Posts Tagged ‘hierarchy’

They’ve Finally Done It, They Are In Control!

September 30, 2013 Leave a comment

Oh ratz! BD00 wishes he concocted this brilliant “Planet Of The Apes” parody T-shirt:

Planet Of The Mgrs

But alas, BD00 didn’t create the masterpiece. The Random Manager team did. Damn it! Here’s the BD00 rip off version:


Size, Flexibility, Learning

August 2, 2013 Leave a comment

Size Flex Learning

So, do ya think that the losses in flexibility and capacity for learning are forgone conclusions as an org increases in size (i.e. adds more managers, directors, executives)? If not, got any examples that demolish the theory?

One of the great tragedies of life is the murder of a beautiful theory by a gang of brutal facts. – Benjamin Franklin

Ghost Org

After discovering Valve Inc. earlier this year, I wrote several posts (here and here and here) praising their flat organizational structure and unique management practices. Well, as the saying goes, “nothing ever is as it seems“.

In February, Valve laid off a group of hardware designers and one of them has spoken out against the company. Jeri Ellsworth, the former head of Valve’s hardware division, is that person:

JE Fired

In a podcast interview, Jeri said the following unflattering things about the company:

There is actually a hidden layer of powerful management structure in the company, and it felt a lot like High School. There are popular kids that have acquired power, then there’s the trouble makers, and then everyone in between. Everyone in between is ok, but the trouble makers are the ones trying to make a difference.

Now we’ve all seen the Valve handbook, which offers a very idealized view. A lot of that is true. It is a pseudo-flat structure, where in small groups at least in small groups you are all peers and make decisions together.

Their structure probably works really well with about 20 people, but breaks down terribly when you get to a company of 300 people. Communication was a problem. I don’t think it works.

They have a bonus structure in there where you can get bonuses – if you work on very prestigious projects – that are more than what you earn. So everyone is trying to work on projects that are really visible. And it’s impossible to pull those people away for something risky like augmented reality because they only want to work on the sure thing. So that was a frustration, we were starved for resources. And I probably was [abrasive] but I just couldn’t find a way to make a process to actually deliver any hardware inside that company.

If I sound bitter, it’s because I am. I am really, really bitter. They promised me the world and then stabbed me in the back.

Despite my naivete and gullibility, I originally thought that Valve was an exemplar case. With over 300 employees, they seemingly proved that flatness and egalitarianism can scale. It seemed magical. But sigh, according to Jeri, who admittedly is only one data point, it doesn’t.

In light of this sad, new information, I no longer think flatness scales. At a certain (but unknown) size, hierarchy is required for sustained economic viability in for-profit enterprises. When you arrive at the (unknown) size where you need a hierarchy, tis better to have a visible, transparent pyramid than a hidden, privileged one.

The trouble with unwritten rules is that you don’t know where to go to erase them. – Unknown

I’m glad to be part of an org with a visible hierarchy instead of an invisible one. At least I know who to suck up to (which I do well) and who not to piss off (which I don’t do well).

Hierarchy will never go away, never. – Tom Peters

Ghost Org



Ooh, ooh. Look at the picture that I snapped whilst on vacation. Expectedly, the sign “protected” the first parking spot next to the restaurant entrance. I’d speculate that it’s a great place to work, wouldn’t you?


Categories: management Tags: , ,

Spoken But Unwritten

April 14, 2013 2 comments

Because they may be called to account for their hypocritical behavior, you may find people in authority saying things like these, but you most likely won’t find them written into the Employee Handbook:

“Providing the freedom to fail is an important trait of the company— we couldn’t expect so much of individuals if we also penalized people for errors. Even expensive mistakes, or ones which result in a very public failure, are genuinely looked at as opportunities to learn. We can always repair the mistake or make up for it.”

“But problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers.”

“…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.”

“Our profitability per employee is higher than that of Google or Amazon or Microsoft, and we believe strongly that the right thing to do in that case is to put a maximum amount of money back into each employee’s pocket. Valve does not win if you’re paid less than the value you create. Over time, compensation gets adjusted to fit an employee’s internal peer-driven valuation.


“T”, “Hyphen”, And “I” People

March 25, 2013 1 comment

In this:valve HB

the company talks about “T” people:

We value “T-shaped” people. That is, people who are both generalists (highly skilled at a broad set of valuable things—the top of the T) and also experts (among the best in their field within a narrow discipline—the vertical leg of the T). We often have to pass on people who are very strong generalists without expertise, or vice versa. An expert who is too narrow has difficulty collaborating. A generalist who doesn’t go deep enough in a single area ends up on the margins, not really contributing as an individual.

T def

That’s too bad for the typical borg. These beasts actively recruit and develop horizontal “hypen” (mgrs, execs) people and vertical “I” (induhvidual contributors) people. Of course, the stewards of these dinosaurs get what they wish for. On top of that, anybody who tries to self-improve towards a “T” person is silently ignored. It would screw up the nice and tidy employee-in-a-box process of emasculation.

Typical Atypical

Come To Papa!

March 20, 2013 4 comments

I recently listened to a fascinating podcast interview of Valve Inc‘s “economist-in-residence“, Yanis Varoufakis. According to Yanis, the company is still organizationally flat after 17 years of existence.

The thought early on at Valve was that the maximum limit to flatness would be around 50-60 people. Above that, in order to keep the wheels from falling off, some form of hierarchy would be required for concerted coordination. However, currently at 300+ employees, Valve has managed to blow through that artificial barrier and remain flat. Mind you, this is not a company solely made up of like-thinking engineers. There are also artists, animators, writers, and accountants running around like a herd of cats inefficiently doing the shit that brings in $1B in revenue each year.

According to Yanis, in order to maintain their egalitarian culture, Valve can’t afford to grow too quickly. That’s because they have to deprogram people who are hired in from hierarchical borgs as former bosses who expect others to work for them, and former workers who expect to be “directed” by a boss. If Valve didn’t do this, their culture would get eaten alive by the pervasive and mighty command-and-control mindset. The spontaneity, creativity, and togetherness that power their revenue machine would be lost forever.


Nevertheless, Valve is pragmatic with respect to hierarchy:

“Valve is not averse to all organizational structure—it crops up in many forms all the time, temporarily. But problems show up when hierarchy or codified divisions of labor either haven’t been created by the group’s members or when those structures persist for long periods of time. We believe those structures inevitably begin to serve their own needs rather than those of Valve’s customers. The hierarchy will begin to reinforce its own structure by hiring people who fit its shape, adding people to fill subordinate support roles. Its members are also incented to engage in rent-seeking behaviors that take advantage of the power structure rather than focusing on simply delivering value to customers.” – The Valve employee handbook

Whether Valve knows it or not, their success is due to their respect of some of Gall’s system laws:

  • Systems develop goals of their own as soon as they come into existence – and intra-system goals come first.
  • Loose systems last longer and work better. Efficient systems are dangerous to themselves and others.
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