Preface
Karl
Pilkington once said “They say the more you know, the more you
don't know”. It is comments like these that I find so funny. It's
comments like these that put him off trying to learn. But I think
otherwise; its comments like these that are thought provoking. I
would respond “The more you know, the more you realise you don't
know”. Its blunt statements like these that makes me want to
analyse the plausibility of it. I love the variety of
interpretations and viewpoints.
So,
when I came across Valve's employee handbook, I envisioned a great
place for designers and innovators where exciting work has been done.
I realised that these people are not just game makers. These are
fun, interesting people who collaborate to make wonderfully
innovative experiences and products. It is then through reading Mike
Abrash's account of him working at Valve, that got me interested.
Valve is special. Without realising, the games that I have played
and enjoyed tremendously were made by creative people. Games that
have character, humour as well as the great passion originating from
engineers, artists, musicians, writers, and of course designers.
These products are detailed and have depth and nuances that feel just
right; maybe this is why I enjoy Valve products so much. However,
this is not to say that Valve is the only company.
Introduction
This dissertation is
about innovation; where it comes from and how technology brings new
innovation to open new markets. The role of a firm is to generate
profit by efficient use of resources, to be creative and to be able
to evolve. This is the story of how the founders of Valve identified
the changing value of innovation and how they have been able to use
innovation to become frontrunners in their prospective industries.
This dissertation will give insights into the growing importance of
innovation and its place in today’s business world because
innovators are able to drastically affects society and our daily
lives. We now live in a society where there's fierce competition and
just innovation alone will not always mean success.
We will look at the
history of a firm's role; the father of modern economics, Adam Smith,
who has always been the foundation in which economies thrive within.
Others have also given hints to the purposes of a firm and how
businesses profit, but the invisible hand and the theory of general
equilibrium still prevails. However, should this be true in a world
over 200 years ago? From the beginnings of bartering, innovation
have taken place throughout businesses all around the world. The
invention of money, the division of labour, communication and
technology are examples. But it is clear that the majority of
businesses are unable to become true innovators. There are only a
few leaders in each industry, the rest follow in their footsteps.
Yanis gives great insight into the innovative structure of Valve.
Fast
forward to today's world; we are now living in the internet-age, just
as Adam Smith lived in the time of the Industrial Revolution, where
mass production created a large gap between the poor and the wealthy.
Allocation of resources are seemingly no longer common practices,
and firms can be seen as the last slivers of communism. Now we are
living in a new era where the internet is breaking boundaries for
many industries and the rise of the Digital Age gives great context
into the world in which Gabe was entering into. Throughout history,
there have been many advances, but there have only been a few who
were able to deliver and fully utilise the opportunities. Innovation
has seen to open up new markets, however only a few have ventured
into and return prosperously.
Knowing
that being innovative is important, and everyone knows what can
happen when it does happen, it affects us in our daily lives. So how
has the digital-age or the internet-age affected us? Similarities
can be seen just as when trains, telephones, televisions and
computers were invented and what new markets have opened up as a
result? This study will be examining what innovations can do, and
how Gabe Newell was able to start Valve with an intention to make
innovation as its produce. After all, not everyone can benefit from
innovation; identifying what will the best and most profitable for a
company is difficult. Mike Abrash and Yanis Varoufakis are witnesses
of Gabe's creation, and from here we can start to deduce what Valve
is. What's more, they have even made a new employee's handbook to
shed light on what's like to be at Valve.
So,
why Valve? Well, they were able to overcome the biggest problem in
the gaming industry and push the limits of their creativity to
produce innovative and quality products every time. Valve has become
Pixar in their industry; creating something that's fresh and never
been done before every time. Arguably, they can be the newest and
most interesting company to enter the gaming industry within the last
20 years. Tapping into the benefits of the internet era, they are in
a perfect situation. Manufacturing and the physical world is now
oversaturated and the digital 3D world is expanding. Gabe Newell saw
this, and has been breaking boundaries in this new world ever since.
We will be looking at Valve's innovations from their Source engine,
Steam platform, Source Filmmaker and most recently, Steam machines,
and how these have been a successes.
If
Valve can be so successful, why are there not more companies
following suit? Clearly, this business structure must have its
problems. There have been places where similar practices have been
implemented giving freedom to employees to do as they wish, but not
to the extent that Valve has done. Places like Google are one
example, and it can be a huge risk to the company. After all, it
seems counter-intuitive to pay your employees to do what they want.
Being successful is a lot of hard work, and maintaining such a place
requires high levels of trust, faith, money and exceptional people.
