There's a mixup in correlation and causation here. Similar mixed up conclusions are reached by people looking at other fantastically profitable companies.
Do you like scenario planning? Shell "proves" it works.
Stalinist management? Apple "proves" it works.
Velvet sweatshop? Microsoft "proves" it works.
Data über alles? Google "proves" it works.
Self-directed workplace? Valve "proves" it works.
...do many people think or claim that their success is due to their management style? More importantly, is that why we're talking about it? Certainly that isn't the focus of this Gamasutra summary of the EconTalk podcast by Valve's economist.
Valve does talk a lot about their org-style in general, and they do talk a lot about their success. But I'm pretty sure they have a sound, mundane reason for those things: talent sourcing.
Standing out in the tech industry as an employer is tough, and the traditional offerings: "smart people working on interesting problems", "we're growing fast", "we're the market leader" are, excuse the expression, tantamount to banal rape. Valve has a further difficulty though, as expressed by Varoufakis:
"In many occasions people simply don't fit in not because they're not productive or good people, but because they just can't function very well in a boss-less environment."
They need to find talent like everyone else, but beyond that, they need to find talent that won't fail without someone taller telling them what to work on. Valve's sane solution to both problems (lack of talent, lack of talent-preparedness for their org-style) is to get loud about their org-style.
Valve's org-style is so wild and different that it means we could all talk about it until the cows return -- and we do. They routinely make (tech website) headlines just by repeating themselves, which draws crowds. It also causes candidates to self-select, lessening the fit-problem. Don't think you'd like to work at a Place Like Valve? You won't apply. Never thought about this org-style before? You will now.
Why do we love to hear about their org-structure so much? Is it just because it's different, or perhaps because of apparent claims it's more profitable? I think it's because it addresses a real problem. It would appear that silly directives-from-on-high don't exist at Valve, because they internally removed the notion of "on-high". They also claim to have given each employee the autonomy to figure out how and where to do their best work, while being paid enough. It sounds like they struck the creative-work motivators of autonomy, mastery, and purpose on the noggin. Good marketing at the least.
 RSA Animate's adaptation of Dan Pink's talk http://www.youtube.com/watch?v=u6XAPnuFjJc
And in some places? Yeah. Probably legit.
But I the thing is that it's impossible to know if the Valve model is worth studying for clues on how to better manage non-lottery-fountain companies, because the confounding factor of riding a money mississippi is basically totally impossible to factor out.
In conclusion, I'm jealous that I'll never have to face this problem up close.
The more common corporate arrangement is the extortionist command economy in which one serves one's immediate superior or gets fired from a whole company. That is ridiculous and pathological. It might have worked in 1870, but it's starting to fail badly. Billions of dollars of value are being lost due to this outmoded way of doing things.
Valve is clearly not perfect-- they had a layoff earlier this month-- but it appears that they're still doing a better job, on a cultural front, than almost anyone else.
I do think it's important that Valve operate as they have (in being loud about their structure), to point the water out to us fish. It's commonplace to think that work is just the way work is, with managers and workers and you get a job then stay in it until you are promoted or fired or quit.
Valve is doing something different -- and of course it won't be perfect. But it's different, and they're shouting at the top of their corporate lungs about it. Hopefully it will help lead to the development of a spectrum of organizational styles. Even if it just brings some common willingness to mess about with the water and see where we go, that would be great.
Terrible UI? Craigslist.
We tend to look at outliers and make them the canonical example. 37signals has been particularly bad with dispensing startup advice being completely not typical.
Multi-billion dollar game franchises have been created in other ways before and since the initial Cabal article was published.
Microsoft is the only company I've heard of that has (or had) "Morale Budgets", completely within the control of the programmers. In the 90s, according to McConnell, Microsoft would go to any lengths to protect and improve morale.
I can't speak for Shell or Apple.
The point is that people are mixing correlation and causation. There's no reason to think that Valve's self-directed model is the cause of their success, just as there's no reason to think Google are successful because of how they manage their people. In all these cases the massive profitability is pretty much exogenous.
I also stand by what I said about Google and Microsoft. I know people give Michael Church a hard time here, but from my own friends I've heard anecdotes that confirm his sentiments regarding the amount of bullshit that goes down there. Sure, it's a good company and people are happy - as long as they play the politics game. I'm sure a company-wide "index of satisfaction" looks good on the HR handbook, but when your manager blacklists you without your knowledge and prevents your transfer or promotion, that's kind of shitty.
