General Stanley McChrystal was responsible for the U.S. Army in Iraq and Afghanistan. In his book Team of Teams, he talks about the rude awakening he had when he saw how disadvantaged his centralized command was compared to the decentralized networks of Al-Qaeda in Iraq and Afghanistan. McChrystal quickly recognized he needed to reimagine how teams were built and empowered. He understood that innovation, insights, and awareness happen at the edges of networks, not in the center. That is why it is critically important to empower the edges of those networks with information, resources, and feedback loops.
Captain David Marquet immortalized that same lesson in his book Turn the Ship Around! He’s the source of the doctrine “Move authority to information; don’t move information to authority.”
We are witnessing the same decentralizing trend in large organizations, powered by the arrival of blockchain or distributed ledger technology (DLT). This trend is going to affect every industry and every business function in the years to come. And hundreds of thousands of blockchain-based technologies are going to emerge onto the market to fuel it.
Coinbase cofounder Fred Ehrsam suggests “There will be a Cambrian explosion of economic and governance designs where many approaches will be tried in parallel at hyper speed.” Indeed, in 2017, we saw more than 442 crypto startups get funded through token sales.
Just as the evolutionary process requires some lifeforms to fail while others succeed, the best products and platforms won’t necessarily win. What makes one product win — or survive — instead of another? In Darwinian terms, it is the ability to adapt to a changing environment. In the world of organizations, the function responsible for ensuring the ability to adapt to changing environments has a name: marketing.
Peter Drucker, the legendary management consultant, once wrote that, “Because the purpose of business is to create a customer, the business enterprise has two — and only two — basic functions: marketing and innovation.” If Drucker is right, it stands to reason that an organization’s marketing function should match and complement the innovation function. After all, it is at least as important.
What I am proposing is that this era of decentralized, crypto-based technical innovation requires an equally decentralized, crypto-based marketing function that enables adaptation: a decentralized marketing organization (DMO). The purpose of the DMO is to partner with the decentralized technology organization (the innovation part of the business) to create a “crypto-customer.”
A crypto-customer is different from the customer of a traditional organization. In a decentralized network, the overall value (i.e., market cap) of the protocol loosely trends to Metcalfe’s Law. That is, the most valuable customers are the people who engage most deeply with the protocol and bring in more nodes to the network. So an effective marketing strategy for a decentralized project will enable a series of multipronged demand pulls that target the wide array of roles that play into protocol adoption — developers, designers, token buyers/investors, social media influencers, regular users, partner integrations, etc.
All of these customers engage with the protocol because they believe in the value of the associated token. The more a token holder believes in the expected future value of the token, the more likely they are to hold on for dear life (HODL) and the more likely they will evangelize.
So token holders are naturally and intensely motivated. They will engage in activities they think will drive the utility and value of the token higher in the long term. One might say they are marketers without knowing it, which is a mixed blessing. On the one hand, token holders have the same motivations and incentives as the project’s marketers. On the other hand, because they are stakeholders, not employees, they cannot be “controlled” or guided as a traditional employee can be.
Marketers who are employees in a centralized organization are accountable to the leaders who judge their results and decide their compensation. In a decentralized project, many of the people executing marketing tactics do so without any guardrails. Their compensation doesn’t come from a boss, it comes in the form of market response to their aggregated activities, as measured by the appreciation in the value of a crypto token.
Hence, marketing is syndicated well beyond the traditional boundaries of the organization. Formerly the “edge” of the marketing network was simply rank and file employees responsible for marketing activity. Now, the edge is the network of token holders who need to actively market the decentralized project to the next set of potential customers. The upshot: the formal organization, or “core,” is accountable to the edges of the network.
Token holders view themselves as brand ambassadors and may feel that, no matter what type of marketing activity they engage in, it is, by definition, on brand. This combination of motivation and no direct accountability means the execution of low-cost innovative activities has the potential to explode in quantity, run the gamut in quality, and be aimed everywhere and anywhere.
