Organised chaos: Keeping the start-up spirit alive

Megabuyte, October 2012. Original article here (£).

scrumThe Early View
Organised chaos: Keeping the start-up spirit alive

Valve, the Washington-based gaming company, has been proudly boss-free since its launch in 1996. Founder Gabe Newell remains in charge, but there is no evidence of this in the company literature, which boasts “no middle management, no bureaucracy, just highly motivated peers coming together to make cool stuff”. This is how most start-ups look when they first start tinkering, enabling a spirited environment where ideas matter more than job titles, but often this is lost as the organisation grows.

With 400 employees, however, Valve’s start-up days are over, but still the group is sticking to its boss-free guns. 400 people wheeling around without managers sounds chaotic, but clearly what they’re doing is working: Valve is reported to be valued at $893m in an ongoing takeover attempt from leading Korean gaming groups Nexon and NCSoft. We take a look at a few companies that are maintaining the start-up spirit as they’ve grown, and how technology provides vital tools for the task.

The Common Good
“Just like in a marketplace, everything in Valve is in flux,” explained Valve’s economist-in-residence, Yanis Varoufakis, in an insightful blog post on the company’s philosophy. Google is famous for its ‘20% Time’ policy, where staff get to spend one day a week on a project not necessarily in their job description, but at Valve this number is 100%. People’s desks actually have wheels on them, meaning staff are given the freedom to literally roam about, picking projects and forming new teams. “The idea here is that through this ever-evolving process, people’s capacities, talents and ideas are given the best chance possible to develop and produce synergies that promote the Common Good,” wrote Varoufakis. “It is as if an invisible hand guides Valve’s individual members to decisions that both unleash each person’s potential and also serve the company’s collective interest.”

Providing permission for employees to go rogue is well and good, but with hundreds of people around, a layer of technology may be necessary to help organisation, discovery and communication. While less extreme than Valve, Google, Apple and Facebook all have more or less flat organisational structures (unlike Microsoft, with its 6 to 12 layers of middle management). Mature organisations in awe of these innovators are curious about emulating their methods, in the hope of finding the source of their good fortune. Chris Robinson, CIO of business collaboration software expert Tibbr, explained at a recent company conference how tax giant KPMG is looking into changing its structure in an effort to reduce staff turnover and attract young talent:

“Organisations are turning to enterprise social networking because it breaks down silos [and hierarchy], creates a more open environment where employees can be more collaborative, think non-traditionally and share innovative ideas across the organisation with the integrity of doing what’s good for the organisation.”

Innovation at the edges
Tibbr, owned by Tibco, is among the leading providers of social collaboration tools for enterprise, according to a new report from Forrester, the others being Yammer (now part of Microsoft) and Salesforce’s Chatter. WMVare’s Socialcast and Neudesic’s Pulse are also notable contenders.

“As older companies think about how to become more innovative they are doing it in an old way: ‘We need to figure out the next innovation.’ But there is no next innovation! It is about constant innovation, and organising around letting everyone innovate,” said Yammer co-founder Adam Pisoni when we met in San Francisco earlier this year. Yammer’s collaboration software, which aims to create a productive breakdown of company boundaries, is one way to try and stave off rigidity as a company grows. It may even be possible to predict when this will be an issue: history is full of examples of how 150 is the maximum group size before the individual becomes unable to keep track of the relationships and unity is lost, if evidence from Malcolm Gladwell’s famous book ‘The Tipping Point’ is to be believed.

One way to look at Yammer’s service is how it enables staff at large organisations, where size means they can’t keep track of who does what anymore, to do what they would naturally do in a smaller environment. Software developers at PerkStreet Financial, a Boston start-up, use Yammer to facilitate its morning meetings: each member of the 37-person team posts what they did yesterday, what they’ll do today and tomorrow, and the barriers for moving forward. Members can follow the conversation using the hashtag #scrum, and chip in if they have something relevant to add, or otherwise remain uninterrupted yet reachable. Tasks can be delegated to other members using the @-reply, and keeping these conversations out in the open instead of individual inboxes means no duplications. The transparency also creates a social stigma to not pulling your weight, while at the same time it makes the group efficient by letting tasks fall to those with time and inclination to do them.

Into the Scrum
While a so-called Facebook-for-business interface will give employees the tools to organise themselves, this is not enough; a company that is serious about tapping into the innovative impulse among its staff will have to drive through what could be some big cultural changes. Before venturing into collaboration tools with Chatter, Salesforce was a red hot CRM start-up experiencing rapid growth. Seven years after its 1999 launch, however, Salesforce realised its size was starting to make it less efficient: over 200 people now worked in R&D and the department suffered from a lack of visibility, late feedback, long and unpredictable release schedules and a general decline in productivity. In response, Salesforce initiated a brisk three-month transformation to the ‘Scrum’ working methodology, the dominant technique for creating an adaptable, feedback-driven and outcome-oriented organisation with open lines of communication.

In other words, Scrum can teach companies to work like start-ups again. Also used by Amazon, key principles of Scrum include coming together to work in project cycles, during which a team runs itself, report to the customer, and management does not interfere. Another popular system is ‘Kanban’, used at Xerox and music streaming service Spotify. While similar, Kanban is arguably easier to implement successfully than Scrum, whose values go against the grain of a traditional command structure and requires goodwill from all its participants in order to work. Kanban, however, is mainly focused on openness around workflows and does not necessarily require people to throw away their job descriptions.

Satisfaction
Generation Y, accustomed to the organic nature of social media, may well prefer a flat office hierarchy because it lets them run with ideas instead of dealing with office politics. But pleasing the ‘web kids’ is not the only reason corporations may find agile working methods to be in their best interest. In the first year of changing to Scum, Salesforce released 94% more features, delivered 38% more features per developer and delivered 500% more value to their customers compared to the previous year, according to Mike Cohn’s book ‘Succeeding with Agile’.

For a large company with a strong culture and an established pecking order, it may seem daunting to throw tradition out the window and place so much trust on staff to do good. But in addition to improved output, Salesforce found employee satisfaction doubled after its adoption of Scrum, while Deloitte found a correlation between staff retention and active use of Yammer in its own organisation. People like to feel in control of their work, and to be a part of creating something that matters. If allowing people to work organically on projects they are drawn to can help a large company keep the start-up spirit alive, this may well be the secret to staying innovative in the age of constant flux.

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