This writing is a companion guide to a workshop given to the Protein Recelerator program given on 03/23/2022.

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Goals

This governance design guide has three primary goals.

• Understanding of stakeholder identities and qualification criteria
• Understanding which decisions are made, and who makes them
• Creating a document that outlines both

Background

Civics as design

A helpful framing of creating online governance structures is “civic” design. Civics are another way of saying “democracy in the small”. It helps define who are members or citizens of a space, and the rules that help structure it.

This is a form of participatory design, the design of systems that include considerations of democracy, labor, and equity. As a design exercise, this is a way to renvision and construct the associations and relationships between people. It can be complex, because it combines politics, justice, and challenging assumptions about our civic and communal lives.

Wholesale Ideologies vs Modular Politics

As outlined in this paper, choices of wholesale governance ideologies (like democracy or oligarchy) are limiting. Instead, we can create responsive, customized, and elegant solutions for community governance. We can combine composable governance elements.

Understanding Corporate Governance

Corporate governance typically defaults to one-share, one vote and hierarchical decision making. There are many examples of corporate governance that are better, and worse.

Facebook super voting

Different classes of shares can be weighted differently. For instance, at Facebook, more than half of the voting shares are controlled by CEO Mark Zuckerberg. This is possible because he owns special Class B shares that have 10 times the voting rights of regular Class A shares. This means that the CEO of Facebook is functionally not accountable to anyone else.

BCorp criteria

BCorp certification (not to be confused with the Public Benefit Corporation legal entity) is a way to measure and signal many facets of corporate social and environmental responsibility. Governance practice is one category of the BCorp assessment, and is measured on several criteria, including:

• How much social impact is integrated to decision making
• Stakeholder engagement in decision making
• Ethics policies to prevent corruption or conflicts of interests
• Stakeholder transparency into finances

ESG governance

Often, large public corporations are measured on ESG (Environmental, Social, Governance) metrics. This includes:

• Board structure
• Gender diversity and equity
• Leadership accountability and oversight

Cooperative governance

Cooperatives are businesses owned by their workers, customers, or both, and operate on a one-member, one-vote basis (instead of one-share, one-vote). There are some cooperative bylaws at the end of this document as resources.

Web3 Governance

We are currently in a stage of rapid experimentation with Web3-native online organizations. Right now, they tend to default to one-token, one-vote (which is similar to traditional corporate governance). However, many groups blend on-chain and off-chain voting.

Example:

To elect City Leads, Friends With Benefits enacted one-member, one-vote elections.

Nathan Schneider wrote a paper titled Cryptoeconomics as a Limitation on Governance. In it, Nathan cautions that token governance often relies too much on economic thinking, while advocating for a blend of human-based politics. Vitalik Buterin shared his response here.

Creating A Decision Making Matrix

The most important goal in creating a decision making matrix is to articulate clarity in decision making processes. Without clarity, governance will almost certainly default to hierarchical and non-democratic governance.

Cataloging Decisions

The first step in making a decision making matrix is to catalog all the decisions that are already being made. This can include:

• Business Strategy
• Dividend Allocation
• Compensating Leadership
• Selecting Leadership
• Amending Decision Making Matrix
• Fundraising Strategy
• Negotiating Funding Terms
• Check Signing Authority
• Hiring/ Firing Staff
• Budgeting
• Approve New Contributor
• Approve New Investment
• Approve Brand/ Corporate Partnership
• Workplace policies
• Community Standards & Guidelines
• Selection of the Board of Directors
• Fate (Merger or Acquisition)

There will likely be decisions that are highly specific to your organizations.

NOTE: It’s important to include important decisions like updating or amending the decision making matrix. This way it can become a living document.

Identifying Stakeholder Groups

Next, identify stakeholders that will be able to provide input into any form of decision making. Stakeholders are anyone with an interest in the company and are not to be confused with “shareholders”. This non-exhaustive list can include:

• Board of Directors
• CEO/ Director
• Management
• Founders
• Head of Community
• Team
• Members
• Contributors
• Users
• Investors

This may also include groups of stakeholders, which can take the form of juries, working groups, advisory boards, or committees. For any of these groups, there should be rules on how they are either elected or appointed.

Stakeholder qualification

Next, identify which stakeholders would be involved in governance. Then, for each stakeholder class, develop a clear articulation of criteria for how someone qualifies. This can have thresholds based on ownership, labor, time, or other activity or designation.

Ex:

• In order to become a community member, a user must have created an account, be active for 6 months, and be approved by a membership committee.
• In order to be an active contributor, an individual must contribute 40 hours of work in the trailing 6 month period.
• In order to be considered a team member, an individual must be a salaried full time employee.
• In order to be considered a founder, an individual must have joined the company before a particular date.

Stakeholder empathy and responsibility

Some decisions affect particular stakeholders more than others. Some stakeholder groups may not want to be responsible for certain decisions. In the design of elegant decision making structures, it is important, through codesign, to identify which decisions particular stakeholder groups should be a part of.

As an example, musicians on a collectively-owned streaming platform may not need to be responsible for providing input on day-to-day operational decisions. However, they may want more direct input on decisions related to revenue models, fundraising, or major product updates.

How Decisions Are Made

Next, you can provide a menu of options for how particular decisions are made. Some examples are:

• Consensus: Everyone agrees
• Democratic: Voting with defined thresholds for majority rule
  • Majority: A simple majority required
  • Supermajority: The action does not pass if one stakeholder group vetoes with a simple majority
  • Quadratic voting
• Consent: Absence of strong objections
• Consultative: Decision made with input from others
• Delegate: One individual is in charge of making a decision

Finished Decision Making Matrix Example

Next, all the above elements are combined to provide a document that is a full picture of how decisions are made. This document should be made collaboratively and thought of as a living document that is responsive to evolving organizational needs. Then, the document can be made public across the organization so that stakeholders are aware of how decisions are made.

Here is an example of Ampled’s decision making matrix:

Bonus:

There are other documents that your community may also want to develop, including:

• Clear Community Guidelines
• Conflict Resolution & Mediation
• Other Web3 considerations
• Conflicts of Interest Policies

Resources