MNO1001 Management & Organisation

Final Group Project: Flat Organizational Culture & Structure: Valve Corporation
Tutor: Professor Wu Pei Chuan

Sectional Class A2 Team D Alex Lee Yong Sheng Cheryl Lee Mei Hui Eunice Tan Nie Yuan Qiu Tan Ke Li Timothy Cheong Zurong (A0112183U) (A0114123B) (A0116598R) (A0115421X) (A0112983A) (A0111548L)

Table of Contents
CHAPTER ONE: REPORT CONTENT
1. INTRODUCTION ..................................................................................................................3 2. BACKGROUND & CORPORATE CULTURE .............................................................................3 3. FLAT ORGANISATIONAL STRUCTURE ...................................................................................4 3.1 Valves HR Planning Process ..........................................................................................5 3.2 Analysis of Valves Success ............................................................................................5 4. CHALLENGES ......................................................................................................................6 5. STRATEGIES/SOLUTIONS.....................................................................................................7 5.1 Evaluation of Strategies ....................................................................................................... 9 6. CROSS COMPARISON ANALYSIS ........................................................................................ 10 7. CONCLUSION .................................................................................................................... 11 8. BIBLIOGRAPHY ................................................................................................................. 12

CHAPTER TWO: REFLECTION

1. TEAM EXPERIENCES .......................................................................................................... 16 1.1 Team Formation Process .................................................................................................. 16 1.2 Task Oriented..................................................................................................................... 18 1.3 Group Maintenance........................................................................................................... 18 1.4 Intervention ....................................................................................................................... 19 2. ACTION PLAN FOR IMPROVEMENT ................................................................................... 20 2.1 Motivation ......................................................................................................................... 20 2.2 Team Work ........................................................................................................................ 21 3. OVERALL CONCLUSION ..................................................................................................... 22

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CHAPTER ONE

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1. INTRODUCTION
This report serves to analyse Valve Corporation to examine their flat organisational structure as a result of its corporate culture, propose possible solutions to address the key challenges faced by Valve and finally evaluate the effectiveness and applicability of the structure in the long run.

2. BACKGROUND & CORPORATE CULTURE

Valve Corporation is a video game company founded in Bellevue, Washington in 1996 by two former Microsoft employees. It has launched many revolutionary games such as Half Life. Furthermore, Steam by Valve, is also the worlds largest online game distributor for the buying and selling of games.

Valve has built a culture of embracing failure as their mission statement states: Having the freedom to fail and fail the right way (Varoufakis, 2012). The rationale is that failure is necessary for learning because Valve may be a testbed for failures to flourish. Besides, Valves ritual of providing paid vacations reflects its focus on people business by extending welfare to the employees families. Lastly, Valve uses Lead-User Innovation practice to suit its innovation-centered business. Such practices allow Valve to reap substantial benefits from their customer-oriented products by understanding customers needs to offer maximum value to them.

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3. FLAT ORGANISATIONAL STRUCTURE

From Valves culture of innovative products and willingness to accept failure, it is evident that it operates under a flat organisation. Valve eliminates hierarchy through self and peer management. The company operates without a system of central command, resulting in decentralized decision making and empowered employees.

These employees are free to allocate 100% of their time on any projects of interest and decide where to conduct it with the aid of movable office equipment. (Silverman, 2012). (Refer to picture on the right)

There is also no interference from middle managers as with self-managed teams, whereby the most knowledgeable employee will take charge as the project team leader (Hu, 2013).

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3.1 Valves HR Planning Process1

3.2 Analysis of Valves success

Flat Organization reduces bureaucracy, resulting in efficient decision making and increase in productivity among employees. Valve also hires elite performers to ensure consistent work quality in order to stay ahead in the competitive gaming industry. With minimal interference from the top management, it helps remove any favouritism during the various HR process. Furthermore, it also motivates employees as there is no fear of unfair treatment since everyones opinions within the team are sought and they receive pay-out according to their contributions.

Stack-ranking*- Process of ranking individual employees worth based on factors such as productivity, skill level and group/company contributions and adjusting their bonuses in line with it.

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4. CHALLENGES
There are few challenges for Valves management practices.

Firstly, without a clear structure for dissemination of information, top-down communication is inefficient. The internal dissemination of information may also result in miscommunication and misunderstanding.

Secondly, with no managers acting as internal control, it is difficult for Valve to track wrong decision making as there is nobody to pinpoint for such wrong decisions.

Furthermore, mentoring employees is also hard to occur due to Valves flat structure.

Thirdly, with the focus on finding self-motivated and independent employees, Valve might be unable to attract talented individuals who prefer working in structured organizations. Thus, the hiring process will be time-consuming and costly.

In the long run, it could limit Valves growth potential and disrupts long term predictions to be made.

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5. STRATEGIES/SOLUTION
Valves flat organizational structure is unique as it is a driver for innovation but is also the main root of most problems. To ensure efficiency and productivity under the Flat Organisation structure, our group suggests two general recommendations as shown in the chart below.