A DMO’s many responsibilities
Anyone can blog about a project. Anyone can create a video about it. Anyone can host an event about it. Those are all positives. At the same time, these activities present risks, including:
- Inconsistent messaging and look-and-feel stemming from many voices creating confused or even contradictory messaging about the purpose, vision, and value of the token and project
- Wasted energy going after less-desirable customer segments or low-value objectives
- Feature delay stemming from differing points of view about the primary use case and target customer, leading to confusion and infighting (look no further than Bitcoin Core vs. Bitcoin Cash). To be sure, one of the benefits of an open-source project is the ability to “fork” it and create a new, better alternative. But premature forking can make it hard to reach critical mass adoption. And that kind of delay can be lethal in a fast-moving, dynamic, noisy marketplace.
For the reasons above, the marketer of a decentralized project has goals in common with a traditional chief marketing officer as well as goals that are unique to a DMO:
Like in a centralized marketing organization, a crypto-marketer must:
- Avoid total marketing chaos through the creation and communication of a strategic marketing plan
- Ensure brand clarity and message discipline with well-thought-out brand and messaging platforms
- Maintain and encourage the passion of the people most vested in the success of the project with a well-planned and inspired communication program that highlights momentum, new features, and benefits
- Uncover the active and latent needs of current and future token holders
- Aggregate those needs for assessment by the core technology team
- Help the technical team prioritize protocol development against expected increase in utility and value, weighed against cost/time to deliver.
But a crypto-marketer also has some unique challenges. They must:
- Identify and build a developer audience that sees the value in building on the core protocol
- Inspire effective execution of marketing activities by token holders using 100 percent influence and 0 percent authority
- Create a marketing infrastructure to enable any token holder to leverage a set of brand assets that support consistent messaging and visual identity with the absolute minimum amount of friction
- Identify and analyze the token holder-driven marketing activities that produce effective outcomes
- Rapidly disseminate the learnings and know-how to other motivated token holders for reuse, where applicable
- Propagate the belief that token HODLing is the utmost sign of commitment and dedication.
The first part is not easy, but it is doable. An experienced marketer who has had a leadership role in an organization and had a broad range of responsibilities, including planning, budgeting, brand communications, go-to-market, product, community, PR, influencer relations, developer relations, analyst relations, content, and lead generation should be able to help you. It is the second part, however, that provides the greatest opportunity for growth.
When it comes to marketing innovation, the best ideas tend to occur at the edges of a network. After all, that is where the interaction with the evolving market is most intense. Yet, while the best marketing ideas tend to emerge in locations that are far away from the “group think” of those in the core, the mechanism for funding and executing those ideas tends to sit in the concentrated areas of the network. This leads to friction in terms of meetings, approval processes, communication lags, and internal selling.
In the “Age of Accelerations,” as Tom Friedman calls it, the projects that figure out how to identify, cultivate, and activate their token holders to drive marketing outcomes as quickly and effectively as possible are going to significantly increase their odds of success.
The tech behind a DMO
How will all of this actually work? To be honest, that question is probably at least slightly ahead of the technology. At the same time, like a jigsaw puzzle on a floor, we are starting to see the pieces of an eventual DMO emerge. As my CEO at Sprinklr, Ragy Thomas, used to say, “Think future back.”
A DMO tech stack will have a number of elements. Here are some of them:
- Decentralized autonomous organization platforms
- Decentralized idea-generation and voting platforms
- Decentralized prediction engines
- Decentralized artificial intelligence
- Decentralized bots
- Decentralized gamification engines
- Decentralized content management
- Decentralized marketing tools
These technologies will serve as the nervous system for the DMO. The ability to create organization-wide governance systems that are enforced by blockchain-based smart contracts is not just possible but is in development (albeit in the early stages). Projects like Aragon, DAOstack, Colony, and District0x are all pursuing the vision of enabling the back-office functions of global, decentralized organizations to work with less friction, lower costs, and greater agility.
[This article is an edited excerpt from the author’s new online book, Decentralized Marketing Organization: How Crypto-Marketers Can Increase Token Value by Empowering Community Members.]
Jeremy Epstein is CEO of Never Stop Marketing and author of The CMO Primer for the Blockchain World. He currently works with startups in the blockchain and decentralization space, including OpenBazaar, Zcash, ARK, Gladius, Peer Mountain and DAOstack.