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?"

Theory Y organizations

[Anonymous Coward]

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

Valve Handbook

[bwhaley]

Valve addresses this very question in the Handbook for New Employees: [sbnation.com]

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.

Re:Like Most Companies?

[SpiralSpirit]

http://assets.sbnation.com/assets/1074301/Valve_Handbook_LowRes.pdf [sbnation.com] I think you should read the handbook before deciding you know more about their hyperbole than they do.

Re:No

[buybuydandavis]

I don't know about capitalism's fears (does an ism have fears?), but probably the two major free market economists in the 20th century were for a guaranteed basic income - Hayek and Friedman. Charles Murray recently came out with a book on it.

Ending the regulatory/welfare state is the greatest fear of government apparatchiks and central planners.

Re:No

[psycho12345]

The problem is that everything after Half Life 2 Episode 2 is not a Valve game, they were indie games that pitched their idea and got funding from Valve. So that puts the last actual in house developed game by Valve around 2005.

Re:It requires the right kind people

[gizmonic]

Have you ever worked for a Fortune 500 company, or any company with more than 10k employees spread across several states?

Most companies adopt pay grades, and assign certain pay grades to certain job titles. This is your base salary range, which is then adjusted by the cost of living for your location. You have to make at least the minimum of the range, and can never make more than the maximum. The only way to go up once you've capped out, is to get a new job title (ie, promotion).

When a company is faced with a large number of employees, that becomes the easiest way to make sure people are being paid fairly across the board. It doesn't matter what race, gender, ethnicity, etc, you are; if you are Job Title A at Pay Grade 15, you will always be making between $x and $y.

I'm not saying it's the best solution, but it is dead simple, easy to implement and about as bullet-proof from lawsuits as you can get. Could they come up with something better? Most likely. But if this works, why spend time and effort on something that may not (at the same time opening you up to discriminatory salary lawsuits)?

Anyway, none of that is an argument FOR the practice, just an explanation of why it exists.

Because projects need project managers

[raymorris]

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.

Re:No

[Neil Boekend]

It's not new. Here in the Netherlands we have a system that provides for the bare necessities of life if you are fired. It works.

If the employees aren't constantly afraid they may get fired most do not work less. Most will work better. Fear is a really bad long term motivator. Employees who are afraid have bad concentration. They tend to focus on the possibility of unemployment.

When trying to get into the workforce in this economic climate I have been temporarily assigned at different companies. Some went through a rough spot (they expected that, that's why they only employed new workers on a temporary basis). If fear were a good motivator then people would have been working harder when the troubles became apparent, but that's not what I saw. The average efficiency of these engineers fell. Even with the securities that The Netherlands offer. It is hard to focus if you aren't sure about the future. Fear eats away at most people.

Then again, some people do not work if they can avoid it. But are they ever going to be good employees? Are they going to work more than they need to prevent getting fired? They'll feel like slaves. Living in fear, only working to prevent the repercussions of not working.

Re:No

[BasilBrush]

If you're talking about welfare for all, working or not, then the question is where that money comes from.

Where? Watch this and the answer is obvious.
https://www.youtube.com/watch?v=QPKKQnijnsM [youtube.com]

So the only question is: How?