1101IBA CR2 Report: Strategic Management Issues at Valve Corporation

This report examines the strategic management concepts and challenges faced by Valve Corporation, a company known for its unique flat organizational structure and popular video games. The report identifies key management issues, including communication problems, conflicts, and the misuse of employee independence. It then delves into a critical discussion of two leadership theories: autocratic and transformational leadership. The report evaluates the suitability of each theory for Valve's organizational context, considering their positive and negative aspects. Based on the analysis, the report recommends that Valve increase employee involvement in decision-making, promote mutual agreements, and emphasize self-organizing, self-managing, and self-designing principles to address the identified management issues. The report concludes that while Valve's flat structure fosters innovation, it also presents challenges that can be mitigated through strategic leadership and organizational adjustments.

Running head: STRATEGIC MANAGEMENT CONCEPT
STRATEGIC MANAGEMENT CONCEPT
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1.0 Introduction
The Valve corporations are based in Washington and it is known for its award winning
games like Half Life, Team Fortress and Portal games. These games are extremely popular
throughout the globe. The company employs a unique management structure with little formal
hierarchy. The company has a totally flat hierarchy structure, the CEO and the senior executives
of the company do not interfere in the daily operations of the organization. The internal project
groups of the company are known as “cabals”, which is made spontaneously by employees and
established a common goal (Schermerhorn et al., 2011). However, there are issues faced by the
management including cumbersome internal process as the team members of the company
grows. Without managers and supervisors the productivity of the company had suffered and it
faced issues in communication. There are major problems with the unfair and unskilled
formation of groups.
2.0 Management Issue Discussion
Valve is a sample organization which implements unique methods for operating the
business. The employees of the business organization are highly independent, they have no
customary chiefs and the employees are free to take direct obligations while picking their own
projects and completing the projects in a proficient manner (Schermerhorn et al., 2011).
However, one of the main issues that are faced by the business organization is self organization
through self selection as well as the issue of information communication problems and informal
leadership issues. These are some of the main problems that can be faced by the business
organization to move forward with an organic business structure. There are issues and problems

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with unfair and unskilled formation of groups and committees within the business organization.
This can also be considered as one of the major problems faced by the business organization.
This has taken place as there are no authority figures in the organization who assigns the tasks to
the particular groups and teams. The employees of the organization are extremely independent
which can also lead to conflicts and disagreements in the organization. According to the Valve
Handbook, 2012, “A fearless adventure in knowing what to do when no one’s telling you what to
do.” There are other organizations as well that follows a flat structure such as Nike, the
innovative footwear company. It uses the flat structure to maximize the transparency and agility
among its employees (Schermerhorn et al., 2011). There have minimized the bureaucracy and
encourage employees to undertake new ideas. The company also faces issues and challenges in
respect to the structure such as barriers to communication, it creates confusion and slow things
down. The company also faces complex situations and faces difficulties to keep up with the
changes in the external business environment.
3.0 Critical Discussion
Theory 1: Autocratic style of leadership
According to Rast III et al., (2013), autocratic style of leadership is also known as
Authoritarian style of leadership. It follows a high rigid rules and procedures. The policies and
the procedures of the business organization are highly consistent and this can lead to the success
of the business organization. However, as mentioned by De Hoogh et al., (2015), in this
leadership style there is little scope and opportunity for creativity and innovation. The
implementation of new processes and independent thinking process is not considered among the
top priority by the leaders and the senior executives of the business organization. It is believed

