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August 5, 2012 3:24 AM   Subscribe

The current system of corporate governance is bunk. Capitalist corporations are on the way to certain extinction. Replete with hierarchies that are exceedingly wasteful of human talent and energies, intertwined with toxic finance, co-dependent with political structures that are losing democratic legitimacy fast, a form of post-capitalist, decentralised corporation will, sooner or later, emerge.
An analysis of the management and organizational style of Valve Software.
posted by barnacles (31 comments total) 22 users marked this as a favorite

 
"In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic."
posted by jaduncan at 3:29 AM on August 5, 2012 [2 favorites]


Dude seems to ignore the role of chargebacks in any large corporation. Not all decisions are made top down: many are driven by internal budgets. Markets exist within most big enterprise's walls.
posted by jenkinsEar at 3:43 AM on August 5, 2012


The other crucial thing that's not really mentioned is that pay adjustements are undertaken via peer review; there's still a big incentive to do whatever you choose to do to a high level and that encourages both pushing projects to successful completion and personal specialisation.
posted by jaduncan at 3:50 AM on August 5, 2012 [1 favorite]


Valve has a great reputation, no doubt. But it seems like wishful thinking to draw your conclusions about The Future Of The Corporation And Of Capitalism from a company that is privately held, that is able to hire the best and brightest, produces a product that functions only as entertainment (rather than a more humdrum product that may be less intrinsically motivating) and not only does not work to any external requirements or deadlines, is legendary for taking forever to produce their product.

I'd love to see him try and apply this to, say, a frying pan factory, allowing everybody to make handles this month if they feel like it, and wheel their metal casting machine over towards the corrugated box folder, and who gives a fuck if the last time they shipped their flagship two quart pan was in 2007.
posted by Homeboy Trouble at 4:08 AM on August 5, 2012 [23 favorites]


I'm sure Valve's spontaneous organisation and non-existent org chart can be made to work when you have supremely talented and driven individuals on the payroll.

Now please Mr Varoufakis try to do the same with run of the mill employees, and don't forget to write about your experience.
posted by jgbustos at 4:50 AM on August 5, 2012


Now read my political economy analysis of Valve’s management model; one in which there are no bosses, no delegation, no commands, no attempt by anyone to tell someone what to do.

Now read my political economy analysis of Valve's management model.
posted by Blazecock Pileon at 5:00 AM on August 5, 2012


So this is the same Valve that has just updated the Steam subscriber agreement with a mandatory arbitration clause, and will lock you out of all of your Steam games (without a refund) if you decline to accept it? (steampowered forum thread)

Valve's management style may be "quirky" in a delightfully post-Hayekian way, but that doesn't necessarily make them any nicer than anyone else.
posted by A Thousand Baited Hooks at 5:09 AM on August 5, 2012 [3 favorites]


Heh, dig the haters.

"I can't deny that this specific example does work, but I'm sure if you tried it some other way it would fail, not that I have any specific examples I could point to."

Considering that all your evaluation is peer evaluation, I actually think this might work quite well for many classes of non-bullshit organization - particularly if you had some "out-of-band" information gathering mechanism ("an auditor") to prevent some peer groups from systematically cheating the entire group. (Note that an auditor is NOT "management in disguise" but a regulatory mechanism designed to make sure that all participants get good information.)

> So this is the same Valve that has just updated the Steam subscriber agreement with a mandatory arbitration clause, and will lock you out of all of your Steam games (without a refund) if you decline to accept it?

Creepy!
posted by lupus_yonderboy at 5:12 AM on August 5, 2012 [1 favorite]


Does anyone know what it's like to be a cleaner for Valve? How far does this management model extend?

If the cleaners and so on are still hierarchically organised then going on about how great the organisational model is becomes rather insidious and ignores the fact it's just a continuation of the age old practice of giving an elite privileges that aren't extended to everyone.
posted by knapah at 5:25 AM on August 5, 2012 [9 favorites]


Valve's spontaneous organisation and non-existent org chart only work where there are no significant time or financial pressures. They also don't scale up to organisation sizes where people stop being able to make interpersonal relationships. Beyond a few hundred people organisations simply need to begin to put formal procedures in place or nothing gets done outside the inner-circle of blessed employees (with friendship-access to the assets they need to be effective).
posted by Hugh Routley at 5:42 AM on August 5, 2012 [1 favorite]


... am I the only one who came away from that article thinking it'd be pretty damn cool to work for Valve?

Pity they're halfway around the world for me and don't seem to hire juniors.
posted by Xany at 5:50 AM on August 5, 2012


W L Gore (perhaps you've heard of GoreTex?) uses a similar management model and they have nearly 10,000 employees in 50 facilities. Fast Company writeup in 2004.

