Moving Beyond Productivity: IBM’s Remote Work Reversal

In the wake of WSJ’s recent article, “IBM, a Pioneer of Remote Work, Call Workers Back to the Office”, Lise Newman, Director of Workplace Practice at SmithGroupJJR lends some insight.

The organization that pioneered the “work from home” movement across corporate America is reversing its position after 30 years. IBM CEO Ginny Rometty believes that bringing the 40% of its total workforce currently working remotely back into offices is the magic bullet that will turn around 20 consecutive quarters of declining sales. When the Wall Street Journal’s article “IBM, a Pioneer of Remote Work, Call Workers Back to the Office” published last month, responses elicited from Forbes, Fast Company, Quartz, and numerous others were swift and often offered a skeptical perspective.

An Evolving Viewpoint

Measuring success by lower expenses and higher productivity, IBM should have been yielding high-performance results. The company’s real estate annual savings total over $1 million and its internal research states that this contributes to their remote workers increased productivity. However, with its five-year average revenue growth of -5.65% compared to the +54.35% average revenue growth of its competitors over the same period, IBM seeks to transform its business model to one that fosters creativity and innovation over cost reduction and increased productivity. As it battles to compete in the tech arena, IBM realizes it must become an agile organization. Before the recent, widely publicized call for its Marketing teams to return to the office, several business units have already begun to share workspace, including the Design Department, portions of the IT Department, Watson Teams, and Cloud Development. Is it a coincidence that these groups are also some of IBM’s most profitable?

 IBM’s announcement is not dissimilar to the one made by Yahoo in 2013, in which the elimination of its telecommuting policy resulted in the exodus of many senior talented employees that valued the flexibility its remote work policy afforded. That change is not surprising, as flexibility is also cited as a top consideration when evaluating a job offer by 80% of respondents according to a survey by Flexjobs.com. Similarly, Daniel Pink’s research on motivation found that the “secret to high performance and satisfaction-at work is the deeply human need to direct our lives…” Meaning autonomy in the workplace goes a long way. But does higher productivity, flexibility, and independence for employees outweigh the need for innovation and profitability?

Revenue per employee can be considered a measure of success that balances an organization’s human capital investment with its revenue. IBM’s revenue of $250,000 per employee in comparison to Google’s revenue of over $1,000,000 per employee, is an indication that Google must be doing something right in motivating and inspiring its employees to innovate. While Google permits employees to work from home on a case-by-case basis, its success is rooted in the cooperation that occurs when employees work together in a shared workspace.

Is shared workspace alone enough to drive innovation?

While bringing employees together can increase collaboration, successful companies recognize it requires more than co-location to stay ahead of the disruption curve. The workspace will only improve creativity if it is aligned with the organization’s culture and can enhance the total employee experience through the intentional incorporation of several design strategies.

 Proximity and Path Overlap

Over its 50 years of existence, MIT’s Building 20 earned the nickname “Magic Incubator.” Rather than working in individual offices, cross-disciplinary scientists worked together in the open, often in the transition zones of hallways and stairways to produce breakthrough research. More recent proximity studies on the MIT campus utilizing badge swipe data correlate path overlap with innovation; those scientists that crossed paths between buildings produced more patents than those that worked alone. Similarly, a 2013 research study at the University of Michigan found that both proximity and the intersection of key spaces that scientists crossed throughout the day influence discovery and creativity as path overlap correlates with the success rate of winning grant funding. Not unlike the lessons learned from the higher education examples, proximity and path overlap are key elements for workplaces of choice as employers value teamwork, communication, perspective, and critical thinking across multiple disciplines. Utilizing “found” space at the intersection of two office wings in this financial institution provides the occasion for chance encounters between employees throughout the day.

 Lake Trust Credit Union Headquarters. Photography by James Ewing and image courtesy of SmithGroupJJR.

Lake Trust Credit Union Headquarters. Photography by James Ewing and image courtesy of SmithGroupJJR.

Three Work Modes

Providing employees with control and autonomy over their workspace is also critical in fostering creativity. Work changes throughout the day and effective workspaces integrate a range of settings that accommodate three distinct work modes:

  • focus | concentrate
  • meet | collaborate
  • live | create

The newest members of the workforce want the freedom to move around and determine where they’re going to be productive and with whom. Workplaces of choice offer a variety of eclectic places for employees to choose from—comfortable living rooms and lounges, libraries, community tables, outdoor workspace, as well as “off the radar” hangouts. By providing a range of settings that enable employees to choose when, where and how to accomplish their work, workspace transcends the ordinary and becomes a place where the efficiencies and focus on telecommuting and balance opportunities for serendipity and innovation. We’ve even found these strategies successful in our offices.

