Valve: How going boss-free empowered the games-maker

 
Valve office Valve believes high-performance workers tend to self-improve without a need for managers

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Welcome to Flatland.

Imagine a company where everyone is equal and managers don't exist. A place where employees sit where they want, choose what to work on and decide each other's pay. Then, once a year, everyone goes on holiday together.

You have just imagined Valve.

The video games developer caused a stir when a handbook detailing its unusual structure leaked onto the web last year. Now, in a rare interview, it discusses its inner-workings.

"We're a flat organisation, so I don't report to anybody and people don't report to me," explains DJ Powers, speaking to the BBC on the sidelines of Edinburgh's Turing Festival.

Team Fortress 2 Valve's employees often continue working on a game, adding features, after its release

"We're free to choose to work on whatever we think is interesting.

"People ask you questions about what you are working on. And the response is not to get defensive but to have that conversation and make sure that we're all invested in each other."

Even the furniture in Valve is unusual.

While other firms have fixed layouts, the workstations at the Bellevue, Washington-based company are fitted with wheels.

"We move around a lot and we don't want it to take a lot of time to do that," says Mr Powers.

"We form into teams based on need to complete a feature or complete a game, and then we disperse into new teams.

"The ability to be able to pick up and move and be in another office in 20 minutes as opposed to a day-and-a-half is really attractive.

Valve handbook Valve's somewhat eccentric handbook includes a guide to how to move its desks

"I've moved my desk probably 10 times in three years.

"You just wheel it out of the office and into the freight elevator and go up to whichever floor you need."

Valve's games - which include the Half-Life, Portal, Dota and Left 4 Dead series - are famed for both their quality and high sales.

Its online store, Steam, helped popularise the idea of a digital marketplace years before Apple's App Store.

Now some suggest its new Steam operating system could disrupt the games console market.

One might think the firm's set-up is a recipe for its staff to career off to their own personal passion projects. So how do its complex products ever emerge?

"One of the ways that things get done at Valve is that a critical mass does form," explains Mr Powers.

"There are lots of ideas about what is cool to work on.

"But unless you can find like minded people to work with, you will struggle to get enough resources you need to get it done."

DJ Powers DJ Powers worked at Electronic Arts before jumping ship to join Valve

Traditional management consultants might shudder at the implications, but Prof Cliff Oswick from Cass Business school - who has studied other experiments in what he calls "non-leadership" - commends the model.

"This is the most extreme form I've seen of deliberately moving away from hierarchy," he says.

"What I like most about this is it privileges the idea of dialogue, the idea of collective engagement."

Valve handbook Gabe Newell wanted to create a company without bosses after working at Microsoft for 13 years

He adds that he believes the model works in this case because Valve attracts "elite" performers.

But Mr Powers suggests there's another reason for its success.

"It doesn't work because we have the 1% of the 1%, or however you put that. It works because it was the original philosophy.

"Gabe [Newell] and the crew that started Valve hired people with this in mind.

"That's how we got to a company working effectively for a long period of time under this structure - because it was designed from the beginning."

The firm's stack ranking system is another curiosity.

Staff working on the same project rank each others' technical skills, productivity, team-playing abilities and other contributions.

The information is then used to create an overall leader-board which then helps determine who gets paid what.

Valve office The sofas may be static but Valve's desks and chairs are designed to be moved

Although Valve's record suggests the system can work, Prof Oswick warns that it could go awry were the firm to face a financial setback.

"Peer-pressure is a fantastic way of organising a business," he says.

"And so long as everyone is well paid people don't mind being in the bottom earning quartile.

"But as soon as resources become more scarce, then competition increases, which creates conflicts, which creates tensions, which creates hierarchies, which creates concern about relative positioning."

It's something to bear in mind at a time Valve is expected to embark on a potentially costly foray into hardware.

Valve handbook Valve's first "company vacation" was to Mexico in 1998 when it had only 30 employees

In the meantime employees have an expenses-paid week-long holiday to look forward to.

The company regularly flies all 300-plus members of staff and their families to a tropical resort, most recently Hawaii.

The idea of spending free-time with workmates might sound like a nightmare to some, but Mr Powers says it is something that he and the others genuinely look forward to.

"We travel together once a year and it's fun," he says. "Valve's really a family atmosphere in a lot of ways and that gives us an opportunity for our [own] families to get know each other even better."

There are some caveats to Valve's model.

In a land of equals there's recognition that founder Gabe Newell still has most influence.

Or as the handbook puts it: "Of all the people at this company who aren't your boss, Gabe is the MOST not your boss, if you get what we're saying."

And at a firm which says picking who else to hire is its workers' most important task - it describes the activity as "more important than breathing" - there's an acknowledgement that many talented individuals will not fit in.

"The culture is a flat organisation without a lot of top-down direction," explains Mr Powers.

"That's not a comfortable situation for a lot of people."

Valve handbook Valve's handbook declares hiring is "the most important thing in the universe"

Then there's the fact that when a firm without bosses dismisses staff it attracts attention. A decision to let about two dozen workers go in February made headlines across the tech press.

Mr Powers would not discuss the event, but when the Verge news site interviewed two of the laid-off employees they appeared to still be on good terms with the company, revealing they had been allowed to retain the intellectual rights to the project they had been working on.

