Cofounder of EarthFund, Alex Vergara, recently joined Jonathan Westover on an episode of Human Capital Innovations Podcast to discuss why decentralization is so important and how organizational leaders can leverage it in the future of work.
One reasons that decentralization is so important is that “... [i]t’s pretty much impossible to pivot quickly [to adjust to market or world events] in a healthy, meaningful, sustainable way when you have a centralized, hierarchical organizational structure.” Many companies are seeing the increased demand for remote or online jobs and it is very difficult to adjust to that change in demand from workers if there is a firm hierarchical structure in a company. Decentralization changes that, and “... allows for very quick decision making…” when it comes to changes in a company. “We’re living in times that are very fast moving and if we can use [different tools]... to make sure that we’re making solid judgments but moving quickly and expeditiously, then why wouldn’t we use it?” Decentralizing is one of the potential tools that companies can use.
Alex puts it this way: “If it’s the CEO [that makes all the decisions], everything has to run up the hierarchy to the CEO, to the C-Suite. Decisions are made, then push[ed] back down the hierarchy… you’re just playing games of telephone, right?” Companies who have changed the type of organization they use for their company, “... were able to, in real time, see the needs and address them. And that just leads to higher levels of engagement and better outcomes for the organization and for the individual.”
When it comes to beginning the decentralization of your company, Alex suggests that we should “...[p]ush down decision making autonomy to lower levels, even to line levels with people who are interfacing with the product or interacting with the customers.” This allows for the company to respond faster and more efficiently, which leads to the greater success of the company overall.
You can listen to the full episode at innovativehumancapital.com/podcast, or anywhere you listen to your podcasts, just search “HCI Podcast”.
Read the full transcript below:
Alex Vergara. Welcome to the Human Capital Innovations Podcast. Thank you. Thank you for having me, John. I'm excited. Yeah, it's a pleasure to be with you. You're joining us from Miami, Florida. I'm south of Salt Lake City in Utah. And today we're going to be talking about why decentralized decision making is so important and how we can create the decentralized organization of the future that I think more and more younger people, people are desiring as they get into the workforce. As we get started. I just wanted to share Alex's brief bio with everybody. Alex Fergara is community lead and founding member at Earth Fund, the decentralized platform for a better tomorrow. And I would love to hear Alex a little bit more about Earth Fund, but also is there anything else about yourself, your background, your personal context that you would like to share with the audience before we dive on in? I think the story of how we founded Earth Fund is pretty interesting, but maybe we can pick that up a little bit later. But just really briefly, the idea started in a garage and I feel like most good ideas starting garages right. Me and his name is Adam Bolt, he's another founding member, started going into the rabbit hole of decentralized finance and decentralized decision making and we realized the power for crowdfunding and organization within the decentralized world and that's how we got the project started. So a little teaser there into that. Yeah, I think that's great. When we talk about decentralization, there's different kinds of ways that that term is used. You were just talking about decentralized finance. There's all the talk around blockchain and cryptocurrencies and some of those sorts of things. That's one kind of branch of this whole general topic of decentralization. But we're also going to be talking about it in terms of decentralized decision making within organizations because in a very complex, messy world where the landscape is shifting quickly, there's not all the stability. That may have been a bit of a facade in the past, but at least people felt like there's a sense of kind of some consistency, some predictability. And now everything's changing so rapidly, we have to figure out how to pivot quickly. And it's pretty much impossible to pivot quickly in a healthy, meaningful, sustainable way when you have a centralized, hierarchical organizational structure. That's how traditionally most organizations have been structured. And so certainly in recent decades there's been some shift away from that. But over the last three years, with the pandemic and the reactions around the world with geopolitical and the global economy, organizations have had to wrestle with how can we decentralize decision making, how can we provide more autonomy, get decision making pushed down to lower levels so that people can be empowered to be proactive and pivot rapidly and iterate and move quickly. All of that is really challenging. So we're going to dive into that a little bit more. Anything else about oh, go ahead. Yeah, so I mean, you mentioned a lot about the decision making and we can get into some examples on how our company has benefited from rapid decision making from a decentralized standpoint. And also when you look at the younger crowd, like you were saying, people are actually looking for remote jobs. That's what they want. They want to be able to live in the middle of nowhere if they decide to, or move to whatever city they want on a wins notice. And with that, they're also looking for more autonomy within their companies. There's kind of this