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Can Valve's 'Bossless' Company Model Work Elsewhere?
glowend writes "I just listened to a fascinating podcast with Valve's economist-in-residence, Yanis Varoufakis, about the unusual structure of the workplace at Valve where there is no hierarchy or bosses. Teams of software designers join spontaneously to create and ship video games without any top-down supervision. Varoufakis discussed the economics of this Hayekian workplace and how it actually functions alongside Steam — a gaming platform created by Valve. I kept wondering: assuming that his description of Valve is accurate, can this model work for other tech companies?"
Too many entrenched managers who provide nothing to the company.
Just look at the number of Half-Life games they churn out. I haven't even finished HL6 and HL7 is coming out next week!
For all intensive porpoises your a bunch of rediculous loosers
But only on Valve Time.
Isn't this how most companies work? In order to get anything done, you form an ad-hoc group of capable people to work on a project.
Seems to me the only difference is that in a normal company that group then has to figure out how to outflank the management hierarchy in order to complete the project, whereas this model skips that step.
WL Gore & Associates, which makes Gore-tex and applies the similar technology across dozens of other industries from medical devices to space suits and military gear, also operates as a (very successful) Theory Y organization.
http://en.wikipedia.org/wiki/Theory_X_and_theory_Y#Theory_Y
If you think about how they describe pushing out people that "don't fit" by group consensus, you quickly begin to see how such a workplace is actually fairly toxic. Everyone would be trying hard to get along and not piss anyone off, because, like on the reality show Survivor, once the team gets a bug in their bonnet for you, you're gone, despite your productivity or ethics. It also leads to monocultures - people will want to hire and work with people like them, the complete opposite of diversity hiring. I would be interested to see the cultural vectors for Valve. I'm betting they don't have a lot of ethnic minorities or women working there.
Valve addresses this very question in the Handbook for New Employees:
Q: If all this stuff has worked well for us, why doesn’t every company
work this way?
A: Well, it’s really hard. Mainly because, from day one, it requires a
commitment to hiring in a way that’s very different from the way most
companies hire. It also requires the discipline to make the design of
the company more important than any one short-term business goal.
And it requires a great deal of freedom from outside pressure—being
self-funded was key. And having a founder who was confident enough
to build this kind of place is rare, indeed.
Another reason that it’s hard to run a company this way is that it
requires vigilance. It’s a one-way trip if the core values change, and
maintaining them requires the full commitment of everyone—
especially those who’ve been here the longest. For “senior” people
at most companies, accumulating more power and/or money over
time happens by adopting a more hierarchical culture.
"I either want less corruption, or more chance
to participate in it." -- Ashleigh Brilliant
The short answer is no.
The long answer is probably no, as you need a certain mix of incredibly talented people with very specific attributes. Valve is notorious for only hiring the absolute best, going for those with wide specialist knowledge (but shallow knowledge of all other aspects of game development... some kind of "T" metaphor is used by them?), and ensuring everyone they hire can be an effective leader/is capable of following an effective leader when needs be. And you can't just have a few people with those attributes; everyone in the company has to be like that.
If you can hire only people that meet the above qualifications, then sure, you could make another Valve. But it's a very difficult (or at least expensive) proposition, and no doubt incredibly challenging to scale.
If you have the right kind of people, namely competent, motivated, result oriented professionals, that do not care one bit for power, but are willing to assume it temporarily in order to take responsibility for a specific part of a project (only to relinquish it freely afterwards), then this works very well indeed.
The two reasons for people to go into management are absent here
1. Incompetence: Doing management is often a way for people that have no real skills with regard to the product being made to join or stay in an organization.
2. Lust for power: The other primary motivation for going into management is wanting to tell others what to do.
In bad managers (the predominant type), both things combine. Good engineers, artists, writers, etc. almost universally want to practice their craft and get better at it. Doing any management-like function is something they will only do willingly (and temporarily) for the greater good and never as their sole function. If you have such a pool of people, the only permanent (but critical) management function to remain is to make sure nobody incompetent at or not passionate for their (non-management) job and nobody with lust for power joins the team. People that are passionate about what they do are easy to identify. Skill is harder, but doable if you invest some time to find out. Lust for power is still harder, but people that have gotten good as their primary competency rarely have it as it gets into the way.
This also means that most companies cannot use this model, as they have been taken over a long time ago with those of no valuable skills and/or a craving for power and, from my observation, usually have quite a few incompetent non-managers in addition.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
"Welcome to the company! Here is your Allen key."
Running a real company or a real government requires dealing with people who don't want to be there. Not everybody wants a career, some people just want jobs. They want to punch the clock and go home. Some people steal habitually from the till. Had I my druthers, I'd spend all day at home reading, and I'm considered a sociopathic workaholic. Some people are going to cheat. Some people are going to lie on their interviews. The test of any organization isn't how it does when it's doing well, it's how it does when its under extreme stress. Valve hasn't been under extreme stress, so the question of the effectiveness of their organization is effectively mooted. We can look to other game companies with strong egos (Origin for example, or Ion Storm) and get a good idea, though.
