April 15th, 2012
(written by lawrence, however indented passages are often quotes)
If most of the value is now in the initial creative act, there’s little benefit to traditional hierarchical organization that’s designed to deliver the same thing over and over, making only incremental changes over time. What matters is being first and bootstrapping your product into a positive feedback spiral with a constant stream of creative innovation. Hierarchical management doesn’t help with that, because it bottlenecks innovation through the people at the top of the hierarchy, and there’s no reason to expect that those people would be particularly creative about coming up with new products that are dramatically different from existing ones – quite the opposite, in fact. So Valve was designed as a company that would attract the sort of people capable of taking the initial creative step, leave them free to do creative work, and make them want to stay. Consequently, Valve has no formal management or hierarchy at all.
Now, I can tell you that, deep down, you don’t really believe that last sentence. I certainly didn’t when I first heard it. How could a 300-person company not have any formal management? My observation is that it takes new hires about six months before they fully accept that no one is going to tell them what to do, that no manager is going to give them a review, that there is no such thing as a promotion or a job title or even a fixed role (although there are generous raises and bonuses based on value to the company, as assessed by peers). That it is their responsibility, and theirs alone, to allocate the most valuable resource in the company – their time – by figuring out what it is that they can do that is most valuable for the company, and then to go do it. That if they decide that they should be doing something different, there’s no manager to convince to let them go; they just move their desk to the new group (the desks are on wheels, with computers attached) and start in on the new thing. (Obviously they should choose a good point at which to do this, and coordinate with both groups, but that’s common sense, not a rule, and isn’t enforced in any way.) That everyone on a project team is an individual contributor, doing coding, artwork, level design, music, and so on, including the leads; there is no such thing as a pure management or architect or designer role. That any part of the company can change direction instantly at any time, because there are no managers to cling to their people and their territory, no reorgs to plan, no budgets to work around. That there are things that Gabe badly wants the company to do that aren’t happening, because no one has signed up to do them.
Hardest of all to believe is the level of trust. Trust is pervasive. All of Valve’s source code is available to anyone in Perforce, and anyone at Valve can sync up and modify anything. Anyone can just up and work on whatever they think is worth doing; Steam Workshop is a recent instance of someone doing exactly that. Any employee can know almost anything about how the company works and what it’s doing; the company is transparent to its employees. Unlike many organizations, Valve doesn’t build organizational barriers to its employees by default; it just trusts them and gets out of their way so they can create value.