Spotify announced on Friday last week that it would be embracing remote work completely. It decided, after the COVID-19 lockdowns end, employees can choose to be in the office full-time, to be at home full-time, or to engage in a combination of the two. Spotify will even pay for co-working space memberships for those who need dedicated workspaces while working remotely. WeWork must be very happy.
Meanwhile, the French luxury-goods giant LVHM is telling people to report to their offices at least a couple of days a week starting in March. JP Morgan Chase is doing the same. But their eagerness to have people return cannot be explained away easily. It’s not just because they are “hardware” companies rather than software companies. Nor is it that they have “brick and mortar” operations rather than being “online.”
It’s worth noting that CEO Tim Cook said that Apple would not “return to the way we were.” He observed, “There are some things that actually work really well virtually.” Bear in mind that Apple is running some 500 retail stores worldwide and is manufacturing gadgets. It’s as traditional as an operation can get. So what exactly drives productivity when employees are working remotely? Why do firms like Apple and Spotify seem to like it? Why wouldn’t LVMH and JP Morgan Chase do so too?
What Does It Mean When A Company Needs Lots of Face-to-Face Meetings?
In theory, most knowledge work can be done remotely. The only operations that require people to come on-site are those that involve specific manipulations of physical stuff. Think about the kinds of work that are done on an assembly line, in a surgical theater, or in a specialized laboratory. You simply can’t do them at home. The same goes for frontline work among essential workers.
When a company needs to bring its middle management back to headquarters as soon as possible, that reveals something else: The company must have suffered productivity loss due to remote work. And the only possible reason for such a loss is that managers in the company need a lot of face-to-face meetings with their colleagues.
Zoom can’t replace human interactions. We all know that. And why these companies need so many face-to-face meetings to get their regular work done? Complexity. Here is an example.
In one of my online executive workshops, my senior managers were tasked with developing a product vision for the company. Each participant described their viewpoint. But the team struggled to build upon its members’ collective thoughts. They tried Google Docs, PowerPoint by SharePoint, Miro, MURAL, and Chatbox. Nothing came even close to an old-fashioned flipchart with five people sitting inside a conference room.
You can’t build out your thoughts using Zoom as effortlessly as you would on a physical whiteboard. Other people can’t react as fluidly to your inputs while illustrating their own. And then you can’t place quick Post-it Notes on top of a movable flowchart while checking whether your colleagues react with a smile or a frown. Seriously, no video conference can deliver all that. Not Zoom at home anyway. And so, for highly creative work, we have to rely on face-to-face meetings. Only such immersive, real-time, face-to-face dialogue can bring us to conceptual breakthroughs.
Obviously, this is a very high-cost set-up, requiring tremendous time and effort to coordinate. It is far more expensive than other asynchronous methods like email, Slack messages, newsletters, company websites, intranets, and extranets. So how do smart companies reduce high-cost coordination?
The Common Features Of Companies Who Love Remote Work
What the pandemic did was reward companies that could minimize the high-cost coordination. Then you had companies that couldn’t do so because of the complexity of their operations. And complexity has nothing to do with the size and scope of a company. Apple and Google are enormous in size but elegantly simple in their setups.
Consider how it looks like when a task is dependent on the inputs of others. An executive of an old fashion manufacturer once told me that, every time his company prepared to launch a new product, he will dial in to a briefing from headquarters. He would then call up his team to parse out the responsibilities. Each member, in turn, would find their counterparts—the freight forwarders, the retail stores, the advertising agents—all the while keeping headquarters updated on every milestone. With Excel spreadsheets flying everywhere, everything was done manually.
This is complexity. It’s a sprawling operation where anything can affect everything else. As a result, managers working in such a company need a lot of face-to-face meetings to coordinate and strategize. It’s an enormous task to “connect the dots.” It’s really hard work. But it’s the sort of internal work that doesn’t help external customers at all. Nor do the customers care how hard insiders work on their internal challenges.
Here’s the thing: All companies that have achieved simplicity have, in fact, gone through near-death experiences. They were all been hobbled by complexity at some stage. But they restructured to pay down their complexity debts. As I wrote here before, Google, Facebook, LinkedIn, Netflix, eBay, Twitter, and Etsy have all rebuilt from the ground up. Communications between different teams are standardized via APIs (application programming interfaces).
Let me use Amazon as a concrete example. When Amazon started in 1996, it was built as a single-application entity. It ran a web server that talked to a database on the backend. Over time, it sprawled into a monolithic architecture of a million lines of code.
CEO Jeff Bezos specifically observed that Amazon’s application developers were in a constant struggle with the hardware server team. So he made them develop some standard application programming interfaces (APIs) for accessing and allocating computing resources.
Bezos was adamant about this. His instructions for creating internal APIs were written in an email that ended with the characteristic signature: “Anyone who doesn’t do this will be fired. Thank you; have a nice day!” But with the new directive, there was no more face-to-face meetings or email communications. Instead, the big functional system — in this case, IT — was broken down into smaller service modules called microservices. Each microservice would communicate with others through the APIs.
The end result is that a small team of software programmers can now launch a new feature on Amazon.com independently. It’s similar to how a small merchant runs a Facebook campaign. They don’t call up Facebook customer service to schedule a campaign by phone. It’s all self-serviced, and the execution is automatic.
As for the Amazon engineers, launching a new product offering was not so much like coordination across departments. Rather, it was like assembling LEGO bricks, mixing and matching capabilities for new offerings that fit the changing marketplace. That’s complex made simple.
The Future Of Work and Organizational Design
People have been saying that the pandemic acts an accelerant: It has accelerated many business trends. I agree. But, with Sportify and Apple and many fast-moving organizations, the acceleration is not limited to the marketplace. It also changes how companies need to architect themselves.
Forward-looking managers always ask themselves these questions:
- In my current role, what percentage of my weekly meetings are about status updates? How many of these routine updates can be automated, making the process completely transparent for other stakeholders?
- In my department, how many services that I provide to others can be switched to the “self-service” mode? How can I package work into an easy-to-use interface so that I don’t need to attend its daily operations but can focus on the underlying improvement instead?
P.S. In your observation, what practice have companies successfully deployed to reduce complexity? If remote work is to extend beyond the current pandemic, in what type of tasks do you think it will remain critical to have face-to-face collaboration or colocation? Share your thoughts with us. Join the discussion below.