IBA111 Assessment 2: Report
Report on Strategic Planning at Valve
Jimmy Jo Jo S1234567
Monday, 4 February 2013
Strategic Planning at Valve Introduction A global leader in the software and computer gaming industry, Valve maintains a very unique internal operating environment. The company operates without any managers, instead relying on all employees to manage themselves. Grouped into project teams, the employees of each team are collectively responsible for the success of their respective project. While it could no doubt be argued that there are certain benefits to Valve’s distinctive operating style, it is evident from the case study that there are also substantial problems with the operational ecosystem within Valve. One of the major issues for Valve is the lack of strategic planning within the organisation. All of Valve’s employees work in project groups, and their goals, tasks, and deliverables are all project-specific. As such, there is no employee group specifically focused on longer-term, strategic planning for the organisation. Valve’s flat organisational structure also means that there is an absence of management personnel, who would usually be charged with driving the strategic planning process. This lack of strategic planning at Valve has left the organisation without clear goals, objectives, and plans for the future. An absence of strategic planning also exposes Valve to the risk that it will be in a weaker position to respond to future changes in the operating environment. Schermerhorn, Davidson, Poole, Simon, Woods, and Chau (2011, p. 166) define planning as ‘setting objectives and determining how to accomplish them’, and stress the importance of planning as one of the four functions of the management process. Strategic planning maps out the company’s future goals and objectives, and allows the employees to see the direction the company wants to take. Without strategic planning, Valve cannot hope to be successful in managing changes in its operating environment, a point that is particularly relevant given the volatile conditions of the software industry. This report examines the role of strategic planning within an organisation, discusses the relevant strategic planning theories, and recommends steps that Valve can take to implement strategic planning within its organisation. Analysis and Critical Evaluation Jimmy Jo Jo S1234567 Page 2 of 8
Strategic planning builds a solid foundation for an organisation, and provides a company with a higher chance of performance success. Peattie (1993) contends that strategic planning should be a fundamental process in every organisation, as strategic planning allows an organisation to determine the future direction and goals that the organisation will work towards. Reid and Hinkley (1989; as cited in Peattie 1993, p. 12) agree, arguing that the strategic planning process fulfills many roles in an organisation, including acting as an organisational communication process, a resource allocation process, and a form of strategy alignment. The positive correlation between strategic planning and organisational performance has also been well documented (Armstrong 1991; Rudd, Greenley, Beatson, & Lings 2008; Glaister, Dincer, Tatoglu, Demirbag, & Zaim 2008), strengthening the argument for the necessity of planning at Valve. However, strategic planning is not a uniform process across every organisation, but must be specifically tailored for each organisation, based on characteristics such as the organisation’s type and industry. Operating as a project-based firm, all of Valve’s employees belong to individual project groups working on separate projects. A study of project-based firms found that although autonomous project teams generally undertook their own project-specific planning, in firms where organisation-level strategic planning was absent, these project-based plans were often in conflict with one another (Mutka & Aaltonen, 2013). On the...
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