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A $4-billion company with no managers? Can it be?

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At Google, employees are granted 10 percent of their time to work on any project they like. At Valve, a video-game producer, they have pushed that autonomy to 100 percent of employees' time. Is such a free-form business model sustainable?

Yanis Varoufakis, former economist in residence at Valve. Photo from Twitter.

For Valve, now valued at $4 billion, it's a business model that keeps on working. That's the word from Yanis Varoufakis, former economist-in-residence with Valve and currently professor at the University of Athens and University of Texas. Valve, based in Seattle, now has 400 employees and 55 million customers of its Steam gaming platform across the globe. And no one in charge, outside of Gabe Newell and Mike Harrington, former Microsoft developers who launched the company in 1996.

Inc.'s Samuel Wagreich surfaced a recent interview with Varoufakis, who described in detail how the Valve model works. The company prides itself on the fact that there are no bosses, at least in the traditional sense of the word, Varoufakis says in the interview, posted at EconTalk. "It is a bit disconcerting for people who enter Valve, because there is no one there to tell them what to do," he says. "So it's a flat management, spontaneous order kind of operation, which creates a very interesting phenomenon from a managerial perspective, and actually from the perspective of people who try to live and work within it."

In building a community of video game players, Valve "pushed aside the great divide between consumers and producers," Varoufakis explains. This also "has had a major impact on the way that Valve Corporation employees relate to one another."

Varoufakis brands this style of anti-management as "anarcho-syndicalism," but a less academic term for it may be that it is a highly entrepreneurially charged culture. In fact, he notes, compensation is based more on bonuses than actual fixed salary, which is a minimal part of the package. A couple of decades back, John Naisbitt, a business futurist, predicted that businesses would evolve into "confederations of entrepreneurs" -- and Valve may be a classic example of such a confederation, or clustering of startups and small ventures.

Teams are ad-hoc, and people voluntarily join with others to collaborate on new projects in which they are interested.

There is no pressure for employees to be at their desks or workstations at any time, but people are expected to fit in and contribute value, Varoufakisin adds. "On many occasions people simply don't fit in not because they are not productive or good people, but because they just can't function very well in a boss-less environment," he says. If someone isn't pulling their weight, coworkers will decide by consensus that there isn't a fit, "some  attractive offer is made to that particular person and usually there is an amicable parting of ways."

For those trying to figure out how to work without a boss, the Valve employee handbook offers a four-step program:

  • Step 1. Come up with a bright idea.
  • Step 2. Tell a co-worker about it.
  • Step 3. Work on it together.
  • Step 4. Ship it.

— By on March 8, 2013, 12:29 AM PST

Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure