There is recently been some press coverage of Valve Corporation which famously has no bosses. As a management consultant I spent most of my working days putting in hierarchal management systems to support a company’s growth. Therefore I am very interested in Valve’s management model. Valve is a very successful company, therefore the question naturally arises, is Valve successful because it has a flat management model or can it have a flat management model because it is very successful and can afford to be inefficient?
Traditional hierarchal management has several functions including line management and resource allocation. The duties of a line manager include employee development, reward and discipline. To date, Valve has only employed extremely experienced programmers and has admitted its systems do not facilitate taking on junior staff.
Reward and discipline are less relevant for Valve than many other companies because it is extremely profitable, thus it can “stuff their employees mouths with gold” and staff are highly incentivised to be good employees.
It is said that employees score each other’s performance and that these scores are published on whiteboards. This process has positives and negatives, on the plus side employees benefit from real-time 360 feedback. On the minus side, most employment law serves to protect the interests of unproductive workers and one can see how such a system would expose the employer to allegations of victimisation and bullying if implemented in a naïve manner.
Fundamentally, Valve addresses the problems of line management by avoiding them. Valve’s approach to resource allocation is more interesting. Employees can choose which project to work on and change it at will. The desks have wheels to enable quick switching. This is in stark contrast to traditional project management techniques where a senior manager assigns people to projects. At this point, most project managers will be asking “how on earth can they keep to schedule?” The answer is “they don’t.” Valve is famous for delivering late, sometimes years late. Self-evidently this does not matter much to Valve. The reason for this is that Valve is known for creating very high quality games. Letting employees vote with their feet in this way ensures that games that should not be written, are not written. In “In Search of Stupidity” by Merrill R. Chapman the author suggests that most disasters in software firms are caused by dumb decisions taken by one or two senior executives. The Valve model guards against this but I’d note that this is only possible because the whole team has a very strong understanding of the project’s goal. This is in marked contrast to many projects that require expert resources, where it is only reasonable to expect the employee to understand their own contribution to the project rather than the value of the project as a whole.
And finally, “who cleans the toilets?”. This is outsourced along with many other functions. The no-boss model seems only to apply to the development team. There is really much less to the Valve management model than meets the eye, it is better considered as a significant extension to existing agile development practices in the software industry than as an alternative to hierarchal management systems because software development is only part of the business. It appears that other essential business functions such as finance, marketing, sales and yes, cleaning the toilets, are managed in more traditional ways.
Most of my business involves working with the client to improve coordination between all the teams in the business. If you think that your business might benefit from more effective implementation of strategy please give me a call.
This is a very interesting article particularly to fans of Ronald Coase.
- Why Valve? Or, what do we need corporations for and how does Valve’s management structure fit into today’s corporate world?