Bu 398;Organization Business
Wednesday June 10,2015
Co-founders Gabe Newell and Mike Harrington, whom both had experience in operating systems and software, founded valve in 1996. Gabe Newell who had previously worked with Microsoft wanted to leave the company to create a more interesting company that allowed for freedom and creativity. Together they wanted to start a video game company with games that could be played anywhere rather than strictly video games. Valve currently offers games that can be played on computers, but have no hardware to be played on. Valve is wondering if they can create hardware to extend their market and still continue with the same ”boss free” structure currently implemented or if they should outsource the hardware to another company.
Game and Mike both offered a strength to the company by having experience in the operating and software development industry. This allows them to have knowledge of the main competitors that other new company’s trying to enter the hardware industry may not have. Another strength is that they offer their employees the opportunities to take risks and grow from their failures. This pushes the employees towards more creative projects and empowering roles have influenced many of the successful projects so far. Valve currently has 50-70% of the PC digital gaming market using Stream, which offers a potential following if they were to merge into the hardware market. Unfortunately, although they have expertise creating software they have no expertise with the development of hardware, which could lead difficulties along the way. The structure could also become a disadvantage along the way. Some employees may have problems with setting long term goals needed for the company to grow and surpass is competitors. Valve may also miss out on talent because of the very very flat structure that they provide.
One opportunity that Valve can take advantage of is that there are always opportunities for hardware upgrade. Hardware upgrades hold a higher price tag then the current PC gaming options they are offering. The big competitors have made a large profit from offering new console upgrades with new differentiating features. They are entering into an already very powerful market with big competitors. This could lead to competitors offering new products similar to valves with even greater differentiating features. The bigger companies also have more financial resources and may not take well to another company entering the already very competitive triangle. The technology industry is a very fast past industry that could lead to consumers deviating away from game consoles and more towards PC gaming or smartphone gaming as it is more accessible and often a cheaper option. It is very hard to predict the way that the technology industry will change over time making it an incredibly risky investment.
Decision Criteria The alternative needs to keep the current structure of the company. Valve wants to keep the horizontal structure that focuses on employees producing the best work they can in their own individual ways. This can be measured by looking at the skill, productivity, group contribution and product contribution of the outcome. The solution also needs to be profitable and offer growth for the company. Valve is currently at a plateau with what they are offering which is leading to a stable market share instead of growth. Lastly the alternative needs to solve the problem of moving customers into the living room. Their main goal is to find a solution which adheres to customers request of being able to continue games with friends or switch rooms.
Outsourcing is the first alternative. This would offer Valve the opportunity to work with an already developed company with previous experience in building hardware. This would help them overcome the need for finding a team of qualified group of individuals with…