pushback with Gen, Z and Millennials that they don't want to be managed and I know that a lot of people listen to and they're like wait, that's not going to work. But allowing people to do what they do best and empowering them has the potential to be good too. There's a balance to it but this new generation is very different than previous and what they're expecting out of work and work life balance. Yeah. And so for some people that means to the extreme extent we want to be 100% remote. I want to be able to just have flexibility to work when, where, how I want, wherever I want. I think there is definitely some people asking for that but there's a whole spectrum, right? And there's people that do want to be in the office, there are people that want some sort of variation hybrid arrangement. I think there's every kind of level of the spectrum of what people want and younger people, I think disproportionately are leaning towards the flexibility side of the spectrum. But even within that population group that age cohort, there's still people that want to be face to face or they want to do the types of work that really needs to be face to face. So all of this is a really interesting conversation but I think even regardless of whether we're talking face to face or virtual or hybrid somewhere in between, decentralized decision making can be something that can happen in any form of organization, in any type of work. So even if you're 100% face to face in a more traditional type of office setting and traditional type of organization, you can adopt decentralized decision making kind of approaches, systems, processes, procedures, culture that can have a lot of benefits for your organization. And then certainly as you go more hybrid and even more remote distributed teams, it almost becomes a necessity at that point that you have to do it that way. Yes, absolutely. That's a great point and also it just allows for very quick decision making. We've come across large bureaucracies, whether in government or corporations and we just see they're very slow moving and we're living in times that are very fast moving and if we can use the software to make sure that we're making solid judgments but but moving quickly and expeditiously, then why wouldn't we use it, you know? And I think I think that's why you saw decentralized, autonomous organizations grow so much in 2021. In the beginning of 2021, there was only 13,000 Tao members, and by the end of it, there were 1.6 million. So you saw this really large dynamic shift, and I'm sure that the growth rate declined a little bit in 2022. But nonetheless, when you look at the demand for quick decision making using software, it's there. It's the future, I believe. So, anyways, yeah, absolutely. And again, it's about just timeliness, right? You need to be able to respond quickly. It's one of the reasons why sometimes governments or large organizational bureaucracies, higher ed, for example, there are all these different types of organizations that get a bit of a bad rap because they're slow moving. And on the one hand, I suppose we don't want governments to always be rapidly moving because then you have social instability. Correct. On the other hand, you do need to be able to be responsive. You do need to be able to be innovative, and sometimes that's harder when you're steeped in bureaucracy and when you're really slow moving to adapt to the surrounding environment. So all those points are really well taken. I'd love to hear a little bit more about Earth Fund and some of the examples around decentralized decision making that you've seen at Earth Fund along the way of its growth and development. Yes. So I think one of the first example, and it's a very important one, had to deal with our vesting schedule. So when we launched the company, the Token, we had a specific vesting schedule, and the Token was to be locked up, I believe it was for three months. And that was the beginning of the vesting schedule. And then thereafter was a year unlocking schedule. And there were unforeseen factors that made us realize that that was not going to work well for the company. It was going to put us under if we continued the schedule. So we put out a proposal within the Dow, and within five days, everybody voted the people that were interested in it, and we were able to change the vesting schedule of our company, and we delayed it for an entire year. And then we made it. Instead of it being only a year vesting, it was five years vesting. So everybody within the private round and the seed rounds were able to they voted on it whether they believed in it or not. They saw that the company had long term potential, so they delayed the vesting schedule, and that happened in five days. So traditionally, to make a move like that to change around a company organization structure, it would be a lot more complicated. But everybody that has tokens was able to vote. The governance tokens. You can see it on the blockchain. And I kind of want to bring this back into a point that you had made about decision making. This also allows for transparency because now you can see who voted for what. You can see what their stake is within the company or government, let's say. And you can easily compile that data using the history of the voting. So I think that that's really important because if you can see within your company, within the history, within what's happening, you can kind of sift out who bad actors are, you can see who's going to vote which way. I'm sure in the future you'll be able to use artificial intelligence to already make a predetermined decision of how people are going to vote, which may or may not be accurate. So it just gives more depth and understanding