From humble beginnings as a simple clone of the then-popular first-person shooter Quake, Half-Life would eventually become the first installment of one of the most successful video game series of all time.
Today, Valve Inc. is one of the most renowned, innovative, and successful game development companies worldwide, boasting one of the largest video game digital distribution service platforms on the planet, a range of pioneering virtual reality hardware and an impressive roster of instantly recognizable and widely-loved game titles.
Specifically, the development of the original Half-Life makes for an interesting case-study, and represents a model of innovative agile organizational management.
Half-Life is remembered as one of the best games of all time, and the intense environment in which it was created – where the Cabal process was born – is testament to that legacy.
Companies like Valve, Zappos, Semco, and even Google have come up with different models to enable the potential of their workers. These methods give power to the employees to pursue their own entrepreneurial pet projects.
Tesla’s innovation is equal part production process as it is the product; you need only look to the hulking Gigafactories to find evidence of this.
Similarly, Facebook’s success is not just in the service it offers users, but also how it was designed to scale to billions of users.
The process of organizational management is always an important factor in the outcome of these hugely successful products.
In this post I’ll be looking at democratic methods of organizational management, with a particular focus on Valve’s Cabal process. I’ll also mention a couple of other interesting examples of holocratic organizational management, and talk about our own internal structure at Process Street.
Here’s a quick breakdown of each section, if you want to jump ahead:
- What is organizational management?
- Valve’s Cabal game design process
- Zappo’s holocratic organizational management system
- Semco’s organizational management success story
- How digital democracy plays a role in organizational management
- Process Street’s organizational management structure
Before we get into Valve’s Cabal process, I want to quickly clarify what I mean by organizational management, and how it differs from organizational structure.
What is organizational management?
Organizational management is the combination of factors that determine how companies structure and align their leadership with their objectives; the ongoing process of managing the organizational structure of the company.
However, this may read as somewhat vague. That’s because every company will have their own version of organizational management, and do things in their own way.
One popular form of organizational management is the agile approach, wherein goals are set and plans are implemented – that’s the “organizational” part – and that the tools are in place to adapt to changes as and when they’re necessary – that’s the “management” part.
During the development of Half-Life, Valve developed its own variety of agile process for managing development – the Cabal process.
The Cabal: Valve’s game design process for Half-Life
Valve started developing their first game back in 1996: Half-Life. Ambitions were sky-high, with the hope that their finished product would be able to compete with the upcoming (and hugely popular) Quake II.
“The net result is that we threw out just about everything. All of the AI was gone, and we gutted all of the levels. In reality, Half-Life got delayed because of Half-Life. The game is really Half-Life 2. It’s an incredible game.” – Ken Birdwell, on Half-Life’s delayed and restarted development.
Release day is just around the corner, and Valve decides to postpone. They decided that the current build of Half-Life just wasn’t up to scratch. It lacked that special something – it wasn’t innovative enough, and most of all – it just wasn’t fun.
Just imagine the tension in Valve’s office back then. Everything the company had worked towards up until that point was riding on the success of that game. Valve had never released a game before, and they were practically burning money at that point. With the release date already announced, they had to make the excruciating decision to spend even more money to push the game back, with zero guarantee of any payoff.
But, they did it. They carefully and meticulously reworked everything from the details of each level to enemies, weapons, atmospheric in-engine cutscenes, thoughtful puzzles, interesting mechanics, you name it. They essentially ripped the innards out of the game they’d built so far, and pieced it back together into a different beast.
With that logic, Half-Life 2 was Half-Life 3!
Kidding aside, the development of the first Half-Life game can show just how easy it is to let a development project slide down the calendar.
The highly pressurized, chaotic environment resulted in the Cabal process, which is still used by Valve to this day. Half-Life was finally released in 1998 and remains one of the most successful and universally acclaimed games of all time.
Democratic design: Understanding the Cabal process
The ins-and-outs of the Cabal process can be found documented in this gem of a Gamasutra article dating back to 1999. I’d highly encourage anyone interested in Valve’s Cabal process to check it out, but I’ve included a brief breakdown below.
Design of Half-Life was led by a committee. There was no “lead game designer” or director, like many present day games have. Instead, what they had was referred to as the “Cabal”.
The Cabal was a cross-disciplinary team that would spend several hours a day, several days a week working on the high-level details of the level design, as well as scripted elements.
This team included three engineers, a level designer, a writer, and an animator.