SmithGroupJJR Chicago Office. Photo by Dave Burke and courtesy of SmithGroupJJR.

SmithGroupJJR Chicago Office. Photo by Dave Burke and courtesy of SmithGroupJJR.

Elements that Boost Creativity and Innovation

In working with organizations ranging from technology giants like Google and Microsoft to global manufacturers like General Motors and Ford Motor Company, several design elements emerge as common ingredients for a workspace that inspires creativity.

  • Elements of Surprise: Neuroscientist Gregory Berns found that by introducing unfamiliar work settings, the imagination becomes inspired. Introducing limited, unexpected elements into the workplace environment can ignite the brain to reorganize perception and look at an old problem with a new lens.
Noblis Headquarters. Photo by Eric Laignel and courtesy of SmithGroupJJR.

Noblis Headquarters. Photo by Eric Laignel and courtesy of SmithGroupJJR.

  • Hearth: Central gathering spaces like an open stair or wider, day-lit corridors encourage people to socialize informally between both focus work and meetings. In a recent post-occupancy survey for Lake Trust Credit Union Headquarters, over 85% of employees believe that spaces such as this central stair provide the chance encounters and unplanned interactions between employees that improve ad-hoc interaction and innovation. Other successful gathering spaces focus on food as the impetus for spontaneous conversations, uniting people across the organization and fostering the cross-pollination of ideas.
Lake Trust Credit Union Headquarters. Photo by James Ewing and courtesy of SmithGroupJJR.

Lake Trust Credit Union Headquarters. Photo by James Ewing and courtesy of SmithGroupJJR.

  • Rest + Play: In his research about insight and creativity, Jonah Lehrer found that when people take a break from focus work, imagination flows and the likelihood of creative breakthroughs increases. Others including psychologist David Abramis support Lehrer’s theory and note that employees who also have fun at work are not only more creative but often get along better with their peers than those who spend the entire day in contemplation.
Gravillis Headquarters. Photo by Art Gray and courtesy of SmithGroupJJR.

Gravillis Headquarters. Photo by Art Gray and courtesy of SmithGroupJJR.

  • Agility: An agile workplace incorporates all the above features and often adds a few more. Flexible (aka unassigned) seating arrangements increase opportunities for cross-pollination and the breaking down of silos within organizations, as employees form relationships with colleagues they otherwise would have never meet. Successful agile workspaces need intuitive and convenient technology throughout and a variety of settings from which to work and collaborate. Hackable environments where employees can rearrange workspace themselves on an as-needed basis to support the formation of ad-hoc teams is also enhanced innovation and creativity.
DPR Mid-Atlantic Headquarters. Photo by Judy Davis/Hoachlander Davis Photography and courtesy of SmithGroupJJR.

DPR Mid-Atlantic Headquarters. Photo by Judy Davis/Hoachlander Davis Photography and courtesy of SmithGroupJJR.

  • Brand: The final element that will boost engagement and creativity is the connection of every employee to the meaning behind their work. Employees want to work for employers that share similar values; by integrating brand identity throughout the workplace design strategy, the company’s purpose becomes a source of pride.
General Motors IT Innovation Center. Photo by Kevin Korczyk and courtesy of SmithGroupJJR.

General Motors IT Innovation Center. Photo by Kevin Korczyk and courtesy of SmithGroupJJR.

The Bottom Line

IBM will succeed in its call for employees to return to the office if it recognizes that creativity and innovation require more than co-location; its workspace must realign with its business mission of becoming increasingly agile. In requesting that about half of her 5,500 remote employees return to work in the offices of one of six cities, IBM’s Chief Marketing Officer Michelle Peluso is betting that “really creative and inspiring” workspaces will boost the company’s ability to thrive in the competitive tech marketplace in which agility drives innovation.

A Future Outlook

All this debate on remote working and the importance of the workspace is timely in 2017. However, when looking towards the future, company and design firm considerations will be very different. In our highly connected world, the virtual space is becoming increasingly complex and how it supports our workspaces should not be ignored. In the last 15 years, this virtual space has evolved from simply allowing us to create and share documents more efficiently to supporting connections between workflows and the people engaged in them. These changes led to the portability of work and then to the portability of collaborative work. The next evolution will be in the portability of the experience of collaborative work.

As virtual space created by augmented and virtual reality becomes more sophisticated, and the sense of working side-by-side occurs even when there are hundreds of miles separating colleagues. While it may never precisely recreate the experience of truly working side-by-side, it will certainly advance collaboration from different physical spaces. An important key to the design of the workplace and creating a culture of innovation will lie in creating a balance between work in the physical and virtual spaces. When this happens, debates such as the one stirred by IBM’s recent announcement about remote working will be (virtually) non-existent.

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