Valve is a Software game development company founded by an alumnus of Microsoft. Self-funded, it has about 300 employees. Its first product came together quickly and paid off handsomely. Most importantly, it has no bosses. It is entirely flat. There have been several write-ups recently about Valve in the mainstream (Capitalist) business press pointing out the "no boss" structure. This Business Week article has pointers to another article which then points to Valve's New Employee Handbook which is very enlightening.

This is no Worker-Owned Enterprise. This is a for-profit capitalist company but it has taken several notions to heart. Internally, it operates as an Open Source Software incubator where workers drive product direction and execution without top-down direction. Certainly, the founders offer vision and elder-wisdom, but apparently gently. This internalizes the enormous productivity benefits of the Open Source model and frees the enterprise from the sclerosis of top-down decision making. One assumes that compensation is high to attract the kind of human productivity desired and this flat-organization, Open Source Bazaar, model is an alternative to the traditional democratic workplace vision.

In the larger-scale classical worker-owned enterprise, the collective replaces the management either by acting as a collective or by managing their appointed/hired management as a collective. However, this replicates the Republican structure[1] of the enterprise. we all too often end up with bosses. We end up with hierarchy and top-down (centralized) decision-making. We end up, once we get past relatively small collectives, looking and behaving a lot like our Capitalis-owned counterparts. Certainly, it is a much more democratic Republic structure. The collective can quickly act to change management and impose new or restore old directions, processes, or values. It is a huge improvement over the Capitalist version where, generally, the Labor has no rights. But workers not in "management" are subordinated and expected to defer, at least at some level, to "management."

There is a wide-spread belief that beyond a certain size, a collective must institute structure. The Valve experience provides an alternative model for our consideration. The most fundamental element the Valve approach offers should sound familiar: self-direction of the workers. Workers move among projects as they see opportunities for higher value and/or more fulfilling roles. Think, for a moment, of Valve as a collection of federated volunteer-run co-ops. Volunteers are entirely free to move among the various co-ops (projects). Co-ops are expected to recruit volunteers, to attract talent. Valve pointedly tells employees that the most important thing they will ever do for the firm is recruit new employees of a sufficiently high caliber. Each new employee is a worker who choose which co-op (project) most interests them.

Generalize this to a network of co-ops in NY City, for example, and think of the freedo m to cross-recruit and have true mobility of labor through some federation in which each co-op is recruiting for the Federation and not, necessarily, the particular job-description at hand. First, the Federation will grow faster because good people will be recruited and helped to find where they can best contribute. Second, it would (should) be normal for members to recruit other members for short or long term participation in the various co-op projects even if they are "poaching" from other co-op enterprises. Third, project-formation (formation of new co-ops or major initiatives in existing co-ops) would be facilitated by access to a flexible and mobile membership. Clearly, the network or federation would need to be the collective within which the other co-ops operated so that members truly had the mobility within the larger collective to make the Open Source model work.

The two biggest challenges to this approach are direction and compensation. By direction, we mean the setting of objectives, maintaining commitments to members or clients, establishing metrics of quality, and all of the discipline required for longer term success. Not every member of a broader collective of this sort should be expected, like employees at valve, to be highly entrepreneurial. Many are more comfortable performing useful, well compensated roles they have adopted. Compensation is more difficult. We would recommend that compensation models in an Open Source Co-operative Federation be a matter of trial and error. One can envision approaches from flat per-hour (or annual) wages with traditional "patronage" bonuses all the way to differentiated compensation based on risk, novelty, or heightened responsibility. We suspect we collectively know too little to think we understand the best approach.

To summarize, the successful experience of creating an Open Source Bazaar of employee-initiated projects to drive Valve, a very successful Capitalist software game development company, offers us a different way to look at our conceptual models of cooperative organization. We should take this relatively iconoclastic example for its merits and challenge ourselves to see how it might enhance our organizing and activities.

Note 1: We're using "Republican" in a formal sense: a system of governance where democratically elected Representatives form higher level governing structures and the Representatives are only "answerable" to voters at subsequent elections.