When a company adopts a flat organizational structure, it's often with the goal of increasing employee autonomy and productivity. However, this approach can sometimes have unintended consequences. At Valve, the renowned video game developer, a flat structure initially led to increased productivity and creativity. Employees were free to work on whatever projects they chose, without traditional managerial oversight. But as time passed, the lack of clear direction and accountability began to take its toll. Without explicit goals or incentives, some employees struggled to prioritize their work, leading to decreased overall team velocity. The company's experience highlights a crucial aspect of organizational design: the interplay between incentives, autonomy, and productivity.

Incentives can be a powerful tool for driving behavior, but they must be carefully designed to align with the company's goals. When incentives are misaligned, they can create perverse effects, such as encouraging employees to focus on individual accomplishments rather than team objectives. At Valve, the lack of clear incentives and accountability led to a decrease in team velocity, as employees pursued their own interests rather than working towards a common goal. This experience illustrates the importance of balancing autonomy with clear direction and incentives.

The key to avoiding this trap lies in creating an incentive structure that rewards team-oriented behavior, rather than individual accomplishments. By doing so, companies can encourage employees to work together towards common goals, increasing overall team velocity and productivity. This approach requires careful consideration of the organizational design and incentive structure, as well as ongoing monitoring and adjustment to ensure that the system remains aligned with the company's objectives.