I've said elsewhere, whenever Valve comes up, that we really have no idea how well it works. It's so fantastically swamped with money that they can pretty much run it any old how and still be "successful".

There's a mixup in correlation and causation here. Similar mixed up conclusions are reached by people looking at other fantastically profitable companies.

Do you like scenario planning? Shell "proves" it works.

Stalinist management? Apple "proves" it works.

Velvet sweatshop? Microsoft "proves" it works.

Data über alles? Google "proves" it works.

Self-directed workplace? Valve "proves" it works.

I agree with your point, and the parent's, that Valve's success is most directly caused by Steam runoff and their own sales dollars, and not necessarily their dynamic organization style.

...do many people think or claim that their success is due to their management style? More importantly, is that why we're talking about it? Certainly that isn't the focus of this Gamasutra summary of the EconTalk podcast by Valve's economist.

Valve does talk a lot about their org-style in general, and they do talk a lot about their success. But I'm pretty sure they have a sound, mundane reason for those things: talent sourcing.

Standing out in the tech industry as an employer is tough, and the traditional offerings: "smart people working on interesting problems", "we're growing fast", "we're the market leader" are, excuse the expression, tantamount to banal rape. Valve has a further difficulty though, as expressed by Varoufakis:

"In many occasions people simply don't fit in not because they're not productive or good people, but because they just can't function very well in a boss-less environment."

They need to find talent like everyone else, but beyond that, they need to find talent that won't fail without someone taller telling them what to work on. Valve's sane solution to both problems (lack of talent, lack of talent-preparedness for their org-style) is to get loud about their org-style.

Valve's org-style is so wild and different that it means we could all talk about it until the cows return -- and we do. They routinely make (tech website) headlines just by repeating themselves, which draws crowds. It also causes candidates to self-select, lessening the fit-problem. Don't think you'd like to work at a Place Like Valve? You won't apply. Never thought about this org-style before? You will now.

Why do we love to hear about their org-structure so much? Is it just because it's different, or perhaps because of apparent claims it's more profitable? I think it's because it addresses a real problem. It would appear that silly directives-from-on-high don't exist at Valve, because they internally removed the notion of "on-high". They also claim to have given each employee the autonomy to figure out how and where to do their best work, while being paid enough. It sounds like they struck the creative-work motivators of autonomy, mastery, and purpose[1] on the noggin. Good marketing at the least.

[1] RSA Animate's adaptation of Dan Pink's talk http://www.youtube.com/watch?v=u6XAPnuFjJc

A lot of people don't like their boss, don't like hierarchies, and secretly suspect that they're made to do stuff as some kind of display of power.

And in some places? Yeah. Probably legit.

But I the thing is that it's impossible to know if the Valve model is worth studying for clues on how to better manage non-lottery-fountain companies, because the confounding factor of riding a money mississippi is basically totally impossible to factor out.

In conclusion, I'm jealous that I'll never have to face this problem up close.

I actually disagree that the Valve-style bossless organization "works" as a matter of universal assertion. It probably works for some companies and not others. However, the alternative is ludicrous and only "works" because, with 99% of large corporate organizations taking that form (legacy) there is no competition.

The more common corporate arrangement is the extortionist command economy in which one serves one's immediate superior or gets fired from a whole company. That is ridiculous and pathological. It might have worked in 1870, but it's starting to fail badly. Billions of dollars of value are being lost due to this outmoded way of doing things.

Valve is clearly not perfect-- they had a layoff earlier this month-- but it appears that they're still doing a better job, on a cultural front, than almost anyone else.

If I've somehow represented that I think their organization would work universally, I didn't intend to.

I do think it's important that Valve operate as they have (in being loud about their structure), to point the water out to us fish. It's commonplace to think that work is just the way work is, with managers and workers and you get a job then stay in it until you are promoted or fired or quit.

Valve is doing something different -- and of course it won't be perfect. But it's different, and they're shouting at the top of their corporate lungs about it. Hopefully it will help lead to the development of a spectrum of organizational styles. Even if it just brings some common willingness to mess about with the water and see where we go, that would be great.

