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Puranam and Håkonsson (2015) challenge us to ponder what we as organization design theorists make of Valve’s way (see also Jeppesen, 2008). We believe that Valve, in spite of its radical vision, does not represent a challenge to fundamental organization design theory and that it is questionable to what extent it represents a new blueprint for organization design, despite it being consistent with an “egalitarian Zeitgeist” (Puranam, 2014). In fact, managerial authority may be of increasing importance rather than the opposite (Guadalupe, Li, & Wulf, 2015). Thus, Valve is, and will remain, an outlier, albeit a voguish one.

There are many ways to exercise authority. Perrow (1986), in his review of March and Simon’s Organizations (1958), offers a threefold classification of the ways authority can be exercised in organizations: (1) direct, “fully obtrusive” controls such as giving orders and direct monitoring; (2) bureaucratic controls such as defined specializations, roles, and hierarchy; and (3) “control of the cognitive premises underlying action.” Valve ostentatiously makes little use of direct authority. It downplays bureaucracy, although in fact many bureaucratic controls are in place. Instead, the legal authority vested in the owners of the company (especially the majority shareholder, Gabe Newell) is used quite extensively to set the premises of action and thus unobtrusively channel employees’ efforts and communication patterns into a highly productive configuration. The sustained high profits of the company, and its ability to attract and retain talented software developers, are testimony to the success of this organizational model. At the same time, contextual variables – in particular Valve’s identity as a video game creator and the fact of a single majority shareholder – are also critical factors contributing to its success. As a result, even within the software industry, the range of companies for which this organizational model is appropriate is quite limited.

Valve Corporation represents an intriguing case study of organization design and strategy. In this short commentary (cf. Puranam & Hakonsson, 2015), I discuss Valve’s use of tipping points and thresholds in strategic decision making. While Valve indeed illustrates structural features such as polyarchy and markets-in-hierarchy, what appears to be novel about Valve is their use of specific social mechanisms in making decisions. I also discuss the broader opportunity for future work to study these mechanisms — such as self-selection, thresholds and matching — in the context of entrepreneurship, strategy and innovation.

Our goal in putting the spotlight on Valve Corporation is to stimulate thinking about what (if anything) this specimen in the zoo of organizational forms teaches us. We thank our panel of distinguished commentators for kindly (and sportingly) joining us in this exercise. So is Valve simply unusual? Or is it also instructive? The commentators, to our gratification, seem to argue that it is both.

Discussions of the Valve Corporation are always enlightening. The skeptic wonders how much is rhetoric and recruiting ploy and how much is real. Is there clear evidence that this organizational design actually works – that it is efficient in this setting? While revenues per employee are quite remarkable, cause and effect are unclear. Is “boss-less-ness” the cause of high sales per employee or simply the result of high sales per employee, fueled from earlier success? The same question could be asked of Google’s unusual organizational approach. Is Google’s success the result of its extensive autonomy granted to employees, or is its past success the enabling cause of such autonomy? Such questions, of course, are empirically unanswerable here. I therefore set them aside and assume this organizational specimen is efficient – well-suited to its environment – and proceed with further commentary.

Valve is a fascinating example of a company experimenting with a new way of working – one in which there are no traditional managers, and where employees are encouraged to take direct responsibility for choosing their own projects and completing them in an efficient and effective way. Of course, Valve is not alone in pushing a “manager free” model. Zappos (owned by Amazon) is currently experimenting with a similar model they call “holacracy”, and moving further back in time there are such classic examples as W.L. Gore and Associates’ “lattice structure”, Oticon’s “spaghetti organization”, and Brazilian industrial products company, Semco. Nonetheless, Valve’s experiments are note worthy because they are ambitious, visible, and so far very successful.