Is this Network Leadership taken to the Max?

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I’ve written several articles about Network Leadership, but how far can this concept really take you?

Well, how about a company so successful that it is worth $4 billion. A company that is more profitable per employee than Apple. A company that makes Google’s 20% time look nothing more than a minor gesture.

This company is Valve, creators of the online game publishing and distribution platform Steam. This may be a very different business to yours. But don’t stop here. You may learn a thing or two.

 

At Valve, 20% time is 100% time, through and through.

Valve employees have absolute freedom. Work on what you like, when you like. You have no boss (And founder Gabe Newell is the ‘most NOT your boss’)

But how does a company like this function? And not veer off a cliff in an ungoverned mess…

Valve is a perfect example of a company implementing many of the network leadership concepts I’ve written about. And when Valve takes on a concept, it’s clear they’ve learned how to take it all the way.

Enterprise Leadership hierarchy
Leadership Development – Is this Leadership Development taken to the Max?

 

Valve is completely self-governing from within.

The Valve handbook for new employees introduces their organisational structure as ‘flat’. No one can tell you what to do (and even if a colleague did get particularly forceful, you can always just change teams).

The big idea is that collective leadership results in a better experience for customers. Projects only gain momentum if a) enough people believe the project is a good idea or b) someone believes in a project so strongly that he or she make it their personal crusade to ensure it happens.

You might think that replicating the above within your company would mean no one would ever get anything done, and certainly, Valve recognises that “deciding what to work on can be the hardest part of your job at valve”. The key is in the underlying culture and hiring process, ensuring that the team are made up of action-takers that know how to prioritise what is most important for them and the company.

Enterprise Leadership handbook
Leadership Development – Is this Leadership Development taken to the Max?

So how do they achieve this in practice?

Massive emphasis is placed on hiring correctly, and anybody can (and is encouraged) to get involved with the hiring and interview process. Valve stress that “any time you interview a potential hire, you need to ask yourself not only if they’re talented or collaborative but also if they’re capable of literally running this company because they will be.

Valve have put in the effort to create a real community and family culture. They take all employees and their families for a 1 week holiday each year.

They have snuffed out physical limitations, right down to ensuring that all the desks in the office have wheels, so that people can unplug and move their workspace to be closer to colleagues working on similar projects. And to make sure staff can find each other, each workplace has a tracker so that you can log onto the intranet and find out where anyone else currently has their workspace.

What is the leadership in this model?

Well, whilst the corporate organisational structure is flat, at any point temporary hierarchical project teams may well evolve. Or as Valve put it; ‘‘Structure happens”.

Leaders emerge as projects gather momentum with a role usually to keep the whole project on track and provide a resource for others in keeping up to speed with the project. This structure is only ever present temporarily though, Valve believes that structures which persist for a longer time “inevitably begin to serve their own needs rather than Valve’s customers”.

Are there any checks and balances at all?

Valve encourages and expects the team to engage in regular and unofficial peer reviews. They also have an annual formal peer review process which follows set guidelines. In addition, peers rank each other annually on how valuable they are to the company. It is this ranking process which results in pay adjustments (up and down).

It is also deeply embedded in the culture at Valve to measure nearly everything:

we have learned that when we take nearly any action, it’s best to do so in a way that we can measure, predict outcomes, and analyse results

It’s clear that this type of structure takes an absolute commitment from the founders of the company, and Valve is very proud to remain a privately owned company – recognising that securing outside investment would have put pressure on their working methodology.

However, such a structure is clearly not without its challenges.

And Valve points out several risks from their approach:

  • A lack of strategic Planning. Without top-down direction, there is a natural inclination to focus largely on the short and medium term. Employees need to make an effort to spend time focussing on what the long term goals should be
  • Difficulty making long term predictions
  • Overwhelm and burnout – Because there’s so much you can be working on, it’s easy to feel like you’re failing and not getting enough done. This is one reason why Valve has a strong culture of taking time out to recharge and not working long hours.
  • New employees having difficulty orientating themselves in their new environment
  • A lack of effective mentoring for staff – there is a belief that “high performance people are self improving,” but some talent may perform better in a more nurturing environment.
  • Availability of information
  • Hiring new people with skills outside of Valve’s core expertise
  • Losing out on talented people that prefer a more traditional top-down structure
  • Spotting and removing a bad hire

 

So with eyes wide open, why did they do this?

From the employee written Valve guide for New Employees:

When you’re an entertainment company that’s spent the last decade going out of its way to recruit the most intelligent, innovative, talented people on earth, telling them to sit at a desk and do what they’re told obliterates 90% of their value

The fundamental belief at Valve is that their system ultimately provides customers with the best value. It also ensures that the company gets better and better each year. Removing the requirement to ‘hire downhill’ (with this model the political reasons for hiring subordinates of a lower skill level disappear), ensures that employees are more inclined to hire staff that will have the greatest contribution to the company.

This is in complete contrast to a highly hierarchical organisational structure. In such a structure, you require at least one person who understands the work as well as the individuals doing the work. This arguably creates an inefficiency that network leadership solves.

When looking at Valve, it’s almost like looking at another world. That said, there are lessons for us all in how we can adapt elements of their model to create effective network leadership environments.

If you have a spare hour, I highly recommend that you see the Valve Handbook. Possibly the only HR document you’ll ever actually enjoy reading!