So, fuck that "it would never work in other industries or at larger scales or where shit really matter or when the founders die or after a couple of years it'll all just fall apart anyway" noise.
posted by seanmpuckett at 5:55 AM on August 5, 2012 [8 favorites]


Interesting stuff. In addition to who cleans the toilets, I wonder how they deal with specialized functions. You can't just roll your desk into the legal department and become a corporate counsel and conversely, what happens if all the lawyers decide to join marketing? How is compensation decided?
posted by MattD at 6:09 AM on August 5, 2012


Interesting stuff. In addition to who cleans the toilets, I wonder how they deal with specialized functions. You can't just roll your desk into the legal department and become a corporate counsel and conversely, what happens if all the lawyers decide to join marketing? How is compensation decided?

I would very strongly imagine that both the cleaning and the legal work is done by external companies. Gabe doesn't really have the skills to hire lawyers, no?
posted by jaduncan at 6:15 AM on August 5, 2012


Very nice theory. Terrible in actuality; even within software, Valve makes an exceptional product. They control distribution, they can take as long as they like to release a new version or product, and if there's a bug in Portal 2, the worst they have to deal with is players bleating about it on a forum. (Players from whom they already extracted the maximum value of the product, the up-front cost.)

There is no concept of SLA, no concept of meaningful ongoing support—the boring work—no diversified portfolio of products that have to work together. There's Steam, there's games, there's the administrative tools to manage the presentation of games on steam, and that's it.

Making games isn't easy, but it's a simpler model of production than a lot of business systems.
posted by sonic meat machine at 6:24 AM on August 5, 2012 [2 favorites]


You think Steam doesn't have meaningful ongoing support, or are you arguing that SLAs are the only support contract clauses that force internal pressure on an organization? I kind of see where you are going, but I'm just saying that SLAs don't guarantee you a hammer big enough to exert internal pressure on other companies without the resources to hire a great legal team. Whereas Steam is beholden to please the customers somewhat to stay a viable marketplace.

I suppose it could be argued that it's not a very complex piece of software, although I'm not sure that's correct or important.
posted by BrotherCaine at 6:53 AM on August 5, 2012


Reading articles like this make me sad about having to go in to my job tomorrow at my very backward and traditionally-run company.
posted by Fleebnork at 7:06 AM on August 5, 2012


I agree with sonic meat machine. It is actually pretty arrogant to take a corporate structure that happens to work well with your particular product, and then make speeches about how all other companies are doing it wrong, bringing up Karl Marx and Adam Smith and claiming to know the universal truth of the world.

Imagine if Boeing tried to operate this way. The entire company is organized around designing and building a single plane over many years.
posted by eye of newt at 7:47 AM on August 5, 2012 [2 favorites]


Morningstar Farms (pdf) is also interesting.
posted by underflow at 9:50 AM on August 5, 2012 [1 favorite]


sonic meat machine, arguing that Valve can get away with this weird management structure only because they happen to make an exceptional product that everyone loves seems a bit backward, logically. Great products don't usually just happen (especially in software)--they're rare even when you try as hard as you can, with lots of money to spend and you have top talent (consider Google's record). Just because it's a game doesn't mean it was easy to make a beloved product either--think of all the ridiculously awful computer games that have been made.

This essay is an attempt to explain how they created an environment that was capable of making exceptionally good products.
posted by jjwiseman at 10:22 AM on August 5, 2012 [1 favorite]


Considering that all your evaluation is peer evaluation, I actually think this might work quite well for many classes of non-bullshit organization - particularly if you had some "out-of-band" information gathering mechanism ("an auditor") to prevent some peer groups from systematically cheating the entire group.

The last time this came up I shuddered in horror, and I'll explain why.

I am a business analyst. I spend all my time reviewing the processes of the department for possible efficiency gains and tweaking their procedures to save money and time, both for the employees and the company.

This does not, to put it mildly, make me a well-beloved member of staff. I'm viewed as the bastard child of an auditor and an executioner, with some parasite thrown in for fun. The other members of staff do not have the skills to evaluate what I do because the whole reason I was brought in was that I have technical skills they lack.

So if we got our evaluations based on peer reviews I could be the very best business analyst in the whole world, but because my peers a) dislike my role and b) don't have the faintest clue how to evaluate my work I'd get killed in a peer review evaluation. Nothing I've read about Valve's review process gives me any understanding of how they address issues like that, or simply having peers who don't like you and game the system to affect your review.
posted by winna at 10:22 AM on August 5, 2012 [2 favorites]


oops, sonic meat machine, I see now that you weren't necessarily saying their product was exceptionally good. But I think one can still argue that the exceptionalism of their software, which you're saying helps the software be successful, comes from the structure of the organization. They pioneered a new model of distribution that meant they didn't even have to consider solving some hard problems that drag companies down (in your example, support). That level of structural innovation is rare.
posted by jjwiseman at 10:27 AM on August 5, 2012


no concept of meaningful ongoing support—the boring work....

