The Distributed Company

I’ve said before that distributed working models – which I prefer to the term “remote working” but whatever – are a disruptive organizational technology cycle that is already well underway. The number of salaried, professional workers who work remotely at least part-time has been growing slowly, but steadily, for two decades.

 

In some professions, this trend is more pronounced than in others. Even in tech, I personally find that remote working is actually much more common than many people seem to think. Remote arrangements, whether just working from home or from another city/state, are frequently granted on the basis of political weight (eg. longtime employees or executives) and/or without labeling them as such. So-and-so employee simply lives elsewhere, but isn’t called a “remote employee” per se.

Like any disruptive technology, distributed working has its critics who dismiss it as infeasible and unrealistic. And to be sure, it’s still improving (albeit steadily). But when I look at the broadening set of tools available to collapse the productive distance between professionals, as well as remote collaboration habits from other fields like gaming, the more convinced I am that this model is going to eat “the office.” One model of a high-productivity firm of the future will be a distributed one, where many or nearly all employees are based in separate towns, cities, states and even countries. This type of firm is able to use technology to most efficiently source talent regardless of location and route tasks throughout the organization, leaving geo-constrained firms at a permanent competitive disadvantage.

Firm productivity is really dependent on two things: people and the systems for organizing them. Google is a highly productive firm not only because it hires smart people, but because they’ve developed a system for organizing their labor that works. Some people claim that technology is a source of competitive advantage, but this is wrong. Technology use is an extension of a firm’s system, what some techie folks call a “company’s operating system,” of organizing and directing the work of its people. Sometimes technology will assist that, and sometimes it won’t. Rarely will just buying a product make any company more effective (and I make enterprise software for a living, so you know that’s saying something).

In the bad old days, “remote working” was only really feasible once the right talent found your company and could do their work in isolation. But that hasn’t really been the case for almost twenty years. Better phone lines, mobile connectivity, email, messaging and web conferencing has gotten us to the point where most routine meetings can be done remotely – and for lots of companies in many industries, that is basically sufficient. Resistance to remote arrangements in these situations today mostly boils down to personal preferences (or, as they say, the HIPPO – “highest-paid person’s opinion”).

There is still a high political premium placed on “face time” at many companies. It’s tempting to dismiss this as a vestigial holdover from stodgy old dinosaurs, but it holds equally true at Google or Apple as anywhere. Indeed, many of the hottest Silicon Valley firms have held stubbornly to organizational models that their products, which allow people to collaborate anywhere, make obsolete.

There are certain silly exogenous reasons for this (ex. VCs typically want their investments nearby), but I think it really comes down to internal factors, like inertia (most companies start among local networks), ego (founders and executives like big offices), and various beliefs about “collaboration.”

This supposed inability for distributed teams to adequately collaborate in particular is usually put forth as the reason for eschewing them. Strangely, this seems to mainly come up at legacy companies in cost-cutting mode who aren’t known for impressive innovation in the first place, like Yahoo, IBM, and Bank of America. But I think it also reflects a basic disconnect between what most executives think they do, versus what actually happens on their teams.

Most companies, even the best tech companies, are not engaged in constant “eureka” moments day-in, day-out. We’re not all sitting around at whiteboards together having ah-ha moments. The large majority of our work, particularly in software development, is far more mundane: as they say, it’s 1% inspiration, 99% perspiration. In product, just as an example, our day-to-day job consists of evaluating use cases, writing and prioritizing stories, managing a backlog and constant communication with multiple other teams (like engineering, marketing and sales, not to mention customers). Deep collaboration is a part of what we do, but a small one that sometimes becomes the genesis for most of our other “real work.”

This actually makes relying on online collaborative tools more of a necessity in the modern workplace, and co-location less so. Go into nearly any high-productivity office today, and you’ll see rows of people communicating across the company over email, messaging, Slack and the like, noise-canceling headphones firmly clasped on their heads. Particularly in a big city, many of these people might have commuted over an hour and still pay exorbitant housing costs to do this. If that sounds like madness, perhaps it is.

If you think that intense collaboration over distance is impossible, then you’re also probably not a gamer. Nor am I, honestly, but I’ve had enough exposure to see that the gaming community has figured out deep collaboration in a way that most workplaces still struggle with. If you’ve never watched an elite Call of Duty clan stage a raid on a rival, you’re missing out on seeing a strategy meticulously planned and executed. (I would link to some video on this, but I couldn’t find one that’s family-friendly.) Or consider EVE, the gigantic MMORPG that tens of thousands of people around the world basically structure their lives around, using intricate spreadsheets, forums, Slack channels, huge email lists and teleconferences to plan. (It’s truly a remarkable subculture unto itself.) Dismissing these as merely games utterly misses the point, because these communities are demonstrating a level of distributed “collaboration” that even elite tech firms can learn from.

The companies of the future who can harness the energy, talents and skills of people the world over, and not just those within a 90-minute commutable distance, are going to win in a marketplace fueled by human capital. The tools we’ve developed to make this easier – phones, Webex, Slack, etc. – are great, but we still have further to go. I think these are fundamentally transformative technologies that hold great promise for the future of work. I look forward to seeing the working models of the future they make possible.

 


I send out a semi-regular update with the more interesting stuff I've read and written. Learn more about it and read old issues, or just sign up below. I won't spam you - promise.