Opening the Valve: From Software to Hardware (B)

Case Solution

Ethan S. Bernstein, Francesca Gino, Bradley R. Staats
Harvard Business School ()

Valve, one of the world’s leading video game software companies, has also become an iconic example of an organization without hierarchies. An organization of 400 people, Valve’s unique organizational form (detailed in the case and in the accompanying employee manual) includes 100% self-assigned time, no managers (and therefore no management oversight), such a fluid structure that all desk wheels have to allow free movement between “cabals” (teams) at regular intervals (which happens often enough that Valve has created its own tracking app so colleagues can meet between yes), a unique recruiting machine that handles recruiting with the support of T-fit people, and a purely peer-based performance appraisal and stack ranking. As customer demand and market forces drag Valve to hardware in 2013, Valve asks whether their organizational model should change as it expands from software to hardware, and if so, whether they should prioritize strategy over structure or structure on strategy. Thus, the case presents students with a strategic and organizational challenge that tests Valve students’ understanding and determination regarding the congruence between their organizational model and strategic direction. Students should have read and discussed Case (A) and Valve’s hardware input options before distributing Case (B). Case (B) contains important details about Valve’s initial decisions, but keeps the end result as an operation.

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