Same thing with Microsoft, which is known for its legendary corporate bureaucracy and political in-fighting. And Apple, which is by all accounts a very high-stress environment to work in.
I don't think communes are as rigorous about admission.
An even bigger difference might be that the financial goals Valve has as a community are more clear than the goal of "build a good anarcho-syndicalist commune". In my experience communities that have a goal to pursue that's external to the existence of the community are the ones that last while those that don't tend to descend into high school-like popularity contests and fail because of that.
BTW, is there anything HN would recommend reading on 1960s-1970s communes and, especially, ways in which they failed?
That or the people that have niched themselves into positions of unwritten-but-assumed authority have decided to hire quiet followers.
Just because someone calls an environment a 'flat system' doesn't make it true. There exists just as likely, a very defined system controlled by seniority.
Like in "The beatings will continue until morale improves"?
Microsoft has, of course, changed. But in the 90s it was probably the best place in the industry to actually work, if the articles and books written about that period are even vaguely accurate.
The interesting thing is that Valve has similar open space areas. You could substituate a photo of one for another. The big difference at Valve is that people have /self selected/ into the other people they are working with, and can move any time.
The ability to choose is worth any likely amount of "morale budget."
It's true that there are a few disgruntled ex-Googlers that may give you this impression.
But I don't believe you'll find many current Google employes who will agree with that.
Unless you're running a multi-million dollar fraud, money is the proof it works.
Proof as in: a lot of other smart people do worse.
Of course, Google, Apple, MS, Valve products are all different, and they would probably be bad at doing the other company's job (to a certain extent)
And yes, MS is monopolistic, is inefficient at work, have several divisions that are a money sink. Still, last I heard, they only lose in profits to oil companies.
Yes, some models require more money to work, still, they got that money in the first place and are free to work like that for as long as it works.
Or worse: an article in the Harvard Business Review.
My hobby is Olympic-style weightlifting. One thing that happens a lot in my sport is cargo-culting whichever country happens to be dominant at the moment. Back in the 1990s everyone got very excited about the "Bulgarian" training system, which was quite different from the "Russian" system which had dominated from the 60s.
In the USA in particular, wholesale attempts were made to adopt the Bulgarian system for elite athletes. Results? Very disappointing.
The context is wildly different. Bulgarian coaches had a feedstock of hundreds of thousands of lifters. If a lifter was wrecked by the extremely aggressive Bulgarian method, so what? You just replaced him with another lifter, there were plenty more coming up the pipeline. Given that in a larger sample you can find more outliers, mere numbers predicted a large fraction of the Bulgarian success -- and before that the Russian success.
Mere numbers today predict the success of China in the lighter divisions; mere numbers in future will predict that China will steadily improve in the heavier divisions as Chinese youth become taller due to westernised diets with more protein and calcium.
But the cargo culting has begun. Weightlifters already talk about "the Chinese System" as if there was some single, monolithic master plan. There isn't really. There's just a metric shit ton of Chinese weightlifters in the lower leagues and the elite international coaches can pick out the best of the best.
For the same reason, New Zealand is rugby superpower, nobody can beat the USA at gridiron, Australia is barred from entering the international Australian Rules Football contest because even our lowliest semi-pros dominate any such match up ...
Your assumption that the Bulgarian coaches have a feedstock of hundreds of thousands of lifters is very far from the truth - the whole Bulgarian population is considered to be around 7.3M people, which doesn't account very well for all emigrants living abroad. Out of these 7.3M only 16% (~1M) are aged 0-17 (I assume that 14-15 y/o is the usual age that a lifter starts training professionally). That means that at the moment there are around 100K teenagers (aged 14-15), out of which less than 50K are male.
During the past 20 years sports have lost a big chunk of their (state) funding and therefore the attractiveness for young uneducated kids have lowered substantially, further reducing the pool of athletes.
I consider the three most prestigious and popular sports for males in Bulgaria to be football (soccer), wrestling and weight-lifting.
Meanwhile the USA had, until Crossfit, about 3,000 lifters. Not a very big pool to draw from.
You correctly point out that state funding for Olympic sports collapsed some time back and that this removed the quasi-professional pathway.
For a similar reason, few athletes in the anglosphere who is naturally strong and power will go into weightlifting. They're playing gridiron or rugby. Those sports are popular and have lucrative professional leagues.
I don't know much about weight-lifting, but I recall many scandals in the past years about disqualified Bulgarian athletes for doping.
(I am Bulgarian.)