One of the biggest, broadest shifts in place across human society is from centralized to decentralized organizations and structures.
Yet there is massive uncertainty about how far it will go. It is possible we are moving towards a world defined by Decentralized Autonomous Organizations (DAOs), participatory democracy, decentralized finance, and self sovereignty. It is also possible that existing institutions and hierarchical societies and organizations will dominate indefinitely.
What will determine the path forward is the quality of leadership in enabling a decentralized world
It is a paradox that the shift to decentralization requires effective leadership, but it is absolutely true. We need the vision, governance, and aligned conviction that will make people embrace very different structures from the past.
It requires incredible balance in allowing the new models to be shaped by and led by the community, while guided into the forms that will best enable value for everyone, rather than the minority.
Perhaps the single best case study we have is Vitalik Buterin in his leadership of Ethereum. A cover story profile in TIME magazine digs into the delicate balance he is treading, continually adjusting his position to be aligned with his principles while achieving real outcomes.
Buterin hopes Ethereum will become the launchpad for all sorts of sociopolitical experimentation: fairer voting systems, urban planning, universal basic income, public-works projects. Above all, he wants the platform to be a counterweight to authoritarian governments and to upend Silicon Valley’s stranglehold over our digital lives. But he acknowledges that his vision for the transformative power of Ethereum is at risk of being overtaken by greed. And so he has reluctantly begun to take on a bigger public role in shaping its future. “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable,” he says, reedy voice rising and falling as he fidgets his hands and sticks his toes between the cushions of a lumpy gray couch. “And those are often far from what’s actually the best for the world.”
Linus Torvalds of Linux and Guido van Rossum of Python are described as “benevolent dictators” in guiding these participatory open-source projects towards their vision. In building truly decentralized organizations, the visionaries and initiators necessarily do not have direct control.
The irony is that despite all of Buterin’s cachet, he may not have the ability to prevent Ethereum from veering off course. That’s because he designed it as a decentralized platform, responsive not only to his own vision but also to the will of its builders, investors, and ever sprawling community. Buterin is not the formal leader of Ethereum. And he fundamentally rejects the idea that anyone should hold unilateral power over its future.
As Ethereum develops and grows in influence (currently worth $350 billion and the foundation for a plethora of commercial and non-profit applications) Buterin is having to adjust his style.
“One of the decisions I made in 2022 is to try to be more risk-taking and less neutral,” Buterin says. “I would rather Ethereum offend some people than turn into something that stands for nothing.”
Developing the capacity for leadership is a journey for everyone, even more so in the relatively untrod context of truly distributed organizations. Vitalik uses the example of how he addressed the 2016 The DAO hack.
“Leadership has to rely much more on soft power and less on hard power, so leaders have to actually take into account the feelings of the community and treat them with respect,” he says. “Leadership positions aren’t fixed, so if leaders stop performing, the world forgets about them. And the converse is that it’s very easy for new leaders to rise up.”
Vitalik doesn’t want control. He wants to enable the conditions for good things to happen.
“I would love to have an ecosystem that has lots of good crazy and bad crazy,” Buterin says. “Bad crazy is when there’s just huge amounts of money being drained and all it’s doing is subsidizing the hacker industry. Good crazy is when there’s tech work and research and development and public goods coming out of the other end. So there’s this battle. And we have to be intentional, and make sure more of the right things happen.”
We have a pivotal case study in progress by watching Vitalik on his journey to make Ethereum a force for good, enabling a participatory, decentralized society.
While I don’t know how far we will shift to a decentralized world, I believe deeply in its potential. If shaped well we could create a radically different and far better society.
There is much to learn from Vitalik and many of his peers on their journeys of effectively leading leaderless organizations. It is up to each of us to find our own path to leadership towards a world of decentralized value creation.