Startup that lets you work 4 days a week? 37sigals.

Terrible UI? Craigslist.

We tend to look at outliers and make them the canonical example. 37signals has been particularly bad with dispensing startup advice being completely not typical.

You make a good point, but how confident are you that the products that have lead to them being fantastically swamped with money didn't arise at least to some extent because of their culture?

Quite confident.

Multi-billion dollar game franchises have been created in other ways before and since the initial Cabal article was published.

The existence of other roads to billion dollarism do not preclude the causality between Valve-style management and more billion dollarism.

This is exactly what I am trying to express.

I think a good way to measure the success of the management methodologies you mentioned is by looking at how happy the employees are. Four of the five companies in your list are full of horror stories describing terrible corporate bureaucracies or abusive/ignorant/incompetent managers. In contrast, everything I've heard coming out of Valve has been overwhelmingly positive.

Google has a company-wide index of satisfaction which they try to maximise.

Microsoft is the only company I've heard of that has (or had) "Morale Budgets", completely within the control of the programmers. In the 90s, according to McConnell, Microsoft would go to any lengths to protect and improve morale.

I can't speak for Shell or Apple.

The point is that people are mixing correlation and causation. There's no reason to think that Valve's self-directed model is the cause of their success, just as there's no reason to think Google are successful because of how they manage their people. In all these cases the massive profitability is pretty much exogenous.

I agree about mixing correlation and causation. I don't think Valve's model should just be blindly applied to everyone. But it does offer some hope as a kind of alternative style of corporate governance.

I also stand by what I said about Google and Microsoft. I know people give Michael Church a hard time here, but from my own friends I've heard anecdotes that confirm his sentiments regarding the amount of bullshit that goes down there. Sure, it's a good company and people are happy - as long as they play the politics game. I'm sure a company-wide "index of satisfaction" looks good on the HR handbook, but when your manager blacklists you without your knowledge and prevents your transfer or promotion, that's kind of shitty.

Same thing with Microsoft, which is known for its legendary corporate bureaucracy and political in-fighting. And Apple, which is by all accounts a very high-stress environment to work in.

If you think ostensibly "flat" social structures can't be gamed in stunningly unpleasant ways, then I have a bridge to every 1970s anarcho-syndicalist commune in Brooklyn for sale.

The difference here is that there is a high barrier of entry. The people accepted to work at Valve are allegedly elite and compatible with this flat structure.

I don't think communes are as rigorous about admission.

>The difference here is that there is a high barrier of entry.

An even bigger difference might be that the financial goals Valve has as a community are more clear than the goal of "build a good anarcho-syndicalist commune". In my experience communities that have a goal to pursue that's external to the existence of the community are the ones that last while those that don't tend to descend into high school-like popularity contests and fail because of that.

BTW, is there anything HN would recommend reading on 1960s-1970s communes and, especially, ways in which they failed?

>The people accepted to work at Valve are allegedly elite and compatible with this flat structure.

That or the people that have niched themselves into positions of unwritten-but-assumed authority have decided to hire quiet followers.

Just because someone calls an environment a 'flat system' doesn't make it true. There exists just as likely, a very defined system controlled by seniority.

I think high barriers lower, but cannot prevent, the incidence of shenanigans. But good point.

Heh, to me that makes it sounds like the politics it would be worse at Valve, not better.

Why would the politics be worse? You are supposedly hiring people who are culturally compatible, possibly apolitical.

> Microsoft would go to any lengths to protect and improve morale.

Like in "The beatings will continue until morale improves"?

More like "the private office with a view and your selection of furnishings and gear, free food, unlimited and unquestioned requisitions policy, Friday sports, renting of whole movie theatres for teams to watch their favourite films, changing of schedules, embarrassing displays by senior executives for the amusement of staff etc etc etc will continue until morale improves".

Microsoft has, of course, changed. But in the 90s it was probably the best place in the industry to actually work, if the articles and books written about that period are even vaguely accurate.

Much less so now. Open space plans (I call them "Moo Towns") are killing the ability to concentrate at Microsoft.

