Can we innovate from home?

I recently finished reading Edmund Phelps's book Mass flourishing.  It's a fascinating read, covers a lot of ground and should provoke a "heated debate".  But this is neither a review nor a plug.

Phelps takes a clear position supporting Yahoo! CEO Marissa Mayer's decision to insist that all the company's employees work from a Yahoo! office.  This is because Phelps thinks home working has a negative impact on innovation which, in his analysis, is the lifeblood of dynamic economies: "The success of this system depends also on the degree of interactivity within it... The belief of some social critics that one can have a good career working at home neglects the value of being pinged by the ideas and questions of others - especially those we learn to admire and trust.  And the belief that a company can place large numbers of its employees in solitary locations, such as their homes, without any cost to its innovation overlooks the importance of serendipitous interactions at the watercooler and luncheon meetings". [Phelps, Mass flourishing, pp38-9].

This made me stop and think ...

>Those working from home were on average 13% more productive than those doing the same job remaining in the office

Let's sketch the main items in the business case for home working.

1) A potential saving to organisations is the saving on accommodation and travel costs (minus any ICT costs associated with enabling someone to work from home).

2) Another key driver for home working is employee retention - it allows organisations to recruit (and, even more important, retain) employees. Usually discussion here turns to those with caring responsibilities (it is not clear in Phelps's book who looks after the kids) but other potential beneficiaries include people with disabilities, two career partnerships and, indeed, anyone sick of commuting. These first two factors might on the whole yield net benefits for home working - at least provided employers can decide who works at home and who doesn't.

3) A critical - yet more ambiguous - issue is employee productivity. Does someone working from home produce more or less than they would if they were working in the office? Are they having a lie in monitoring their emails in their pyjamas or are they still tapping away after midnight? The odds are it depends a lot on the type of work being done and how easy it is to monitor. However, one recent study conducted in a Chinese travel agency, using a random selection methodology, found that those working from home were on average 13% more productive than those doing the same job but remaining in the company office.

4) But, if we put the productivity issue to one side, what about innovation? Companies whose employees keep on producing the same goods and services in the same way, year in and year out, will eventually be overtaken by their competitors. So any company with an eye to the long term needs to think how it remains innovative as well as efficient.

Now Phelps is right about the value of unexpected interactions.  Only a very few may go anywhere meaningful but a very few may be enough.  Ruling these out through physical distance has an unquantifiable but negative impact on innovation potential.  Nor can the problem be "fixed" by requiring those central to innovation (such as the R&D Department, if there is one) to remain in the office or the lab.

Nevertheless, home working may contribute to a company's innovation effort in other ways.

First, there are alternatives to the watercooler.  Social media, for example, create new communities.  It's not the same as physical interaction but it may be nearly as good (perhaps even better?) - and no commute means time available for other things.

Second, another problem all companies face is knowledge management.  Much corporate knowledge is tacit, in the heads of employees rather than written down.  Often it is incapable of being written down.  It therefore leaves the company with the employee.  If home working improves staff retention, this increases the total corporate stock of knowledge.

Third, if home working increases workforce diversity, this can help organisations innovate by tapping into a wider range of employee perspectives (see the links to a Forbes Insight study and a McKinsey study focused more on top team diversity).

Now I imagine all these effects will often be very difficult to quantify in practice.  My point is simply that there are respectable arguments why home working can support, rather than inhibit, innovation - so we should not assume it is always a negative in the business case.

Of course, like much of the discussion on home working, the choice above is black and white - it's either home working or being chained to the desk or lab bench.  In practice, an approach combining working from home with time in the office can allow the best of both worlds - as well as keeping the employee in physical touch with managers, colleagues and customers.

Can we innovate from home?  Yes we can.

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