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

Educators Purchase

Citation:

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

Prior advice research has focused on why people rely on (or ignore) advice and its impact on judgment accuracy. We expand the consideration of advice-seeking outcomes by investigating the interpersonal consequences of advice seekers’ decisions. Across nine studies, we show that advisors interpersonally penalize seekers who disregard their advice, and that these reactions are especially strong among expert advisors. This penalty also drives advisor reactions to a widely-recommended advice-seeking strategy: soliciting multiple advisors to leverage the wisdom of crowds. Advisors denigrate and distance themselves from seekers who they learn consulted others, an effect mediated by perceptions that their own advice will be disregarded. Underlying these effects is an asymmetry between advisors’ and seekers’ beliefs about the purpose of the advice exchange: whereas advisors believe giving advice is more about narrowing the option set by providing direction, seekers believe soliciting advice is more about widening the option set by gathering information.

In 2018, Mellody Hobson, President of Ariel Investments, the largest minority-owned investment firm in the U.S., was considering how best to divide her time and use her position and personal characteristics to push for positive change at her firm and in society at large.

Case | HBS Case Collection | October 2018

P-Will at DISCO

Ethan Bernstein, Naoko Jinjo and Yuna Sakuma

From the outside, DISCO—a Japan-based manufacturer of precision tools for semiconductor production devices—appeared to be a rather ordinary company that had achieved rather extraordinary success: it had simultaneously achieved 70% global market share, had lifted its profitability from 15% to 30% over the past seven years, and was consistently selected as a "Best Workplace" in Japan. The secret to DISCO’s success, according to Sekiya, lay in its truly individualized management of human capital which they called the P-Will (Personal Will) system.
P-Will was a proprietary managerial accounting system based on Will, a currency that enabled internal market transactions. At DISCO, every hour of labor and every good was associated with a price in Will. Employees were expected to act like independent business owners; they used the P-Will system to manage their own revenue contributions and business expenses in Will. Four times a year, the balances of individual P-Will accounts were converted to real currency and paid out as bonuses.
In the last couple of years, about 10 companies, including other companies in the semiconductor industry, had visited Sekiya wanting to replicate DISCO’s enviable success and introduce the P-Will system at their companies. However, none of these companies had actually implemented it. Seeing off another guest who had visited DISCO, Sekiya asked himself: Why don’t other companies adopt the P-Will system? What were the conditions under which P-Will would work—and not work?

Keywords: human capital; P-Will; DISCO; semiconductors; self-managing organizations; Governance; Human Resources; Selection and Staffing; Management Practices and Processes; Management Systems; Organizational Structure; Organizational Design; Semiconductor Industry; Japan;