“It wasn’t clear that egos could be suppressed enough to get anything done. The opposite was true; the people involved were tired of working in isolation and were energized by the collaborative process, and the resulting designs had a level of polish and depth that hadn’t been seen before” – Ken Birdwell, on the Cabal design process during Half-Life development
The main Cabal would have a rotating membership to ensure a cross-section of the company was represented, and to prevent burnout.
According to Birdwell, collaborative teams sprung up in smaller departments to solve smaller problems once the success of the Cabal became evident.
After the first month they had compiled a 200-page design document, and appointed someone to manage it.
Use of data in the design process
During each play-testing session, a member of the Cabal, the level designer, and occasionally an engineer, would sit silently and observe the player, taking notes.
Ultimately, there were over 200 play testing sessions, with each session giving the team an average of 100 action items. That’s about 20,000 action items generated from the play-test sessions alone!
The team tracked data points as the play testers played the game, then graphed them. For example, when they saw that a player would maintain a high amount of hit points for a long period of time, they would know that the level was too easy, or if there was too much time between encounters – too boring.
As they fine-tuned the levels, the collaborative process became common for the level designers as well. Although each level had a lead level designer, the other level designers would make tweaks and edits as well.
According to Birdwell, this approach worked well because each of the level designers had a particular strength they could bring to the table.
Holocracy and self-management at Zappos
“At it’s core, “self-management” means knowing exactly what you are responsible for, and having the freedom to meet those expectations however you think is best. “Self-organization” is being able to make changes to improve things – beyond what is required of you. Simple in theory, but everyone has to truly commit for it to work!”
Companies like Zappos and Semco have flipped the traditional corporate pyramid on its head and employed radically democratic models of organizational management. Through the use of technology, this kind of agile approach has become far more viable.
For example, Zappos eliminated its management structure in favor of a new model: Holocracy. We’ve written about that in depth in our article: How 4 Top Startups are Reinventing Organizational Structure.
The basic principle is that workers do what they want, and even get to decide things like their own pay. One step beyond even Valve’s Cabal process, It represents a radical departure from the typical top-down mode of operation.
Things seem to be working well for Zappos; from a struggling start-up in the early 2000s to a deal with Amazon valued at $1.2 billion in 2009.
Workers essentially decide the work they want to do on a day-to-day basis, and will ultimately self-organize. Zappos created a software called Role Marketplace, which is designed to help their employees figure out what work needs to be done, and to make it easier for teams to assemble around those jobs.
Similar to Valve’s Cabals, these working groups come together and form short-term teams dedicated to solving the problem.
In a sense, the traditional roles of management have been automated by software. It’s not a single person dictating what you should be doing – it’s a software system, operated by a more horizontal consensus economy.
Semco’s success story: An organizational management fairytale?
Founded in Brazil in the 1950s, Semco originally made washing machines. Today a multinational corporation with investments in real estate, banking, and web services, Semco’s success is no fairy tale.
With 3000 stakeholders, Semco prospered despite a decade of recession in Brazil, with revenue growth up 600%, profits up 500%, and productivity up 700%. What’s more, for the past 20+ years, employee turnover remained at the incredibly low rate of 1-2% per year.
It started between the mid-1990s and early-2000s, when Semco began a period of drastic internal change. Joint ventures and acquisitions meant that, over time, the company experienced a natural shift away from the central organizational structure of the headquarters and closer to the outer fringes, where the real action was taking place.
In other words, teams started moving closer to the factories and business premises they actually worked with or supported.
This gradual decentralization meant that the old central headquarters became leaner and leaner, with teams growing smaller and smaller. It didn’t make any sense for such a small team to be holed up in such a huge office building, so they down-sized and saved a bunch of money.
It’s not just about the money they saved in the rental agreement, though – Semco was committed to the holocratic model.
Semco shifted to an entirely self-organized democratic model without any HR, wherein leaders are elected, salaries and bonuses are set by teams themselves and the work-times and physical location of team members are entirely decided by the teams’ self-management; as long as they manage their budget, serve the clients’ needs and keep ahead of the competition.
As for profits, in Semco’s case, each division of the company has a separate profit-sharing program.
Twice a year, they calculate 23% of after-tax profit on each division income statement and give a check to three employees who’ve been elected by the workers in their division.
These three invest the money until the unit can meet and decide, by a simple majority vote, what they want to do with it.
