How Blockchains Will Reinvent the Job Market

Jack du Rose, Co-founder, Colony.io

Office work is a theatrical performance of emails, meetings, and inscrutable tedium. Employees are ‘supposed’ to do frivolous things – but towards what end? Why do companies pay for pointless work?

Our labor market rewards people for menial tasks because our model of ‘a company’ has become inadequate. Over the last 30 years, technological innovations have dramatically changed the work a company does, while virtually nothing has changed about what a company *is*.  We still have CEOs, managers, and subordinates. We still quarantine workers into single-function roles. We still expect work to happen from nine to five, and life to happen on the weekends.

“The firm” needs an upgrade. Blockchain technology, normally associated with Bitcoin, has the potential to change our concept of an “organization” and transform our notions of “work.”

Composition of a Work Day

Incentives are the weakness in our current model of productivity. Traditional, salaried office workers receive a monthly sum regardless of how important or unimportant their work is to the company. Responding to emails might accomplish little but still counts as “work.”

The McKinsey Global Institute estimates that knowledge workers spend 28 percent of their day managing emails, while a  poll by Adobe find that email consumes six hours per work day. Moreover, studies led by Professor Julian Birkinshaw at London Business School find that knowledge workers spend 41 percent of their time “…on discretionary activities that offer little personal satisfaction and could be handled competently by others.”

Most workers have no reason to go above and beyond their narrowly-defined function within the corporate machine. Ownership is for the owners, and work is for the workers. Thankfully, this could change.

Death to Roles

Economic theory says that firms exist – and hire people for roles – because it’s cheaper to do so than rely on the open market. We take it for granted that companies of a certain size have a Chief Marketing Officer, VP of Sales, and Director of Communications. Roles, titles, certifications, and other elements of hierarchy are just heuristics – generalizations that help us to manage the complexity of reputation, experience, and skill.

We have heuristics because it would be maddening (and costly) keeping track of every employee’s fine-grained performance on every task. Instead, we give people a title and just assume that the longer they’ve been working at a job, the better they do it.

Using a blockchain, we don’t have to settle for roles. We can organize companies in entirely new ways.

Blockchains and Distributed Organizations

A blockchain is a tool that allows many computers to agree upon shared data. Blockchain technology has attracted attention in the financial sector because it eliminates the need for traditional banks. Strangers exchange Bitcoin without fear because the blockchain serves as an automated, incorruptible currency.

Newer blockchains, such as Ethereum, have applications beyond finance. They can run computer programs called ‘smart contracts,’ which encode other types of transactions.

One application of smart contracts is the formation of decentralized organizations, or DOs. A centralized organization built with paperwork needs the rigid management hierarchy that I talked about earlier. A DO built on smart contracts, however, does not need a rigid structure.

In DOs, ownership and power can flow from one member to another according to any imaginable set of rules, including rules that reward the completion of tasks with more ownership in the company. Combine this with the ability of smart contracts to handle shared digital assets (for payments, expenses, revenue, etc.), and you have the same functionality as a traditional company but with greater openness and flexibility.

Decentralized freelancing on the blockchain

Workers today, especially in communications and content creation, must choose between two extremes: get a stable job working for a single firm, or try to make it as a freelancer. In choosing the former, you give up the ability to create what you want and might spend a third of your day slogging through emails. In choosing the latter, you give up the stability of a salaried position and live on a per-word or contract-by-contract basis.

Decentralized organizations may soon be a middle path where you can have your independence cake and eat it, too. The administrative work of freelancing, like billing, would be performed automatically on the blockchain. Instead of vying for a cozy spot in the corporate hierarchy, you could earn reputation and ownership in the DO. You’d be more of a ‘free-owner’ than a freelancer.

The single-job-single-pay paradigm would then shift. In a decentralized world, nothing stops a writer or creative from building reputation and ownership in multiple DOs. The decentralized free-owners of tomorrow can focus on the work that they care about and ditch the inscrutable tedium.

 

About the Author: Jack is a former artist in diamonds and current blockchain nerd. Co-founder of Colony and Ownage. Fascinated by the potential of the power shift engendered by a decentralised future. When not making $100m diamond skulls, or paradigm shifting social platforms, Jack enjoys a nice cup of tea and a sit down. 

 

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