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  • 2015
  • Comment
  • Journal of Organization Design

In the Shadow of the Crowd: A Comment on 'Valve's Way'

By: Carliss Y. Baldwin
  • Format:Print
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Abstract

There are many ways to exercise authority. Perrow (1986), in his review of March and Simon's Organizations (1958), offers a threefold classification of the ways authority can be exercised in organizations: (1) direct, "fully obtrusive" controls such as giving orders and direct monitoring; (2) bureaucratic controls such as defined specializations, roles, and hierarchy; and (3) "control of the cognitive premises underlying action." Valve ostentatiously makes little use of direct authority. It downplays bureaucracy, although in fact many bureaucratic controls are in place. Instead, the legal authority vested in the owners of the company (especially the majority shareholder, Gabe Newell) is used quite extensively to set the premises of action and thus unobtrusively channel employees' efforts and communication patterns into a highly productive configuration. The sustained high profits of the company, and its ability to attract and retain talented software developers, are testimony to the success of this organizational model. At the same time, contextual variables—in particular Valve's identity as a video game creator and the fact of a single majority shareholder—are also critical factors contributing to its success. As a result, even within the software industry, the range of companies for which this organizational model is appropriate is quite limited.

Keywords

New Forms Of Organizing; Organizational Forms; Non-hierarchical Organizations; Self-organizing Teams; Boss-less Organizations; Organizational Design; United States

Citation

Baldwin, Carliss Y. "In the Shadow of the Crowd: A Comment on 'Valve's Way'." Journal of Organization Design 4, no. 2 (2015): 5–7.
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About The Author

Carliss Y. Baldwin

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More from the Author
  • Computer-Implemented Methods and Systems for Measuring, Estimating, and Managing Economic Outcomes and Technical Debt in Software Systems and Projects: US Patent 11,126,427 B2 By: Daniel J. Sturtevant, Carliss Baldwin, Alan MacCormack, Sunny Ahn and Sean Gilliland
  • Design Rules, Volume 2: How Technology Shapes Organizations: Chapter 7 The Value Structure of Technologies, Part 2: Strategy without Numbers By: Carliss Y. Baldwin
  • Design Rules, Volume 2: How Technology Shapes Organizations: Chapter 6 The Value Structure of Technologies, Part 1: Mapping Functional Relationships By: Carliss Y. Baldwin
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