Reimagining Corporate Innovation As a Decentralized Autonomous Organization

Since the inception of the term ‘corporate innovation’, companies have struggled with how to structure it in a way that is both separate enough from their core business to be innovative but still able to take advantage of the resources large companies provide. Other struggles like incentivizing top talent, failure stigma, and involving stakeholders like customers have been problems since the beginning. To solve these issues, companies have developed and continue to experiment with structures like accelerators, corporate venture capital, and innovation labs but the struggle continues.

The rise of web3 has presented a potential new solution to the corporate innovation problem in the form of decentralized autonomous organizations, commonly known as DAOs. To use Linda Xie’s definition, “A decentralized autonomous organization (DAO) is a group organized around a mission that coordinates through a shared set of rules enforced on a blockchain. This article by Packy McCormick gives you a good overview of DAOs and why they’re so powerful. Packy makes one addition to the definition that I think will make the concept click:

“More simply, DAOs are a new way to finance projects, govern communities, and share value. Instead of a top-down hierarchical structure, they use Web3 technology and rapidly evolving governance and incentive systems to distribute decision-making authority and financial rewards. Typically, they do that by issuing tokens based on participation, contribution, and investment. Token holders then have the ability to submit proposals, vote, and share in the upside.”

In this article, I’ll explore how a corporate innovation DAO could be structured and what it solves. To make the discussion more straightforward, let’s assume the DAO is composed of stakeholders including the parent company, the innovation team and internal employees, loyal customers, and fans of the brand. These stakeholders all hold tokens in the DAO and the value of those tokens increase if the DAO is creating value or there is some other social benefit that comes with being part of it.

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