Today, most companies centralize much of their decision making process. CEOs, with the help of the board, decide the vision for the company. Executives decide how to strategically interpret the vision. VPs and managers decide how to implement the strategies. Everyone else is essentially given a task list with little to no decision making authority.
Pros of centralization:
- Less overhead in decision making process.
- Hierarchy makes conflict resolution easy.
- Sometimes unpopular ideas are the best ideas.
Cons of centralization:
- Biases often lead to poor decisions.
- The top of the hierarchy is empowered while the bottom of the hierarchy is disempowered.
- Centralized companies often become single threaded and lose the ability to explore and adapt.
Decentralizing a company spreads out decision making authority and essentially inverts the above pros and cons. This might seem like a non-starter if you think of the top 2 pros as cons. A company incapable of decision making or conflict resolution is dead in the water. Fortunately, we can use technology to overcome these problems. The following is an idea to maximize the pros of decentralization while minimizing the cons.
The first step towards enabling a decentralized bounty system would be to completely eliminate salaries. I believe salaries do little more than to inspire people to punch the clock. Without salaries, an organization would have a lot more money to spend rewarding people based on the value of their actual contributions. A meritocracy would inspire creativity, efficiency and innovation.
The big challenge with bounties is figuring out how to fairly assign value to tasks. A centralized bounty system would be fairly easy. An individual has a budget and a list of tasks they want accomplished. They then attach a value to each task based on what they perceive as more or less valuable.
But centralized bounties would result in the same cons as a traditional centralized company. Decisions are biased, employees are disempowered and the company is single threaded.
The value of bounties should be determined by the organization as a whole, not by any individual. To facilitate this, we could use an anonymous voting system where individuals use the stake they have in the company to vote on the value of upcoming tasks.
Any time a contributor has a new idea, they can optionally present it to the team for consideration. Any member who has an opinion on the task may qualitatively AND quantitatively vote on its potential worth.
Qualitatively example options:
- I don’t think this task aligns with the vision of the company.
- This task makes sense but the timing isn’t right.
- Not yet sold. I need more context to understand why this is important.
- Good idea. I’m not completely sold but it’s worth trying.
- Great idea. I can’t wait to see where this goes!
- Amazing idea. I’ll even contribute my own time and energy.
Quantitative vote on potential could be as simple as 0-10. 0 being not valuable to 10 being critical.
Contributors are always free to work on tasks regardless of the outcome of votes. This empowers individuals to work on what they believe in. Often times, the outcome of a task could help other members see the value of a task which could result in a change of a vote. Votes on tasks should not be set in stone, changes to votes should not only be allowed but encouraged.
Contributors could even go so far as to take on projects without pitching it to the team for consideration. This may be desirable if an individual believes an idea is good but requires at least a prototype to show why it’s valuable.
Once progress is made on a task, it should be presented to the team. This gives members to vote on the execution on a 0-10 scale.
Value = Potential x Execution
So let’s say I’ve completed the following tasks in a month:
- Designed logo: P=10, E=2, V=20
- Field customer emails: P=3, E=10, V=30
- Write whitepaper: P=5, E=4, V=20
The sum of value I generated that month would equal 70. If the team had generated 700 value points that month, my share would be 10% of the monthly reward pool.
Overall, I’d personally love to work for an organization that operates like this. Here are a few additional thoughts to consider:
Voting should be as non-blocking as possible. If people are required to wait for a vote every time they do something, everything grinds to a halt. One way to enable this is to never require contributors to wait for consensus before being allowed to take an action. Every contributor has authority over their own actions. If the actions they believe in, aren’t valued by the company, they should have the opportunity to prove the company wrong or go work for an organization they’re more personally aligned with.
Representative voting could make the system much more efficient. Say if I’ve got a 5% stake in a company but I don’t have any technical expertise, I should be able to anonymously give my 5% vote to someone I trust whenever a technical vote comes up. This prevents people from voting on things they don’t understand.
Multiple people should be able to work on a task. Anonymous voting could help determine levels of contribution.
If people are rewarded purely on the value they generate, that could cause financial hardship for people who put in a lot of effort but produce proportionally less value. Maybe a system could be put in place to also reward effort in addition to value in order to minimize that risk.
I’d love to hear opinions. The system is definitely not perfect or fully thought out. So any help continuing to think it through is greatly appreciated!