Project: Building culture in decentralized organizations, intentionally and systematically (Part I of Building culture in decentralized organizations)

tl;dr: “Culture” is mysterious and goopy, but valuable and important in decentralized organizations. By taxonomizing the systems of people who build it for a living, we can help communities be more intentional about building shared meaning together.

Culture is the secret sauce of organizations: the half that you can’t just fork. This is because how an organization performs depends just as much on the behaviors that are incentivized as those that people internalize. You’d think DAOs would have changed that. Mechanized trust could have eliminated the need for all the goopy stuff that makes traditional organizations so hard to build: norms, values, human trust, tacit knowledge. But are you really going to be surprised if it turns out that culture matters, that organizations, centralized or not, are more effective when their members feel aligned with others, connected to them, recognized and trusted by them, heard by them, when they are constantly in touch with how they fit into a bigger system that does something they care about? As DAOs get ever better at pinning down the formal dimension of accountability, this informal side will become an ever greater fraction of the mystery of decentralized organization design.

We’re Seth Frey and Taylor Ferrari. Seth is a Prof at UC Davis, trained in cognitive science and data science, and specializing in the study of online governance systems. He does that work mostly with large data sets and fun computational methods, but recently with goopier approaches like surveys and interviews. Taylor is a consulting researcher and strategist trained in anthropology and design. She specializes in qualitative data collection and strategy development across public and private organizations. We’re working with SCRF support to aggregate the concrete practices and processes that traditional organizations use to build strong cultures. In this project, we’re beginning from a faith claim that internalized values and behaviors matter for DAOs. It could be wrong. We may be attaching too much importance to culture. If so, we’ll all see. In the meantime, let’s take the challenge at face value.

Culture, for our purposes, is the set of values, mental models, and behaviors that are widely internalized by members of a group. Culture building is an organization getting itself to a point where many members have done that internalization. It matters because following rules you believe in gives you another consensual route to complex collective initiative.

Organization and mechanism designers currently have great tools for all the formal structure side of building an organization: review systems, accountability processes, supply chains, and so on. The tooling for culture building is, well: is there any tooling exclusively for culture building? With a better understanding of how groups get there, we can start to say what those tools might look like, and what they’d need to succeed.

It can be tough to root up the internalized dimensions of an organization, but the “secret sauce” metaphor might be holding us back, giving culture a little too much mystique for our own good. There’s a fair chance that it’s mysterious not because it’s hard, but just because it’s a lot of work.

What’s the work of culture building? If we could talk to dozens of experts, compare and group their insights, and translate them for decentralized organizations, could we get a concrete set of practices that anyone can follow? It’s not so far-fetched.

So that’s what we’re up to. We’re interviewing and studying on-the-ground culture building professionals who have taken a systematic approach across organizations, to distill the specific practices they use, and the purpose of those practices. We’re doing it by reviewing and taxonomizing dozens of books by professional organizational culture consultants, and with interviews of some of those same professionals. These include consultants for traditional hierarchical organizations, large and small, but also culture building professionals who specialize in the more value-heavy non-profit sector, who specialize in supporting collaborations and networks, and those who specialize specifically in non-hierarchical organizations. We’ll then aggregate, organize, and pass it around for use by people who run decentralized and non-hierarchical organizations: DAOs, volunteer-run organizations, collaborative networks, cooperatives, and collectives.

We’ll be sharing what we find as we go. If you have questions or comments, we’re all ears. Thanks for your interest!

Seth Frey (Home, Twitter)

Taylor Ferrari (Home, Linkedin)

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Can you share some details about the cultural consultants you’re planning to contact / engage with? What type of backgrounds do these culture builders come from? Are they generally tech types who’ve come from other projects or are they new to web3?

This is a really exciting project! I am looking forward to seeing this and all the resulting data.

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Hi! Thanks for engaging! We’ll be asking permission to name them and their firms as we work down our list—this gets into IRB issues—but in the meantime, I’m happy to share our current reading list (bottom). We’ve been fairly deliberate in not selecting tech/web3 folks. For the most part we’re seeking people who work in the consulting industry for traditional organizations, not-for-profits, and industry networks and collaborations, with a focus on culture building. We’re targeting them because it pays, meaning that it’s possible to find people who have served dozens of organizations with a relatively systematic, if not uniform approach. Part of our work will be adapting those insights from traditional orgs for decentralized/web3 communities. Our presumption for now is that these skills will translate, particularly because culture building, even in a hierarchical organization, tends to be pretty bottom-up. That presumption, of course, will be tested as we proceed, but it is one of the things we’ll be running by our participants as we talk to them.