Half-Life 2: Episode 2 Many gamers wish Valve's employees would decide to release a new game in the Half-Life series

Other companies might blanche at such ideas - and Mr Powers acknowledges it would be a bad idea to retrofit Valve's model to existing businesses - but he indicates there are lessons for start-ups.

"I think the fact that we're not managed by people and we're not managing people and you're able to formulate your own ideas and work with whoever it is to come up with a project or feature - that's empowering," he says.

"It's a community of respect and the best idea wins no matter who it comes from, whether they've been at Valve for a year or founded Valve."

 

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  • rate this
    +5

    Comment number 55.

    The truly revolutionary idea that Valve bring to the table is a company run by Gamers, for Gamers. It's as simple as that.

    Equally, '7. Money'. It's all getting a bit sad now isn't it mate?

  • rate this
    0

    Comment number 54.

    No.31 Actually, we live in a democracy under a constitutional monarchy. As a model this works quite well by avoiding too much power being vested in the hands of the executive. The monarchy subtly dilutes that power and is - incidentally - an invisible export. The electorate delegates power to the government. The analogy stops there, unless Valve's customers could be regarded as their electorate.

  • Comment number 53.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -5

    Comment number 52.

    How is the company constituted as a legal entity?

    The Companies Act requires at least one director for a limited company.

  • rate this
    +1

    Comment number 51.

    This is always good to see as it works.

    However, once the corporate boys move in with their meetings and budgets and office politics: it all goes out the window. I know as I have been there and worn the proverbial T shirt.

    The book has been written years ago but nobody learns.

  • rate this
    +14

    Comment number 50.

    We have about 10 middle managers who meet for 20-30 minutes each morning to discuss pointless stats. What is discussed is never passed on to anyone "lower". They appear to be discussing "call centre" stats in a back office environment where we take about 4 calls a day each.

    In the meantime we have a new system in place that is killing our performance, no time ever taken to discuss that.

  • rate this
    0

    Comment number 49.

    all thats missing are the titles, you'll still have leaders and followers, chiefs and indians, virtual hierarchies are no different.Have worked in companies that tried something like this, its fine till the cr** hits the fan......then its who decided what, or who didnt do what.......

  • rate this
    +85

    Comment number 48.

    But hold on a minute... I was under the impression that if we didn't have top people and pay them disproportionate amounts of money, they'd leave or be poached by foreigners and the company and quite possibly the country would collapse as a result! ;-)

  • rate this
    +1

    Comment number 47.

    Like people have said, it's all well and good when you're basically printing money.

    Take the Steam trading market, Valve give you a load of useless cards/hats etc. when playing a game, then you sell them to other people & Valve takes a cut. On top of that other devs do whatever valve says. Not on steam = low/no sales. Even though steam is not really innovating and the EULA breaks several EU laws.

  • rate this
    +15

    Comment number 46.

    7. Money

    I was just discussing this with 3 of my seven children...

    etc
    ------

    No, you were working out what post would you get you the most attention and give you a thrill from negative votes :)

    Regarding the article, surely human nature will eventually bring concepts like this down to earth.

    Greed, selfishness, power etc

  • rate this
    +10

    Comment number 45.

    Unlike apple, microsoft, activision, EA yadda yadda etc etc.

    People actually have some reasoning behind a little 'worship' of valve.

    Consumer friendly, discounts constantly, easy to use software (steam), games that run on high and extremely low graphics (for people who don't own ultra powerful PCs)

    Oh, and half-Life.

  • rate this
    +3

    Comment number 44.

    Valve's technique works because of their odd but effective business model.

    1. Make high quality game that's playtested and refined to a mirror shine, but possibly at a loss.
    2. Use game to get the Steam platform on just about every PC that runs games.
    3. Make actual profit by selling other people's games on Steam.
    4. Continue making awesome but uneconomical games to keep the brand name maintained

  • rate this
    -8

    Comment number 43.

    Sounds like Socialism, these Americans are always doing some crazy socialist things, it all sounds nice in theory but it just doesn't work in practice (except where it does).

    This is very similar structure to the Socialist utopia 'News from nowhere' by another 'flat' industrialist William Morris.

  • rate this
    +2

    Comment number 42.

    I'd like to hear from someone who worked there and left, either of their own accord of after being made redundant.

    If they still say good things about the organization then it's a model that should be considered elsewhere.

    It does sound really good though.

  • rate this
    +2

    Comment number 41.

    I agree with author of this magazine. the true test of this philosophy will come if and when this company is in financial troubles.

    It also raises questions about getting fired. Doesn't that imply the ancient "wolf-pack" mentality, leaving the weak to die, in this so-called "newly" applied structure?

    Doesn't this make, just a regular tribal pack with a clan leader and rest as equals?

  • rate this
    +3

    Comment number 40.

    One does not simply make a better company than Based-Gaben

  • rate this
    +6

    Comment number 39.

    Makes our obsession with leaders in politics and in most people's working life seem childish.

  • rate this
    -1

    Comment number 38.

    Thanks to Valve I have played 2 of my favourite games ever, Half Life 2 and Bioshock 1 that I bought off them. The fact hardly any games install without problems on Windows 8 is quite annoying. Alot of money has been wasted as games are just unplayable, however much I look online and through the forums. This may be my fault thought as many people say to use Win7.

  • Comment number 37.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +69

    Comment number 36.

    I can hear the sound of ten thousand useless middle managers cry out all at once as they scramble to justify their non-position.

 

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