Under Selective Hierarchy Establishment, only selected levels that are more rigid (e.g. Finance department) will be hierarchical-based to ensure stability. This method is also employed by Google to maintain control and regulation during its expansion. (Smith, 2012)

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Relevant courses could be offered to employees to aid in countering the specific challenges. For instance, motivational lessons are targeted towards developing self-motivation among employees thus

acceptance of empowerment. This method is also evident in W.L Gore that greatly benefited the employees (Maher, 2013).

Hence, we propose that these strategies could be employed by Valve to aid in the long term sustainability and stability of the company. However, we have to take into considerations the pros and cons of these solutions as well.

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5.1 Evaluation of Strategies

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6. Cross Comparison Analysis

The underlying concept of Valves flat organisational structure is empowerment. A learning point for other companies is to incorporate empowerment into traditional hierarchy-based organizational structures.

This is especially relevant in this era, especially with the rapid development of information technology, and a higher proportion of knowledge workers (Cortada, 1998). Conventional top-down methods are no longer as efficient (Drucker, 1999), and many companies such as Taco Bell, hence flattened the hierarchy by cutting unnecessary levels of management thereby increasing morale of workers, which will boost productivity as well as innovation (Davenport, 2005).

However, a completely flat organization without any form of hierarchy is unsustainable, due to complexities in communication and coordination that will eventually arise (Valve, n.d). Thus, it is inevitable that some form of authority and reporting sequences have to be established to organize
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processes to create a sustainable cooperation with the ability to achieve its aims. This is highly similar to the model that Google has adopted (Doolittle, 2012), which encompasses both hierarchy and empowerment, to promote stability, innovation and productivity while eliminating inefficiencies.

Therefore, companies should move toward adopting a balance between empowerment and hierarchy, to achieve an efficient organization for the 21st century.

7. Conclusion
Currently, Valve is a successful company focusing on innovation and productivity. Though the flat organizational structure is ideal in the current situation, there are challenges Valve might face. Therefore, we recommend incorporating some form of hierarchy, as learnt from other companies.

However, even though a flat organizational structure may reduce the future stability of Valve, it may still continue to be implemented because Valves bottom line is about innovation.

Total Word Count (excluding references)

994 Words

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8. BIBLIOGRAPHY
1) Hu, E. (2013). Inside the 'bossless' office, where the team takes

charge. All Tech Considered. Retrieved from: http://www.npr.org/blogs/alltechconsidered/2013/08/27/2070393 46/What-Works-And-Doesnt-About-Bossless-Offices

2) Cifaldi, F. (2013). How valve hires, how it fires, and how much it pays.

Gamasutra. Retrieved from: http://www.gamasutra.com/view/news/187296/

3) Kelion, L. (2013). Valve: How going boss-free empowered the games

maker. BBC News Technology. Retrieved from: http://www.bbc.co.uk/news/technology-24205497

4) Silverman, R. E. (2012). Who's the boss? There isn't one. The Wall

Street Journal. Retrieved from: http://online.wsj.com/news/articles/SB100014240527023033792 04577474953586383604

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5) Yanis, V. (2012). Why valve? Or, what do we need corporations for and

how does valves management structure fit into todays corporate world? Valve Economics. Retrieved from: http://blogs.valvesoftware.com/economics/why-valve-or-whatdo-we-need-corporations-for-and-how-does-valvesmanagement-structure-fit-into-todays-corporate-world/

6) Cortada, J. W. (1998). Rise of the knowledge worker. Boston:

Butterworth-Heinemann. ISBN 0-7506-7058-4.

7) Drucker, P. F. (1999). Management challenges of the 21st century.

New York: Harper Business. ISBN 0-88730-998-4.

8) Davenport, T. H. (2005). Thinking for a living: how to get better

performance and results from knowledge workers. Boston: Harvard Business School Press. ISBN 1-59139-423-6.

9) Valve. (n.d.). Valve handbook for employees. Valve

Retrieved from: newcdn.flamehaus.com/Valve_Handbook_LowRes.pdf

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10) Doolittle, E. (2012). How fortune 100 companies are flattening

hierarchies through enterprise social. Tibbr. Retrieved from: http://www.tibbr.com/blog/topics/enterprise-social-networktopics/why-are-leading-organizations-turning-to-a-flatterorganizationalhierarchy/?goback=.gde_3977473_member_99926731

11) Smith, J. (2012). The world's most reputable companies. Forbes.

Retrieved from: http://www.forbes.com/sites/jacquelynsmith/2012/06/07/theworlds-most-reputable-companies/

12) Maher, J. (2013). W. L. gore & associates named a top U.S. workplace

in 2013. GORE Creative Technologies Worldwide. Retrieved from: http://www.gore.com/en_xx/news/FORTUNE-2013.html

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CHAPTER TWO

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1. TEAM EXPERIENCES
We will be using the Team Formation Process to illustrate our team experiences in this course. Elements of Task Orientation and Team Maintenance will also be highlighted in several examples.

