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Valve’s Michael Abrash has written a fascinating post about his history with the video game developer and the way that the company itself is run. According to Abrash, no formal management or hierarchy exists at Valve.
The old industrial management model is a thing of the past, argues Abrash. Gone are the assembly line days of productive repetition. Value in the modern economy is created by doing something different each time, rather than repeating the successes of the past. The creative act itself is the spark that must be perpetually lit and rekindled, even if that means doing away with old ways of doing business.
The success of Id Software’s legendary game, Doom, illustrates this point.
Abrash tells the story of his Valve coworker, Gabe Newell. When Newell was at Microsoft in the 90′s he conducted a survey to find out what was actually installed on peoples’ computers. Windows took the number two slot. The most-installed program was Doom.
“The idea that a 10-person company of 20-somethings in Mesquite, Texas, could get its software on more computers than the largest software company in the world told him that something fundamental had changed about the nature of productivity,” Abrash writes. “When he looked into the history of the organization, he found that hierarchical management had been invented for military purposes, where it was perfectly suited to getting 1,000 men to march over a hill to get shot at. When the Industrial Revolution came along, hierarchical management was again a good fit, since the objective was to treat each person as a component, doing exactly the same thing over and over.”
Now all that’s changed, Abrash argues.
The military model is dying alongside the rapid growth of technology. Hierarchy itself is quickly becoming irrelevant, as the importance of originality goes front and center. Anyone can duplicate, Abrash points out. Any programmer worth his salt could replicate Facebook or Angry Birds. The trick is doing something new.
“If most of the value is now in the initial creative act,” Abrash continues, “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.”
Don’t mistake this for anarchy. People commit to projects and choose “leads” by informal consensus. It reminds me a bit of the Finnish education system, where trust and team efforts have replaced more traditional teacher-student relationships. Give people trust and respect and make them a part of the effort, and they respond in kind.
(In a sense, this is exactly what anarchist intellectuals envision from a truly anarchistic society, so when I say “Don’t mistake this for anarchy” I mean, “Don’t mistake this for chaos.” The distinction is important.)
Is this a hint at things to come? I’ve written before that technology is changing organizations, both public and private. At Techonomy last year, the story was one of leveling. At times these libertarian techno-Utopians at the conference sounded downright Marxist as they gleefully cheered on the end of bosses, the end of top-down business models, the leveling of workers and management.
Of course, they envision something more akin to Valve’s hierarchy-free innovation as opposed to a socialist Utopia, and rightfully so. Empowered individuals are more valuable to society and the economy than anything on offer from a top-down collective society (though the collective collaboration of individuals is exactly the sort of thing on display at Valve.)
More than likely, we have a long way to go before more organizations adopt a hierarchy-free management style. It can be difficult to identify where value actually comes from. But even an organization like Forbes has made this move over the past couple of years, giving writers like myself a great deal more creative autonomy and control than in the past, embracing the spirit and tactics of new media and less-hierarchical structures, to great success.
It’s also heartening to read this about a company like Valve, because Valve hasn’t merely adopted a radical departure from an archaic business model, they’ve done so while maintaining a sterling reputation within the gaming community. Is part of this their ability to let go of top-down control and let creativity flourish?
Given the creative nature of the business they’re in, I’d say so. But of course, embracing a business strategy that promotes creativity and autonomy is a good idea even outside of gaming and media.
We’re in an age of perpetual newness; it’s only fitting that prehistoric management models go extinct as well.
Follow me on Twitter or Facebook. Read my Forbes blog here. via forbes.com
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