There are companies that seem to stand out by design: they do things differently, and achieve more than the competition. This kind of advantage seldom lasts (usually either through imitation or because of market changes that render it less effective) but on occasion they are dyed in the wool, and survive long enough to be relevant.
The best example of the decade is Apple. By using a strategy, and an execution, that ran contrary to the shared wisdom of the industry and its analysts, it radically changed that industry and almost every neighbouring domain. Fortune’s Adam Lashinsky has developed last year’s article of the same name into «Inside Apple«, a gritty look into Apple’s practices, warts and all.
On the other hand, there is Valve. It’s a comparative upstart (founded in the nineties by ex-Microsoft millionaires), a games development company turned into an innovative games distribution and community hub that mints money and manages to stay ahead of the curve more than usual. It has started publishing a Handbook for rookie employees that filtered to the internet, for good reason.
The books are starkly different. One is an outside view looking in, with very skeptical eyes, a hint of bitterness, and a focus on business and management practices. The second is a company looking at its collective navel and telling how it thinks it does some important things. And of course the subjects themselves are rather different (the one a burningly innovative company that’s more valuable than many countries, the second a specialized, comparative midget). But both are thought-provoking.
There’s no time here (or space) here to go into an in-depth comparison of the philosophies attributed to each company, least still to speculate on the reality. But there’s a few notes I’d like to share.
Be the best you can, get the best you can
Valve strives to consistently hire the best people, and hopes that indirectly shapes its strategy and products. It aims to get «t-shaped people», proficient in many areas and also world-class in a one or a few. The declared goal is to get people who are better than those inside, never less qualified. The boss is «not your boss». It eschews generalists, but wants everyone to know about the rest of the functions. It aims to keep people motivated by lavish perks and the creative freedom to do what they think better (see below). It weeds «damaging» people through collective decisions, or so it says.
Apple hires for roles, and has a culture of specialists in each function, but also strives to get the best. However, once inside the heat is turned on by a combination of engaging, relevant work (the perspective of taking part in potentially very relevant products), competition, and the highest expectations. Those expectations are very clearly worded, and very sharply put: Apple fosters frank and forceful debate on the right way to do things, and Jobs’ tradition of dealing sharply with underperforming or underinspired people has transpired to the whole firm. He believed that «A people» only worked well when surrounded by «A people», so weeded any that looked less. Also, the vision driving the company is both crystal clear and consolidated at the top.
Creative chaos versus competitive maze. Or was it directed focus?
Valve avowedly does not have any (formal and fixed) hierarchies. Employees self-organize, voting with their feet (or wheel-equipped desks) which project has the most potential, and coalescing into work teams that never quite stop shifting. They avoid perpetuating any such structure, though, out of a fear of the consequences of hierarchy. Also, while specializations exist, everyone is expected to get to know other fields and there are almost no fixed roles.
Apple, according to Lashinsky, combines specialization with fluidity. Functions are performed by people in that function. Boundaries are clear and definite. Inside them, organization is fluid, teams are set and phased out, but the ordering mind is not the collective but the leadership. Further, the employees don’t have the complete picture; often Apple pits several teams against each other to find the best solution or alternative, without anyone knowing the others’ work. Structure exists, but the hyerarchy of professional prestige and seniority is much more important than the organizational chart; one engineer can be stellar and held in the highest consideration by management, and yet not be burdened with a managerial role.
Less different than they appear
At first glance it looks like freewheeling «cluetrain manifesto» bazaar versus a command-and-control, strategic monolyth. But it’s not quite as simple as that.
Both companies base their «vision» in a highly-selected employee base. At Valve, it’s spontaneous. At Apple, it shapes the products: they build «what they’d like to use». Yes, the process is different, but the interesting point is that the strategy and the product plan are not driven by perceived market demand or opportunities, but by the desires of the workforce. There are two ways to build a strategy: vision first, or people first. The former gathers the people needed to fit a vision, the latter gathers very good people and lets a vision emerge.
Also, both have a hatred of office politics and fiefdoms. Valve eschews formal power structures, Apple builds them so they hardly overlap: functional, not divisional (not true, but almost) and one single shared profit-and-loss statement. Competition exists and jostling for people, money, and attention pervive, but nothing like the usual big company. At Valve, you can’t have underlings. At Apple, your underling may be more important than you (better considered and with direct access to the boss).
The weaknesses are telling too. At Valve, the mentoring and breaking-in that goes with a good boss or a senior colleague are hard to find, and knowledge sharing is hard to come by. At Apple, Jobs had to rely on serendipity and office «atriums» to break the silos of teams, and almost nobody has the complete map of what’s going on, or who to go to with a doubt.
In short, Valve shows stark differences but also surprising similarities with Apple. A younger, much smaller sibling, dominated by a personality that believes in emerging visions and shared leadership instead of enforced focus, competition, and expectations of excellence. But they share some very interesting genes.