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That sounds interesting! The idea to question consultants is quite interesting. What do you think you’ll find there that we might not find in the academic literature on the question? What do you think consultants might see that anthropologists and economists will miss?

My other point is more nitpicky, but it’s the object of your work, so it might help thinking about it: your definition of culture doesn’t seem to restrain itself to the goopy stuff. Indeed, smart contracts are culture (of your kind) at work—they rely on and underlie shared values, they document and disseminate shared mental representations and they describe and impose behavioural norms. As a result, I’m not really sure what the goopy stuff is. Is it things that rely on non-economic values (things like honor and care and loved ones, whose value are independent of markets)?

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Thanks so much! Us too!

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That sounds interesting! The idea to question consultants is quite interesting. What do you think you’ll find there that we might not find in the academic literature on the question? What do you think consultants might see that anthropologists and economists will miss?

We’re targeting the experiences of consultants as “data” because our question is a “How do you make culture?” question. I’ve found that the academic literature is more descriptive: “What are the types of culture? What are the dimensions of cultural variation?” There’s a bit of “What are the properties of cultures that stick around a long time?” that I’ve found in anthro but where it really gets into practice is in the business/management literature, particular the subset by people who do consulting. The rationale is ultimately the same as any other qualitative deep dive. If you want to understand a cultural phenomenon (or in our case “meta-cultural”: creation of culture) then you should talk to people who have experienced it.

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Not nitpicky at all, certainly meaty. I also don’t know what the goopy stuff is. It certainly is where I’d guess that a lot of the non-economic component is being kept, so if we’re on board that non-economic dimensions matter in an org, then we’re on board with culture (which I didn’t highlight: thanks for pointing it out).

I don’t know if I fully agree with your point about smart contracts already being culture. Literal smart contract artifacts are in code not in heads. If you make it about “effective smart contracts” then I agree almost completely: our premise is that formal organizational structures, to be effective, need a symbiosis with informal (i.e. internalized) structures. But that depends on a sort of s/goopy/effective/ switcheroo.

they rely on and underlie shared values, they document and disseminate shared mental representations and they describe and impose behavioural norms

I don’t think externalizing the internal is the same thing as internalizing. With your picture, smart contracts can give a community a representation of what we’re calling culture, but that’s not the same as being culture or a substitute for it. A little bit of what our definition is is behavioral, and it allows that behavior either came from external constraints or internal drives. Relying on, underlying, documenting, and disseminating are effective with internal drive in place, but are not a cause of it, and imposing is external.

Let me know if I’m getting your point. I do a lot of realizing what I think in exchanges like this so more is welcome.

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This is super interesting! Welcome to SCRF.

I worked as an internal consultant for several years doing exactly this: creating large-scale/transformational culture change. If it helps, there is a growing field of change management practitioners that focus on the ‘people side of change’. Many are now certified with a certification through Prosci Change Management. This might be a good pool to find some participants for your study. I would think that active, full-time consultants may not be able to share significant information with you due to NDAs and how tight consulting firms hoard information (that’s literally their business model).

I’m also very interested in how online communities in general (and now the DAO) create culture. I don’t believe that the DAO is unique in its need for culture, and digital social groups will teach DAO organizers a lot…i.e., they don’t need to reinvent the wheel (of online culture).

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Hi Seth,
Interesting angle in a tech heavy world :slight_smile:
I assisted Commons Stack community in a “cultural build” research exercise for the token engineering commons launch. Happy to speak more about that experience with you or point you to the ongoing leads of the initiative within CS/TEC
Kindly
Kelsie

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I don’t see the reading list anywhere. Could you give an explicit pointer?

My instinct is that your hands-on ethnographic work will be more interesting than the “reviewing and taxonomizing dozens of books by professional organizational culture consultants,” which sounds like a vastly dull job, though I suppose someone has to do it.

You hypothesize that “the ‘secret sauce’ metaphor might be holding us back, giving culture a little too much mystique for our own good,” and yet your project description starts with the very convincing assertion (unless I’m missing an irony somewhere) that “Culture is the secret sauce of organizations: the half that you can’t just fork.”