Who authorized all the recent "layoffs" ?
Valve has been in the unique position of having some hit titles in the past that they had good publishing deals on. That's given them the financial cushion to run things however they wanted with whomever they wanted, without any of those pesky obligations most developers have to meet to pay the bills. And then of course they stumbled onto Steam, the patching platform turned online store where they get a cut of all the other developers profits.
To highlight a similar scenario, 3D Realms was able to dick around for almost 15 years (1996-2009) thanks to the big pot of cash they had from the first Duke 3D game and a few farmed out expansions. We know for sure now that those years where not spent under some masterful system of management creating the most polished game ever, they where terribly managed years in which the same game was reinvented every 4-6 months everytime Broussard saw a new game.
Valve management is certainly not the disaster that was 3D Realms, but at the same time it's very hard to apply their near-zero management style without also having access to their near-zero financial obligations. Valve can afford to mess around in the kitchen for years tossing meal after meal into the garbage until they have something they like. Other developers have to feed their family tonight.
So I guess what I'm saying is that regardless of whether the bossless model works for Valve, other companies have to actually produce games on time and on budget. Where exactly is Half Life 3...
It's easy to get by with less management if the team is more capable.
The common hierarchical management systems are better suited to organizing groups of people towards achieving a common goal when those people aren't all above average.
"I think, and sadly, it is true because much like Communism it works fine on paper but almost never in practice"
Quite an interesting comparation because then, how is it that the vast majority of companies are governed by Communism, just the Soviet Russia style?
I mean it works for a tomato company in Florida (Morning Star), it can work for just about anything, but it takes a lot of time to cultivate the culture, and you've got to have the right people initially for it to work.
Although I have some political differences with Russ Roberts, I'm a fan of his podcast. The guests and the discussion are usually interesting (this guy included).
One thing that drives me nuts though, is Robert's eagerness to call anything that's not obviously a top-down process 'Hayekian'. If Roberts had his way, people would try to get their video to 'go Hayek' to support their 'Hayek-starter' project about 'Hayek-oriented programming'.
If you have a great team that can gel together then sure. A good team is like a well functioning machine that doesn't break down. The problem comes when you have team members who want to steal the spot light and not work with others.
In my last big project we had two members who felt they were the next big Nobel prize engineers, however really they just screwed large portions of the project, they fought the documentation and the requirements and they felt they were above everyone else. That kind of group can't work with out higher management getting involved.
Once they were axed from the project the entire team became a smooth machine, each member knowing what the others were working on. We had smooth integration, smooth code reviews and a great release. Management only got involved at the end to thank us.
So yes and no, management free company's can work in certain cases, in most cases I would never recommend it.
There's an entire business model based on operating a business with no boss -- it's called a worker cooperative. As a founder and member of one, and a friend of dozens more, I'm here to say that it works.
The existence of one bossless model makes it easy to believe that others could exist. The presence of an authority figure, or of any kind of hierarchy, is not a requirement for business success. This isn't speculation -- there's proof in black and white.
What if I do the same thing, and I do get different results?
Github also has a flat organization structure. Read: http://www.elezea.com/2012/06/user-centered-organizations/
What word rhymes with buried alive?
Yes! This!
Honestly, it's the back edge of the proverbial double-edged sword of promoting "hiring from within". If your company really feels (as most do) that the people already working in a business know more about it than outsiders, the only viable option becomes promoting technical people to management positions.
If the financial motivator (of a nice pay raise for becoming management) wasn't in place, though, a lot of the technical people would refuse to switch roles to management -- because hey, why stop doing something you're comfortable doing and know you're pretty good at?
I'd say that in my entire career doing I.T. - every single person who was promoted to a management role over me (from a role doing pretty much what I did, before that) was pretty poor as a manager. But in the big picture, what would have been better? I mean, if they decided just to skip the whole "promote from within" concept and hired outsiders with management experience, would we have respected them or their opinions? I'm not so sure? Many a company has been ruined by outsiders coming in and trying to do things their way, despite really not having much of a handle on the dynamics of the workplace they were tossed in to manage.
This idea of scrapping the whole hierarchy, as Valve has apparently done, sounds great IF and ONLY IF your business focuses squarely on producing a good or service that doesn't require much diversity. I mean, consider the fact this is not only a firm that focuses on software development, but they're focused on only one genre of software development; games.
I think even with that narrow a focus, a company like Valve surely has a lot of business challenges requiring a different type of employee than the creative software developer. For example, they must have to deal with accounts payable and receivables. I imagine they almost have to treat that work as something they outsource, since those people would have no direct involvement in the creation of the products (and that means no motivation or drive to see those ideas become commercial successes, enjoyed by millions of players).