The interesting thing is that Valve has similar open space areas. You could substituate a photo of one for another. The big difference at Valve is that people have /self selected/ into the other people they are working with, and can move any time.

The ability to choose is worth any likely amount of "morale budget."

"Moo town" is a brilliant coinage. Thank you.

Google is full of horror stories about bureaucracies and abusive/ignorant/incompetent managers?

It's true that there are a few disgruntled ex-Googlers that may give you this impression.

But I don't believe you'll find many current Google employes who will agree with that.

Because if they did, they wouldn't be current Google employes anymore?

Um - No.

But see, here's the thing.

Unless you're running a multi-million dollar fraud, money is the proof it works.

Proof as in: a lot of other smart people do worse.

Of course, Google, Apple, MS, Valve products are all different, and they would probably be bad at doing the other company's job (to a certain extent)

And yes, MS is monopolistic, is inefficient at work, have several divisions that are a money sink. Still, last I heard, they only lose in profits to oil companies.

Yes, some models require more money to work, still, they got that money in the first place and are free to work like that for as long as it works.

Being profitable proves only that your revenues exceed your expenses. Drawing any other causal conclusion leads to confusion.

Or worse: an article in the Harvard Business Review.

The mere existence of a company that is both successful and uses a particular management approach proves only that the management approach is not so horrible as to actually be incompatible with success. To argue that the management approach contributed to the success in a meaningful way requires more evidence.

Completely agree. The key to business success: make a lot of money. Like Bill Clinton posted on the wall, it's the economy, stupid. It's sadly obvious but its nearly unbelievable because its the answer that seems too vapid and cyclical to have explanatory power.

Very interesting point! I would also like to add that the type of product being "manufactured" adds to the general direction of how a company is being run. If a company is full of people that understand enough of the business to shape future requirements, my belief is that, they tend to gain more from self organizing than companies that only have a subset of people with enough domain knowledge. If you have a very narrow and deep domain and 1/10 employees that really understand enough to be able to shape future backlogs, then having everyone self organize will not really solve the bottle neck that is those people.

Maybe the lesson is that there's more than one way to make things work. I like to think of the biological world, where different organisms have been successful using vastly different survival strategies. You can't point to the way that elephants live as evidence that crocodiles are doing it wrong.

I think it's also very important to consider the different businesses these companies are in; some management structures naturally lend themselves to certain industries more than others. For example, something tells me that the "velvet sweatshop" model might not work so well for Shell, while obviously the data-driven model is a very natural fit for Google's business.

I think the idea that you can just look at that one, oh-so-great management idea at Valve and then just apply it at your own startup or company is just more wrong than it might be right. All these places somehow grew into what they are doing now and there maybe were smart people making the "right" decisions along the way or it was simply nobody frakking up along the way and since money is still rolling in, everything is great. And what is working for them might be terrible at your place, no matter how romantically "right" it sounds. Maybe what you call Apple's "Stalinism" just worked because Steve was who he was - so all those suits now reading up on him and getting management ideas now because Apple is successful, that's probably a very bad idea because the topic is too complex and you are too likely to fail by just copying an idea without everything else that went into it at the place you are copying from.

You've illuminated a good point that I completely failed to make: transplanting bits and pieces of a system into a different context often fails. The totality of a system matters. Especially in complex systems where the graph of causality is very vague.

My hobby is Olympic-style weightlifting. One thing that happens a lot in my sport is cargo-culting whichever country happens to be dominant at the moment. Back in the 1990s everyone got very excited about the "Bulgarian" training system, which was quite different from the "Russian" system which had dominated from the 60s.

In the USA in particular, wholesale attempts were made to adopt the Bulgarian system for elite athletes. Results? Very disappointing.

The context is wildly different. Bulgarian coaches had a feedstock of hundreds of thousands of lifters. If a lifter was wrecked by the extremely aggressive Bulgarian method, so what? You just replaced him with another lifter, there were plenty more coming up the pipeline. Given that in a larger sample you can find more outliers, mere numbers predicted a large fraction of the Bulgarian success -- and before that the Russian success.

