On a discussion about how to run a company, most of the time you’ll hear how a successful company is determined by its leader. You’ll often told how a leader is the key to success, how a great leader is the difference that make or break a company. Nowadays though, we have witnessed how the “great leader” formula is not always necessary.

In the technology world, the prime example of a company that’s been very successful without a single boss leading is Valve, a game studio that controls 70% of the whole, 4 Billion US Dollars, digital PC game market. Yes, you read that right. Valve, a game studio that managed to score a huge hit of every single game they release, also practically owns the downloaded PC Games market. Their main distribution platform, Steam is the most popular distribution platform. And they managed to achieve that without a boss.

While what they do is incredible, the most important question can we ask from this is how? How did Valve do that and beat many mega corporation such as EA convincingly?

Flatland: The Land Without Boss

On a company with bosses and hierarchy, most of the time a project or job will by initiated when the boss have a vision about something, something that s/he thinks will be useful for the customer or make money. The boss(es) then will gather his/her employees to work for them to achieve that thing. This model of course works, and it have worked for a long time to the point where it became the standard.

But a hierarchical structure like that only works when:

  1. The boss have the right vision / taste / feel, and
  2. the things they wanted to do is not too novel.

To quote the Valve Employee Handbook:

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. Valve Employee Handbook

When you have a hierarchy in which the company moves top-down, planning and controlling a project become easy. The ease of planning comes at a great price though: innovation. When you have a hierarchy where your employees report to their boss and their boss reports to their boss, things like innovation is a luxury.

But why? When a company has layers of bosses, a single employee on the lowest layer will have a hard time convincing all of the bosses up there at the top even when s/he have a brilliant idea. We all have that anecdote where someone on the chain sees something wrong, try to fix things by telling their boss (and the boss’ boss) but they get ignored and the bad thing they’re trying to tell happened. Or the good thing they’re talking about didn’t happen, but the competitor have it and then the company’s screwed.

This is why hierarchy is not always good: it creates a gap between employees and bosses, resulting in a bottleneck in communication and sometimes even stifle productivity.

Nobody Tells Me What to Do!

On bossless company like Valve, no one reports to anyone. People don’t do something because they are told to. The employees of Valve do something because they think it is the right thing to do, and it will provides value for the customers, and ultimately the company. There are even no titles or job descriptions!

But how do they make sure their employees are really working and productive? The short answer is: they don’t. Valve, from what we can see on the outside, seems to trust their employee. They believe that the people they hire can work autonomously, even if they need a long period time to adapt (around six months according one of the founder, Gabe Newell). Naturally, their standard is very high: they hire only the best of the best. The kind of people who could start their own company; could work autonomously, but chose to stay at Valve. To quote Newell:

Jay is the most senior engineer at the company [laughs]. And he saw that I didn’t have coffee! There are probably at least five publishers he could call and get a $30 million project in an hour if he wanted to.

The reason he’s here isn’t because he has no other option, he’s here because he can work with the best people we have. It’s here at Valve where his talent can make the biggest impact and he doesn’t have to waste time rolling his eyes at stupid things the marketing and management teams are doing.

By pulling the most talented people and let them do what they want, you essentially create an environment where innovators assembles. You don’t have to worry about what they do, because those kind of people tend to gravitate around projects that create most value for your customer. To top it off, those kind of people are also almost always capable of achieving what they want!

But It Won’t Scale!

One of the objection you always get when proposing a bosless structure around a company is how it won’t scale. It worked for Valve because of their small size (only around 300 employees). When they got big, say around ten thousands of employees, the chaos will be unmanageable and unprofitable anymore.

In practice though, it works surprisingly well on a huge company. The primary example is General Electric and WL Gore, whose revenues are in billions and employees are in ten thousands, both famous for its bossless environment. That a bossless company needs a very specific kind of people is right though: the model simply won’t work if you hire the wrong person. Even Valve, our primary example in this essay, admitted how:

  1. New hires take time to adapt (approximately 6 months).
  2. Some people just don’t fit in. This does not means they’re bad, but they’re just different.
  3. There are many instances where they have to let go of amazing people because of no 2.

With that in mind though, you won’t have to doubt this model since some have adapted the model to the extreme. Newer companies, for example Github have adapted this model successfully.

Bottom line is, if you’re working on a startup or owns a company, this no-hierarchy, bossless structure might be a great thing to try in your company. It will be interesting to experiment to conduct if you can trust your employee and peers, if anything.

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