into what's happening in your organization and more transparency. So that was a way that we were able to move very quickly and it was for the benefit of the company. Yeah. And the transparency and accountability piece, I think is a really important one whenever we're talking about decision making, whatever kind of model of decision making we're using. And so that's just an added benefit, as you were describing. That. I think that's fantastic, a great example. And again, just the speed of it, right. So something that could potentially completely do your organization in. Like you go under, you're not solvent anymore and you can't even exist anymore. That is an existential crisis kind of a moment for an organization and you were able to respond quickly. And then, of course, in other situations where organizations aren't situated to respond as quickly, then obviously they just end up going under or becoming something vastly different than what they had originally thought they would be just to survive. And so I think we can't emphasize enough the role, the importance of autonomy. Decision making autonomy. Push down to if you're in a hierarchical organizational structure, particularly a really large organization with a lot of bureaucracy, policies, practices, procedures, that kind of slow down the decision making to the extent possible, you want to push down decision making autonomy so that people at the line level or their supervisors, their bosses at least, are able to make timely, quick decisions to respond to the ever shifting demands and needs of the customers. If you're providing a product or service to the market, you better stay relevant and you better be able to provide something that's of value to the market, otherwise you're not going to exist anymore. So pushing that down, I think, is going to be very important. It already is very important. But as we move into the future of work, where the rate and pace of change is only accelerating, where technologies are continuing to push the boundaries of what we can do and what people want, we better be able to respond absolutely. And it empowers people that may have not felt empowered before, so they have a sense of ownership. Right. It's no longer the company, it's our company. And we've seen a big change in the past, let's say, in this current generation of people wanting to feel like they belong to something, wanting to feel like they own something. And there's that saying that people don't take care of what's not theirs. So if they actually own decision making within their company, if they own, let's call it a stake in the company, it's going to be very different, right? They're going to look at it very differently. They're going to feel like they belong and they put a little bit more passion into their work. And that's what everybody's looking for at the end of the day. Right. There are these cold machine companies that perhaps don't care in that, but you're seeing a movement of very successful companies that are empowering their employees. And there's a balance to it too. Check out Twitter and how many extra employees they had. They weren't doing much, no offense to anybody that was on Twitter. There's definitely a balance, but you definitely want to have people feel like it's theirs, like they belong to it and they own it because they'll reflect it in their work. Yeah. Empowerment is one of the greatest benefits that comes from decision making. Autonomy, because you own your decision and you're accountable for it, but you own it, and so you're more invested in it. And that kind of empowerment leads to higher levels of engagement and job satisfaction. It leads to higher levels of performance and innovation. Ultimately, it's going to be better for the organization all the way around. And frankly, it's those people. If it's the CEO, everything has to run up the hierarchy to the CEO, to the C suite. Decisions are made, then push back down the hierarchy. You're just playing games of telephone, right? And so it's slow, there's miscommunications and it's just clunky. But if you push down the decision making autonomy, people feel empowered, they feel they feel valued. They feel like what they're doing is important. They are able to respond. They were able to, in real time, see the needs and address them. And that just leads to higher levels of engagement and better outcomes for the organization and for the individual. So it's really a no brainer. Other examples from Earth Fund that you can think of around this decentralized decision making that you've seen. Yeah, we came to a crossroad where we were looking for more capital, right? So how could we bring in investors into a token project, especially after this whole downfall of FTX and this strange time for cryptocurrencies? To be clear, we're a blockchain software company. We were leveraging a token to build a platform. But we built technology, we built brand new technology that we believe is very useful for the future, especially for the future of Dows. And we were trying to figure out, how can we bring new investment money, large scale investment money. What's the way to do it? To be honest, that's not my department in particular, so I might mess up the specifics of it. But basically what had to be done, a parent company had to be formed that owned the intellectual property. And in order to do that, the Dow had a vote and tremendously passed, without doubt. But basically the parent company was formed that would own the intellectual property and the Dow would own 20% of that company. So you, you were actually backing the assets with intellectual property and with revenue from, from the platform. And the vote was done in two weeks. So we put out the