Mere numbers today predict the success of China in the lighter divisions; mere numbers in future will predict that China will steadily improve in the heavier divisions as Chinese youth become taller due to westernised diets with more protein and calcium.

But the cargo culting has begun. Weightlifters already talk about "the Chinese System" as if there was some single, monolithic master plan. There isn't really. There's just a metric shit ton of Chinese weightlifters in the lower leagues and the elite international coaches can pick out the best of the best.

For the same reason, New Zealand is rugby superpower, nobody can beat the USA at gridiron, Australia is barred from entering the international Australian Rules Football contest because even our lowliest semi-pros dominate any such match up ...

I do agree with your assessment of the sizes of the talent pools in Russia, USA and China. Back of the envelope calculations don't support your assessment of the Bulgarian talent pools though.

Your assumption that the Bulgarian coaches have a feedstock of hundreds of thousands of lifters is very far from the truth - the whole Bulgarian population is considered to be around 7.3M people, which doesn't account very well for all emigrants living abroad. Out of these 7.3M only 16% (~1M) are aged 0-17 (I assume that 14-15 y/o is the usual age that a lifter starts training professionally). That means that at the moment there are around 100K teenagers (aged 14-15), out of which less than 50K are male.

During the past 20 years sports have lost a big chunk of their (state) funding and therefore the attractiveness for young uneducated kids have lowered substantially, further reducing the pool of athletes.

I consider the three most prestigious and popular sports for males in Bulgaria to be football (soccer), wrestling and weight-lifting.

I'm actually having trouble nailing down a source for where I got the 200k number. It was for total registered lifters at all levels, including youth, juniors, seniors and masters. When a sport is popular in a country, it's played at all ages.

Meanwhile the USA had, until Crossfit, about 3,000 lifters. Not a very big pool to draw from.

You correctly point out that state funding for Olympic sports collapsed some time back and that this removed the quasi-professional pathway.

For a similar reason, few athletes in the anglosphere who is naturally strong and power will go into weightlifting. They're playing gridiron or rugby. Those sports are popular and have lucrative professional leagues.

Have you considered the possibility that the Bulgarian success was at least partially based on doping ?

I don't know much about weight-lifting, but I recall many scandals in the past years about disqualified Bulgarian athletes for doping.

(I am Bulgarian.)

I usually leave doping out of the discussion because it's not a point of distinction. Most dominant countries have doping programs. It just seems as though the Bulgarians are particularly inept at planning their steroid cycles to avoid detection at international meetings. Or possibly Ivan Abadjiev doesn't care how he loses lifters -- whether through quitting, injury or doping charges.

>How is Valve going to deal with the "always losing money" proposition?

I would guess, not well. The minute that they start losing money and are forced to seek investment/debt/rescue, is the minute that their current org-structure dies.

I still remember Groupon's offices being shown as an example to follow, and that was what, a year and a half ago?

BTW I just wanted to add that despite all the talk about current Valve's efficiency with the old Valve there was only 5-6 years between HL1 and HL2, while its been 6 years since HL2EP2, and 9 years since HL2.

In comparison since HL2 there were Halo 2, 3, ODST, Reach and 4. Id launched Doom 3, Quake 4 and Rage. And we had Bioshock 1, 2 and 3, and Gearbox made both Borderlands games.

Valve is way too focused in catching up to F2P IMHO, and it should be careful since the social gaming party is already over and I've seen more than a couple of F2P games that get no "whales" at all, if you catch my drift.

Then again, it's not as if a traditional organization is super efficient. If they have less money, they simply can distribute less bonuses.

I don't see how the organization itself costs money, unlike other companies who go for physical perks (food, massages, fancy offices, toys...).

From an individual perspective though, that is not really true. There are plenty of jobs that are so dysfunctional that no amount of money would make it worth working there.

> everything works when the money is flowing.

Don't we have examples of financially successful projects with various problems? A growing number of employees may bring in communication inefficiency, for example. Now this probably won't undermine company success, and from the point of people at the top it may be all good regardless.

For other values of ‘all good’, though, I'd argue structure and organization matter.

As they say in sports, "winning cures everything".