In most cases, that results in an equal distribution of the profit. If a unit has 150 workers, the total is divided by 150 and handed out. Simple as that. The person who sweeps the floor gets just as much as the division partner.
“Any adult welcomes freedom, flexibility and responsibility if it increases the gratification [s/]he gets from what [s/]he does for a living.” – Ricardo Semler, CEO of Semco
Ethan Bernstein, Assistant Professor of Leadership in Organizational Behavior at Harvard Business School, adds:
“…[O]rganizations who are increasingly thinking about structure as an advantage and a form of making their employees more productive, will continue to evolve and innovate in this direction. And that’s something I think we’ll see across all organizations, regardless of whether they are trying to deliver “wow” to customers, or trying to do something very different.”
Democracy in the workplace
According to Derina R. Holtzhausen in the paper The Effects of Workplace Democracy on Employee Communication Behavior, greater democratic involvement in the workplace can result in:
- Strengthened trust between members of the company;
- Improved flow of information (more efficient; more clarity of delivery);
- Improved face-to-face communication;
- Employees are less apprehensive about communicating in general.
It’s clear that democracy has its place in a tech-driven world of highly skilled workers. Under the right circumstances, democratic autonomy can help unlock the full potential of a workforce and gain competitive advantage.
Workplace democracy isn’t just letting your employees do whatever they like. It can manifest in various forms, from “your supervisors care about your opinion” to “you get to vote for your supervisor” to “you are your own supervisor”.
Taking automated democracy one step further is the idea of a DAO (Decentralized Autonomous Organization). This term was coined by Ralph Merkle, and is expanded on in the whitepaper DAOs, Democracy and Governance. We’ve also written on this topic before in this post: What is Digital Ethics?: 10 Key Issues Which Will Shape Our Future.
DAOs should not be confused with The DAO, which is… a DAO. It’s perhaps the most well known example of a DAO due to the huge (over $50 million) hack in June 2016. Despite the initial promise of The DAO, it succumbed in many ways to the wrath of its own success (and the wider success and hype of Bitcoin during the bull-run mania).
In any case, the principle of a decentralized autonomous organization is a model that we will surely see more and more in the future, as technologies like Ethereum (a decentralized platform for building blockchain applications) and smart contracts become more commonplace.
How we do things at Process Street
At Process Street, we employ a number of horizontal organizational management principles like:
- A remote team;
- Collaborative processes and strong process ownership;
- Emphasis on self-management and self-organization, with a promotion of a healthy work-life balance;
- Agile planning and organizational tactics like monthly sprints and weekly all-hands meetings.
Holding all of this together is the platform of Process Street itself. All of our processes are documented using our workflow management software, accessible to everyone else in the organization.
This allows for greater transparency, clarity as to who is responsible for what process, and helps everyone jump into new tasks quickly, easily, and efficiently.
Using a BPM software like Process Street allows you and your employees to document, follow, and automate all of your processes with zero friction, which leads to an organic organizational management structure within your company.
Process Street also allows workers to ease the burden of tedious manual tasks with features like conditional logic (for making processes more robust and flexible), dynamic due dates (for enforcing deadlines and responsibility), and rich form fields (for simplifying complex instructions).
Cultivating the right kind of organizational management structure in your business
If you’re considering experimenting with organizational structure and management of your business, be sure to consider the reasons why.
There is no one right answer, but undertaking such a huge shift in business and process management is one that requires sound reasoning and is not a decision to be made lightly.
Zappos found inspiration in observing the rise of productivity by 15% of citizens in a city that doubled in size, while the opposite was true for companies.
Differences between cities and companies aside, one thing is clear – that such a drastic change as made by Zappos to their organizational management structure required absolute and unwavering confidence in the new model, and an acceptance of the large increase in risk.
Semco’s profit-sharing and holocratic model worked as Ricardo Semler sought to remedy low levels of workplace happiness and motivation.
Valve’s Cabal process evolved organically and spontaneously in a high-pressure development environment, and no doubt such a model could have only worked as well as it did because Valve was confident in the skills and capabilities of its employees to bear the weight of crucial design decisions.
Before you scramble to toss your current structure out of the window, you should consider that just because the structure worked for one company, doesn’t mean it will work for yours.
Take the time to look at different organizations, recognize similarities and differences to your own, take what you like from them, perform business process analysis and research and don’t be afraid to adjust things if it’s not working.
.Have you worked in flat companies? Do you have experience of more horizontal structures of organizational management? We’d love to hear your stories – let us know in the comments!