) are crypto's version of a "corporation." They enable groups of people to pool resources, work together towards specific goals, and set up mechanisms that govern how resources are allocated and how decisions are made. DAOs are owned by their members, and their rules are programmed into code.

I'm not going to belabor you with the technical details (read here and here for that), but the interesting thing about DAOs is that they can do what corporations do without being corporations. And this makes them attractive to people with specialized skills. A Twitter thread by Peter Yang summarizes the appeal:

  • In a corporation, you apply for a job. In a DAO, you simply join and start working.
  • This may sound impractical, but it already works this way in many open source projects: There is a list of open tasks, and anyone can come in and complete a task (code a specific "section" of an app, write marketing copy for a site, etc.). The work is merged into the overall project once approved by more experienced contributors or automatically by an algorithm that validates the code.
  • But unlike traditional open-source, DAOs tie together ownership and participation. This means that anyone who contributes to the organization receives shares or tokens that can be converted into cash and/or used to vote on important decisions. The level of compensation for each task can be pre-defined algorithmically or voted on by members of the DAO.
  • Contributors/members can socialize and get to know each other by connecting on Discord, Slack, or other platforms. They can also team up or join existing groups to take on more complex (and valuable) tasks.
  • But DAO's are not just a patchwork of freelancers. They can also employ people full-time. Members can vote to offer full-time positions to individual people. But just like in open source projects, most contributors are involved with different projects and don't want to limit themselves to a single DAO.

As you can see, DAOs offer a more open and free way to work, and they are also owned by their contributors and not by any specific investor or "capitalist." They are attractive because they seem like the opposite of a corporation.

But eliminating traditional structures doesn't guarantee the elimination of traditional problems. Some DAO participants can quickly accumulate more revenue and more voting power than others. Outside investors can even "back" individuals or groups that complete tasks and accumulate voting power on behalf of the investor. And governance by algorithm or a committee of anonymous strangers is not likely to be more benevolent towards society and the environment than a group of traditional corporate executives. As such, DAOs run the risk of replicating or recreating many of the issues associated with conventional corporations.

But perhaps the riskiest aspect of DAOs is that they are a new weapon in the War on Talent.  Their open and non-corporate structure appeals to the best and brightest, and their modular work structure means that every task can be theoretically picked up by anyone who can handle it. This makes DAOs efficient at making unique individuals interchangeable. DAOs eliminate or expand the boundaries of traditional corporations to include more people — in the same way that Airbnb expands the boundaries of traditional hotels to include many more properties. This enables DAOs to aggregate unique (human) assets, and at the same time, to industrialize the process of extracting value out of these assets.

This outcome is not inevitable, and perhaps it's nothing to worry about. But, as we design new institutions to enable people to collaborate and share resources, we need to be mindful of unintended consequences. In the War for Talent, crypto is an unconventional weapon. We need to spend more time thinking about collateral damage.

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from Hacker News https://ift.tt/30z0B4P

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