Lessons from the Valve Handbook

Liz Presson • 27 January 2014

When I first heard Carl Smith talk about how he left the agency world frustrated that the people who were running the show were only making $35,000 a year, I thought, “damn someone else sees that the way we run businesses is downright archaic.” He was frustrated, and knew he wanted to do things differently. He saw that while we’ve evolved as humans and our work has evolved to meet new needs, organizations have stayed the same. These structures that are hundreds of years old create the foundation for the work that takes up over 3,202 days of our lives.

To me, it seems obvious. Spending over half of our lives in a system that’s stuck in a past century impedes our evolution. We, as a human race, are holding ourselves back from a higher greatness.

So, why don’t more of us try to do things differently? I think there’s a really simple answer: different takes time and commitment. And while many of us will stand up and say, “I will put in the time, I can commit.” Very few actually do. There are the freelancers and entrepreneurs who have decided to leave organizations all together and do different on their own. And then, there are a few companies who are dedicated to different. One of those companies is Valve. You may know Valve as a gaming company, or you might know that they’re also build software. They’re known for their flat organizational structure– which has had praise and criticism. Whether you appreciate it or not,  they are one of the few who break the mold. Their answer to why other business won’t do the same? “It requires discipline to make the design of the company more important than any one short-term business goal.”

Valve has that discipline, and they have the courage. In their company handbook, they share insight into how the company works. Buy into the structure– or lack thereof– or not, the handbook has some incredible takeaways that we all should be thinking about.

1. You can’t control creative people. You can’t hold down the best assets. They’ll run far away where they can breathe, create and produce incredible work that you haven’t even thought of starting.

“Hierarchy is great for maintaining predictability and repeatability. It simplifies planning and makes it easier to control a large group of people from the top down, which is why military organizations rely on it so heavily. But 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 99 percent of their value. We want innovators, and that means maintaining an environment where they’ll flourish. That’s why Valve is flat. It’s our shorthand way of saying that we don’t have any management, and nobody “reports to” anybody else.”

2. Time spent doesn’t mean value created. Output is shippable work, not email response times.

“While people occasionally choose to push themselves to work some extra hours at times when something big is going out the door, for the most part working overtime for extended periods indicates a fundamental failure in planning or communication. If this happens at Valve, it’s a sign that something needs to be reevaluated and corrected. If you’re looking around wondering why people aren’t in “crunch mode,” the answer’s pretty simple. The thing we work hardest at is hiring good people, so we want them to stick around and have a good balance between work and family and the rest of the important stuff in life.”

“How much shippable (not necessarily shipped to outside customers), valuable, finished work did you get done? Working a lot of hours is generally not related to productivity and, after a certain point, indicates inefficiency. It is more valuable if you are able to maintain a sensible work/life balance and use your time in the office efficiently, rather than working around the clock.”

3. Design touches every aspect of the business: sales, marketing, community. Don’t take it lightly. Hire creatives. Hire people with vision.

“Everyone is a designer.”

4. Work with people who believe what you believe. Hire people that you can learn from, not people than you can crack the whip on.

“Hiring well is the most important thing in the universe. Nothing else comes close. It’s more important than breath- ing. So when you’re working on hiring—participating in an interview loop or innovating in the general area of recruiting—everything else you could be doing is stupid and should be ignored!” We should hire people more capable than ourselves, not less.

Interested in reading the handbook? You can find it in full here.

As for Carl Smith, he left the agency world and founded  nGen Works. He and his team at nGen created the Jellyfish model, a model in which the team has all of the decision making power– from choosing client projects to hiring and firing. I recently had the opportunity to interview Carl for my Future of Work podcast. Stay tuned for the interview link to listen– he has some incredible insight.

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