proposal, we put out why we were doing it, how it would benefit Dow, how it would benefit all the users, even people that were concerned with governance and what the empowerment of governance was. And within less than two weeks, the vote was passed and the company is being formed now. So there's a record of it. Again, it's transparent. People know why it was being done. And again, you're restructuring an entire company in two weeks. It's pretty efficient, pretty quick, and again, pretty transparent. So there's a lot, I mean, these are just two examples. You can get into smaller doubts, you can get into larger ones. But these were two significant things for our company in order to survive, in order to thrive. And if you take the time of both of them, they were done in less than three weeks combined. So again, talk about company organization and structure. You're able to make quick changes, make transparent changes, and have people who are investors, who are workers within the company, who are advisers, actually make the decisions as well. Yeah, I think that's fantastic. And obviously there's different types of organizations, different organizational designs, there are different industries and different sectors. There are small startups versus scaling businesses, larger well established businesses. So all of this becomes complex when we start to think there's not a one size fits all approach to how we can go about creating more of a decentralized decision making structure within organizations. Because of course, your individual context within your organization is going to be unique and you're going to have to figure it out. But I think one thing I hope is we're hitting home is, regardless of your particular context, that you'll take some time to think about these things and think about how could you decentralize decision making more how could you? Push down decision making autonomy to lower levels, to even to line levels with people who are interfacing with the product or interacting with the customers. How can you make sure that these things are happening so that you can make these sorts of timely decisions, to respond to market trends, to respond to market forces, whatever it could be new technology that emerges that is challenging your own very business model. All the rage the last few days has been all the talk around Chat GPT and how this open AI chat bot software, how this could be disrupting things. People have been talking about disruption from AI and Blockchain and other technologies for a long time. This is just one example of one that's, like, super timely. Everyone's talking about it online. Could it change things dramatically? Yeah, it could, you know, and we need to be able to respond, and we need to be able to have these conversations, and we need to have the autonomy to be able to make at least key decisions as related to our sphere of influence and responsibility and then be held accountable for that. Well, Alex, I think we could go on and on, but really, this has been a fun conversation. I really appreciate the opportunity to get a little bit of insight into Earth Fund and some of the ways that EarthFund has tried to tackle this decentralized decision making approach and process. Before we wrap things up for today, I just wanted to give you a chance to share with the audience how they can connect with you, find out more about your work, your team, and then give us the final word on the topic for today. Yeah, absolutely. Thank you. So if anybody would like to the people would like to learn more, you go to EarthFund IO. It's our platform. One of our largest partners is Deepak Chopra and the Shopper Foundation, and we're creating the tools for large nonprofits and foundations to create their Dows to raise funds on an international level. And very soon we're going to have the opportunity for people that donate crypto to get tax write off. So it's pretty exciting. It's never been done before, but we're creating novel software for it. Also. I would just say learn about Dowels, learn about the technology. If you're listening to this and this is new to you, spend time on it. People ask me, what do I invest? And invest time in learning about it. When you think about Dows in itself, in 2021 alone, the treasuries of all Dows went from 400 million to $16 billion. That was in 2021 alone. I'm sure it's strunk a little bit since then. It's corrected, but nonetheless, this is something that's here. It's here to stay. It's the future of technology, and a lot of the next generation is looking forward to iterations of this and the ability to work with Dallas. So look at our platform. Look at EarthFund IO. We basically typed it up so even grandmothers could use it. So if you have no idea how to use Dowels or what they look like, go on our website. It's super easy to learn about. Also, if anybody would like to learn more information about what Dowels are and what they look like, my email is alex at EarthFund IO. I'd love to answer emails. I'm pretty responsive on it. And, yeah, just learn about it. It's pretty crazy. Our company, within a couple of hours of launching, we saw a market cap of $400 million. So definitely it has the potential to build world changing technology and be able to crowdsource from people across the world like we've never seen before. So definitely invest time in learning more. Wonderful. Wonderful. Alex, this has been a real pleasure. Encourage my audience to reach out, get connected, find out more about Earth funds, find out more about what Alex and his team could do for you. And as always, I hope everyone can stay healthy and safe, that you can find meaning and purpose at work each and every day. And I hope you all have a great week.