Sure, except for all the meaningful ongoing support that they do on all of their products.

Also, I would like to join the thread in saying that if all this organization can do is consistently put out the best products in its field while somehow building roughly infinite community goodwill despite slow release schedules while also running the largest and most successful online marketplace for products of its type, then its organizational systems must be deeply stupid and awful, and all of the good must be coincidental rather than caused by those systems.
posted by IAmUnaware at 11:08 AM on August 5, 2012 [11 favorites]


A very fascinating business structure, for sure. Especially considering Gore-tex did this first, it seems this might work well for creative, open-ended businesses. Obviously, it only works well when everyone is contributing in a visible way and working in teams. I think the biggest advantage is the collegiate atmosphere it creates by directly correlating rewards (salary) with achievement (products).

Both of those companies also seem to create a very insular atmosphere for creative exploration, much like some of the classic "labs" like Xerox and maybe now, Microsoft Labs.

The biggest thing, though, is trusting employees to actually work without cracking a whip or laboriously grading their performance. It's crazy when you realize how much of what we accept as normal business practices are really just the remnants of a (mostly failed and dehumanizing) attempt to "mechanize" offices like a factory assembly line.
posted by lubujackson at 12:07 PM on August 5, 2012 [2 favorites]


Fleebnork: "Reading articles like this make me sad about having to go in to my job tomorrow at my very backward and traditionally-run company"

Which of course, is their plan. They're clearly laying the ground for recruiting. That manual wasn't leaked, it was "leaked". This is just another piece in their recruiting propaganda.

The real question is, why did Valve feel the need to change their recruiting strategy? Are they worried about a mass exodus? Or are they needing a lot bigger headcount than previously, and if so, what for?
posted by pwnguin at 2:49 PM on August 5, 2012 [1 favorite]


I'm sure Valve's spontaneous organisation and non-existent org chart can be made to work when you have supremely talented and driven individuals on the payroll. […] Now please Mr Varoufakis try to do the same with run of the mill employees

I think many "run-of-the-mill employees" have spent their lives in an office structure that's adapted to train out or actively punish the motivations and behaviors that make a place like Valve work. If people came from a different environment I think it wouldn't be exceptional to be able to work like that.
posted by hattifattener at 3:20 PM on August 5, 2012 [1 favorite]


Slow release schedule isn't quite right - they've managed around a game a year.

Valve puts out plenty of products. It's just none of those products are Halflife 3.
posted by Sebmojo at 3:45 PM on August 5, 2012


I would very strongly imagine that both the cleaning and the legal work is done by external companies. Gabe doesn't really have the skills to hire lawyers, no?

There were several lawyers in-house long before they had an economist in-house - Valve has been in some high-stakes legal battles.
Cleaners are (I think) usually contracted by the office tower (last I heard, Valve is a few floors, not the building).
But yeah, I'd assume that external law firms are still tapped for specialist areas.
posted by anonymisc at 5:47 PM on August 5, 2012


for those suggesting valve try it in a factory ... decentralized systems aren't just for creative work. All over the world, people in all sorts of industries go one better than privately owned businesses that "manage using decentralized systems"... they work or join co-ops.

I've often thought there should be a natural link between open source platforms and co-op businesses...

Happy UN year of the Co-operative, everyone!
posted by chapps at 12:14 AM on August 6, 2012


*work in or join.
posted by chapps at 12:14 AM on August 6, 2012


from the article:
"Valve is, at least in one way, more radical than a traditional co-operative firm. Co-ops are companies whose ownership is shared equally among its members. Nonetheless, co-ops are usually hierarchical organisations. Democratic perhaps, but hierarchical nonetheless. "

I find this really interesting .... I would say it is true that some co-ops are certainly very hierarchical, but I would say the structures of co-ops are much more diverse than implied. Further, I think the fact of democratic control and ownership matters a lot to how much an organization really challenges a corporate model.

Co-op members can choose to change their organizational structure.... could they do this at Valve if they started to find the direction-less office a frustration? Sometimes those very strong beliefs about organization structure and ideas like "no one ever tells you what to work on" can be subtly enforced ... And sometimes, because organizational structure is the business of the owners, people don't challenge it, they just move on to other work environments.

I think it is possible this would not be the case at Valve, but I think it is a risk of the model as described here.

In any case, and interesting and thought provoking post, thanks for sharing!
posted by chapps at 1:15 AM on August 6, 2012


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