I’m not so sure about secret sauce being an expendable part of the equation. I think it’s a mysterious and real thing. In fact, when I read your project summary I couldn’t help but think of Steve Jobs, whom I realize is a cliché today, as well as a reputedly Bad Man who should be cancelled. But I think he understood the subject you’re researching very well. Whatever people may say to dismiss him, Jobs built a great (or at least once-great, while he was alive) tech company precisely by not turning his back on fine art, fine design, fine manufacturing standards, etc., but rather by embracing and insisting on those things.

That still sounds like an oxymoron, doesn’t it? I think so, particularly in the eyes of all those professional culture-builders who consult to the Microsofts, Facebooks, Amazons, and other dull companies of the world. Maybe those well-educated, not-stupid consultants you’re reading actually know interesting things. But their clients won’t change their behavior one whit based on any of it.

I think Apple’s culture in its heyday was a once-in-a-hundred-years phenomenon, driven by the weird, vital, willed, personality-based magic that lies at the heart of the “secret sauce” metaphor. The fact that such companies can’t continue unchanged after the departures or deaths of their founders seems to testify to that.

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@rlombreglia @enfascination
You hypothesize that “the ‘secret sauce’ metaphor might be holding us back, giving culture a little too much mystique for our own good,” and yet your project description starts with the very convincing assertion (unless I’m missing an irony somewhere) that “Culture is the secret sauce of organizations: the half that you can’t just fork.”

I personally have never been a fun of the concept of “organizational culture”. Research on organizational culture dates back at least as far as the late 1970s. A search in ABI/INFORM on the term organizational (or ‘corporate’) culture in the abstract yields more than 5,300 results of peer- reviewed papers published in scholarly journals, spanning a period of five decades. Although references to organizational culture are found in both popular management books and the academic literature, there does not seem to be a sharp, accepted definition of the concept. In fact, despite the large number of academic publications, there is no clear consensus of what ‘organizational culture’ entails.

One of the most widely used definitions is provided by Edgar Schein (2004), who describes organizational culture as

“A pattern of shared basic assumptions learned by an organization as it solved its problems of external adaptation and internal integration, which has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.”

The fact that Steve Jobs is quoted in this conversation is spot on, albeit I would take off the mysterious and the magical to talk about the real.

@rlombreglia
I’m not so sure about secret sauce being an expendable part of the equation. I think it’s a mysterious and real thing. In fact, when I read your project summary I couldn’t help but think of Steve Jobs, whom I realize is a cliché today, as well as a reputedly Bad Man who should be cancelled. But I think he understood the subject you’re researching very well. Whatever people may say to dismiss him, Jobs built a great (or at least once-great, while he was alive) tech company precisely by not turning his back on fine art, fine design, fine manufacturing standards, etc., but rather by embracing and insisting on those things.

Jobs understood early on in his career most of the principles of scientific management from the father of the quality movement Joseph Juran. He talks about it extensively in the interview Steve Jobs on Joseph Juran and Quality. Apple’s success perhaps is nothing more than the application of the science of management dressed with the taste of beauty (this one borrowed from Adriano Olivetti).

@rlombreglia
I think Apple’s culture in its heyday was a once-in-a-hundred-years phenomenon, driven by the weird, vital, willed, personality-based magic that lies at the heart of the “secret sauce” metaphor. The fact that such companies can’t continue unchanged after the departures or deaths of their founders seems to testify to that.

So I won’t go into the mystical, great man theory when explaining the incredible Apple’s culture. This conclusion in fact reminds me of fallacies extensively discussed by Phil Rosenzweig in The Halo Effect: And the Eight Other Business Delusions That Deceive Managers. Instead, Apple’s pattern of shared basic assumptions perhaps simply involved the understanding that repetitive processes + objective observation + decomposition and optimization and its application to the business at 360 degree is the secret sauce of success. Which then is not secret anymore.

After all, what Jo Juran proposed is nothing else than a mechanism mimicking nature’s Principle of Least Action for which everything moves saving the maximum amount of energy (= efficiency). So in my opinion yes, culture’s secret sauce metaphor is definitely holding us back. We should look back to nature instead and mimic its real, tangible genius.

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