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by Hogg & Adelman, (2013), that good leaders with great leadership styles and approaches can
be the foundation for ensuring positive results in the business organization. This style of
leadership approach is characterized by one’s power and control over the other team members
and the employees of the business organization. The autocratic style of leadership in the business
organization is mainly based on the ideas and the perspectives of the autocratic leaders and the
opinion and ideas of the other team members in the business organization are not given priority.
It involves an absolute and authoritarian control over the team of the business organization. This
style of leadership approach is fewer situations for organizations like Valve corporations as it has
a flat structure and the employees of the business organization are highly in depend and creative
in nature. Restricting the creative and innovative thinking among the employees of the business
organization must hamper the productivity.
Positive aspects:
According to Chaudhry and Javed, (2012), the Autocratic leadership approach provides clear set
rules and procedures for performing the work and ensuring positive outcomes. This ensures
discipline in the business organization and reduces the chances of conflict occurring in the
business organization. The autocratic leader provides knowledge and tools to the employees that
are required for performing the job and the work of the business organization.
Negative aspects:
On the contrary, as argued by Bass, (2013), the Autocratic style of leadership limits the
creativity and independent thinking among the employees and the staffs of the business
organization. It also discourages the input of the team members, there is lack of creative and

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innovation in the problem solving of the business organization. This approach tends to overlook
the ability and the knowledge of the team members in the business organization. Hence it is less
suitable for organizations like Valve having flat structure.
Theory 2: Transformational leadership theory
According to Chaudhry and Javed, (2012), the transformational style of leadership theory
was introduced by James McGregor Burns. This theory mainly focuses on the ways in which the
leaders and the managers of the business organization create valuable and positive change in
their followers. The transformation style of leadership is the most validated theory which focuses
on the values and morals of the leaders and the managers. It mainly emphasizes on gaining
compliance by offering rewards and other benefits to the employees of the business organization.
It focuses on transforming the employees and the staffs of the business organization to support
the overall functioning of the business organization. The followers or the employees of the
business organization are responds to it by feeling admiration, loyalty and trust for the manager
or the leader of the business organization. As mentioned by Bass, et al., (2013), they are more
willing to work more hard and willing to meet the targets and the expectations of the top level
employees of the business organization. It is believed that the transformational leaders of the
business organization demonstrate individual consideration, inspirational motivation, idealized
influence and intellectual stimulation. The transformational leaders of the business organization
ensure positive outcomes in performance while emphasizing on the morals and the values in
leadership. Therefore, by implementing a transformation leadership approach in Valve
Corporations to ensure positive outcomes, the leader can implement specific approaches and
other mechanisms for maintaining and building relationships, increasing the morale and
motivation of the employee while enhancing the performance of the business organization.

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Positive aspects
As mentioned by Hogg and Adelman, (2013), the transformation leadership approach can help
Valve corporate to access the present situation of the organization and help to formulate a vision
and mission for its improvement and growth. It promotes enthusiastic work environment,
therefore it can help Valve Corporation to comply with the changes and innovations. The
employees can work through self motivation and ensure high level of efficiency.
Negative aspects
On the contrary Bass, et al., (2013), despite the positive aspects of transactional leadership
approach, it can face challenges as it may not be applicable to all the situations occurring in the
business organization. Various crisis situations require quick decisions. Further, there are cultural
factors which limit the positive aspects of the transformational leadership approach.
4.0 Recommendations
As per the analysis, it has been identified that Valve faces various managerial issues such
as ineffective communication, conflicts of interests, misuse of independence and unfair,
unskilled formation of groups and committees which causes disagreements and conflicts. In
order to overcome the challenges and issues faced, it is recommended that the company must
ensure high degree of employee involvement in the process of decision making (Gürbüz, Şahin
& Köksal, 2014). This can reduce conflicts and communication gaps in the business organization
(Krackhardt, 2014). The management needs to ensure that there are mutual agreements
throughout the organization while emphasizing on self organizing, self managing and self

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designing. The employees must be personally responsible for satisfactory outcomes of the
business organization (Galbraith, 2014)..
5.0 Conclusion
Therefore, from the above analysis it can be concluded that Valve Corporation has been
facing various challenges and management issues due to the flat structure of the organization.
The employees of the organization are highly independent; they are responsible for taking
projects as per their choice and deliver the projects on time. This enables the business
organization to ensure innovation and creativity in the workplace. However, lack of authoritative
control has led to disagreements and conflicts as well as formation of informal groups and
committees. This disrupts the smooth working of the business organization. It has discussed the
leadership approaches and it applicability in the Valve Corporations. The report has provided
recommendations to move forward from the management issues.

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