In many other businesses I can think of, you almost need at least one layer of management, simply because a big part of your core workforce will be people doing tasks that nobody in their right mind would REALLY enjoy doing for any length of time. Their primary motivation is money and the concern that someone above them in rank in the company has the power to yank that money away from them if he/she becomes displeased with the quality of their work.
Quite an interesting comparation because then, how is it that the vast majority of companies are governed by Communism, just the Soviet Russia style?
It's an interesting comparison because the basic idea behind communism was that fundamentally the same as that behind Theory Y style organisations. The idea, that is, that left to their own devices, without the imposition of formal authority (remember that in theory 'communism' was to be a stateless and non-hierarchical society), humans will be self-motivated and express themselves by what they produce. You will recall from your reading of Marx, that one of the great criticisms communists levelled at capitalist production methods (Taylorism), is that the assembly line robbed the factory worker of their human identity by 'alienating' them from the products of their own labour. For Marx you are what you make.
just the Soviet Russia style?
OP wrote about "Communism on paper," so a comparison with Soviet Russia (which never claimed to have a communist system in place anyway) is a little unfair. I do agree, however, that the human management in the Soviet state seems to have a more in common (and if I understand it this is your point) with that in the majority of modern corporations, than with this self-motivated pride in one's own work approach.
Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
They have been doing it for ages.
I has exposed to their style as a case stud durng my MBA. I do not have the files handy, but you can research them on the ionternet.
I leave you this link to get you all started:
http://www.co-intelligence.org/S-Semco.html
*** Suerte a todos y Feliz dia!
Only if you honestly and truly love what you do.
The software devs at Valve have an genuine desire to make games. Hell, most of them probably make games *they* want to play. They fact that they get paid to do so, and that the rest of us get to play them too is all bonus. They certainly don't need a boss telling them to do more of it. So for them, the lack of direct leadership works.
I can't see the same method working for wage-slave type positions, or jobs without distinct landmarks and end goals. An IT call center worker or retail worker probably has no real motivation to come back from lunch and get to work. No real reason to spend all day working instead of slacking of browsing slashdot, or just dicking around on your phone. So what, they answered 10 calls instead of 20, or helped a few less customers find what they were looking for in housewares. Without a boss to "crack the whip," can't see a lot getting done in those types of jobs.
This signature is false.
My experience is that people don't show up on day one knowing exactly what needs to be done. Someone has to keep track of which parts of the project need to be done. That "someone" who keeps track of things is a project MANAGER. A skilled, experienced tech in that role is good. They are more valuable managing the project than writing code. To get me to take on that stress, you have to pay me more. That's two reasons why I do management - because it has to be done and someone is willing to pay me more to manage coders than to be a coder.
Within a decent sized project, you'll have less experienced or less knowledgeable people. They'll need some management by more knowledgeable people guiding them. As much as I would like to just code all day, SOMEONE has to point out to the new person that copying and pasting the same code in six different places causes problems.
While the project manager is busy with the $800,000 project, someone elese has to think acout how that fits into the organization's $12million total budget and the five year plan. Otherwise, you may win the battle but lose the war, you may succeed at doing the wrong things. Your best and brightest people are a lot more valuable making five-year and ten-year $xx million decisions than having the best people writing "while" loops. I prefer to just work on algorithms, but someone needs to plan for what happens when this three-year contract is over.
It's not a power trip. It's a job someone needs to do. Heck, most of the management I do now is for a non-profit where I don't get paid and the managing board resented by those too lazy/apathetic to take on any responsibilities themselves. I do it simply because it needs to be done, or the organization would fail in it's mission.
I like this company.
~.~
I'm a peripheral visionary.
I found a Forbes article [forbes.com] which estimates that Google makes a profit of 350k per head, while Valve's is in the 87.5 million per head...
No, that's not right. Read the article again. " More specifically, Newell says of the 250-person company that on a per-employee basis, Valve is more profitable than tech giants like Google and Apple. Google made an average $350,000 in profits per employee in 2010. That means Valve sees profits of around $87.5 million at least." The $87.5 million number is total profit, not per employee.
Is this why we havent seen half life episode 3 yet ? :)
Capitalism, communism, socialism: all the financial models and systems are broken now by a thing not anticipated by their models: plenty.
When food is limited it makes sense to limit it to those who contribute to the commonweal. When it is so plentiful that we plow half of it back into the ground to keep the price up, and throw half of the rest away - not so much. Likewise with shelter, clothing, all the basic needs. It makes sense to leave some homeless in the winter to freeze to death when there is no room in built homes - but of that now there is no lack. Money is just a proxy for production units.
We have at some estimates 40% of our able population idle for the simple reason that they're not required to produce what we need. That is a serious problem because if we don't figure it out when that figure hits 50% they will be the majority. It's also an opportunity, as these folk are quite capable and eager to produce. The one who figures out how to empower them to produce a social good will be canonized.
We need a new model.
Help stamp out iliturcy.