1.1

Team Formation Process (4 steps)

a) Forming: We first got to know each other through the initial selfintroduction after being assigned to our respective groups. We then laid down our ground rules during the Team Charter exercise where we conformed to what we discussed setting an agenda for each meeting that is to be completed at a certain time frame. Subsequently, several class exercises such as the Belbins Team Role and MBTI test also enabled us to discover our own way of working with others in relation to our personal characteristics.

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b) Storming: Everyone proposed their chosen company and tried to promote the viability of their idea. We narrowed down the choices to two companies, Valve and Li Ning, where we engaged in further analysis. Conflicts arose along the

process due to differing opinions, which impeded the decision making process. A similar situation happened when

deciding on interesting ways to present.

c) Norming: We eventually came to a unanimous agreement and decided on Valve due to its unconventional organizational structure which we believed would intrigue the class. Upon task allocation, we carried out individual research. Timothy will send reminders to us regularly, to ensure we do not fall behind time. This instilled social facilitation within our group which improved overall productivity.

d) Performing: We shared and compiled our individual research, making further discussions and brushing up the content that requires further research and analysis. We finalized our slides and rehearsed numerous times. Eunice were especially enthusiastic in criticising each others presentation skills for better

performance.

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1.2

Task Oriented
Task-oriented actions are actions in which the group focuses on to achieve certain goals or result. This approach is extremely effective especially for timepressing tasks. Some task oriented roles observed within our group includes:

The Information Provider (Cheryl) Researches on related information extensively, allowing tasks to be completed more efficiently. The Questioner (Eunice) Questions assumptions and points that were raised, that allowed critical thinking within the group. The Initiator (Timothy) Often initiates meetings and interesting ideas into the project.

1.3

Group Maintenance
Group maintenance actions are actions to enhance social relationships among group members. It helps to increase the groups overall effectiveness and creates a positive atmosphere for interaction. Some group maintenance roles observe within our group includes:

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 The Comedian (Alex) Stress-reliever by constantly providing laughter to the group. The Supporter (KeLi) Provides verbal support to every member of the group without neglecting any one. The Observer (YuanQiu) Provides timely and constructive feedback to resolve conflicts or difficulties faced that may affect group morale negatively.

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Intervention
In group work, intervention is inevitable. We believe intervention can be beneficial as it allows us to stretch ourselves beyond our potential to overcome it.

One intervention we encountered is time constraint, as we were told to amend our slides within three days to the final presentation. This came as a huge stumbling block to us. Fortunately, all of us sacrificed our weekends and we were able to submit the amended presentation in time.

From this intervention, we came to realise the importance of anticipating changes and not take anything for granted. Furthermore, only through dire straits did we come to a realisation of one anothers strengths and weaknesses.

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2. ACTION PLAN FOR IMPROVEMENT

2.1 Motivation
Motivation is a need to encourage team members to continue working as tasks can become mundane overtime. Furthermore, it can also be a powerful tool to improve individual and team efficiency. Hence, we suggest the following 3 elements for motivation.

Rewards We believe reward is a driver to ensure efficient work completion. Apart from being a source of motivation, it helps to improve members relationship as they work towards a common goal. Some rewards we recommend include having meals after every meeting or going for group outings after task completion.

Punishments Punishment is necessary to enforce and motivate members to adhere to groups norms. Some forms of punishments may include staying back or sacrificing time for more group discussions. However, we must manage punishments carefully to avoid creating unhappy relationships or a fear of failure within the team.

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 Feedbacks We should provide more constructive feedbacks to one another as it brings about improvement when our weaknesses surface. Feedback motivates team members as they are appreciated of their contributions. Furthermore, we should consider each team members feelings before making any comments to prevent conflicts from arising.

2.2

Team Work
We realised that teamwork is the key to our success in this project, especially in relation to our presentation, which required huge team effort to carry out smoothly.

When our group was first formed, we were unclear of our goals and did not understand each others personality. With time, and after going through our first presentation and other in-class exercises, we realised each others strengths and weaknesses, which resulted in a more effective group as we were able to react and assign task accordingly. This greatly forged close relationships amongst our team members.

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3. OVERALL CONCLUSION
After going through the entire MNO course, there are many learning points. We should always learn to view things from different perspectives. In terms of project, it is not sufficient just to bring out the organisations implementations but to also provide possible challenges and recommendations to the current plan. Deeper analysis of recommendations is also necessary to give a complete picture of the topic.

Furthermore, team-level wise, we believe in the acronym T.E.A.M. - Together Everyone Achieves More. Teamwork is an essential element in any tasks and is the action of bringing individuals together for a common purpose. It is one of the best ways to help develop leadership qualities within individual. We believe teamwork is one of the most important elements we have learnt in the duration of this course.

Total Word Count

999 Words

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