Opening the Valve: From Software to Hardware (A)

Ethan  Bernstein; Francesca  Gino; Bradley  Staats

Case | HBS Case Collection | August 2014

Opening the Valve: From Software to Hardware (A)

by Ethan Bernstein, Francesca Gino and Bradley Staats

Abstract

Valve, one of the world's top video game software companies, has also become an iconic example of an organization with virtually no hierarchy. A 400-person organization, Valve's unique organizational form (described in detail in the case and accompanying employee handbook) includes 100% self-allocated time, no managers (and therefore no managerial oversight), a structure so fluid that all desks have wheels to allow free movement between "cabals" (teams) on a regular basis (which happens frequently enough that Valve created a homegrown tracking app to allow peers to find each other), a unique hiring apparatus that supports recruitment of T-shaped individuals, and a purely peer-based performance review and stack ranking. As customer demand and market forces draw Valve into hardware in 2013, Valve questions whether their organizational model will need to change as it expands from software into hardware—and, if so, whether they should prioritize strategy over structure or structure over strategy. The case, therefore, presents students with a strategic and organizational challenge that tests students' understanding, and Valve's resolve, with regard to the congruence between their organizational model and strategic direction.

Keywords: Valve; Self-Managed Organizations; organization design; strategy; Flat Organization; Video Games; organization alignment; Organizational Change and Adaptation; software; family business; Steam; Steam Machine; Design; Games, Gaming, and Gambling; Human Resources; Collaborative Innovation and Invention; Technological Innovation; Leadership Style; Management Practices and Processes; Organizational Design; Organizational Structure; Organizational Culture; Organizational Change and Adaptation; Groups and Teams; Alignment; Software; Hardware; Video Game Industry; Seattle;

Language: English

Format: Print

20 pages

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Citation:

Bernstein, Ethan, Francesca Gino, and Bradley Staats. "Opening the Valve: From Software to Hardware (A)." Harvard Business School Case 415-015, August 2014.

Air pollution is a serious problem that influences billions of people globally. Although the health and environmental costs of air pollution are well known, the present research investigates its ethical costs. We propose that air pollution can increase criminal and unethical behavior by increasing anxiety. Analysis of a 9-year panel of 9,360 U.S. cities found that air pollution predicted six different categories of crime; these analyses accounted for a comprehensive set of control variables (e.g., city and year fixed effects, population, law enforcement) and survived various robustness checks (e.g., non-parametric bootstrapped standard errors, balanced panel). Three subsequent experiments involving American and Indian participants established the causal effect of psychologically experiencing a polluted vs. clean environment on unethical behavior. Consistent with our theoretical perspective, anxiety mediated this effect. Air pollution not only corrupts people’s physical health, but can also contaminate their morality.

Article | Management Science | February 2018

Maintaining Beliefs in the Face of Negative News: The Moderating Role of Experience

Bradley R. Staats, Diwas S. KC and F. Gino

Many models in operations management involve dynamic decision making that assumes optimal updating in response to information revelation. However, behavioral theory suggests that rather than updating their beliefs, individuals may persevere in their prior beliefs. In particular, we examine how individuals’ prior experiences and the experiences of those around them alter their belief perseverance in operational decisions after the revelation of negative news. We draw on an exogenous announcement of negative news by the Food and Drug Administration and explore how it affects interventional cardiologists deciding between two types of cardiac stents. Analyzing 147,000 choices over six years, we find that individuals do respond to negative news by using the focal production tool less often. However, we find that both individuals’ own experiences and others’ experiences alter their responses. Moreover, although individual and other experience act as substitutes prior to negative news, we find that this substitution curtails significantly following the negative announcement. Finally, we find that experience leads doctors to discount negative news more rapidly over time. Two lab studies replicate our main findings and show that behavioral biases due to differences in perceptions of expertise drive the effect. Our research contributes not only to operations research, but also to the practice of health care and operations.

Keywords: Information; Announcements; Service Operations; Decision Making; Medical Specialties; Experience and Expertise; Medical Devices and Supplies Industry;

Citation:

Staats, Bradley R., Diwas S. KC, and F. Gino. "Maintaining Beliefs in the Face of Negative News: The Moderating Role of Experience." Management Science 64, no. 2 (February 2018): 804–824. View Details

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