Companies that have all their workers in one location have the primary advantage of being able to communicate in person faster with each other but the primary disadvantage of being too geographically confined in thought and not being able to meet broader world requirements. On the other hand companies that are too decentralized and distributed often fall prey to the problem of being unable to execute quickly within themselves for a variety of reasons.

In the last ten or twenty years there has been a big push for working from home. They point out the benefits of lower costs due to no office space, more productivity due to less time traveling between office and home, and happier workers. The advocates also point out those companies that are distributed that work well: companies with design centers in India, marketing in the US and production in China. They further point out that people in an office environment suffer too many distractions: too many emails, water cooler talk, physical interruptions, etc.

I think that a lot of these advocates have not really worked in both environments and do not understand how humans behave as social creatures. These companies that are distributed are distributed along lines of centers of excellence, factories, and other functional entities. Within those specific geographic locations an entire entity will exist that has common goals. When the job crosses boundaries, it is managed for that boundary crossing. Maybe it is at a higher level, has coordinators, or treated like internal customers with set expectations.

On Dec 28 I wrote about some MIT research that said that people with face-to-face networks were 30% more productive than those without. And those that were distributed that developed digital networks were only 7% more effective. This applies whether the people are working in a centralized office or are extremely distributed. Logic dictates though that those in a centralized office CAN develop those face-to-face networks a lot easier.

23% more effective.? Thats a lot of extra people. Or that is like having an extra day in the work week without you having to do any work.

All the problems that distributed advocates state about centralized companies can be solved except one: the ability to work in from home. Short of everyone moving in together this is not going to be solved. But I do not think that is a problem. My friends and colleagues that work from home say they actually have to work more hours to get things done. Why? Because everyone is so distributed they have to spend more time corralling everyone together. Too many formal meetings have to be set up that take too long.

Sales people have to be distributed to effectively serve clients and develop the face-to-face relationship with the client. Wait a minute. The advocates point out that sales people are distributed and they work well. True, but they are distributed so that they can physically meet with clients and form the face-to-face relationship.? A face-to-face IS needed, but the one with the client is more important for this job function. This never seems to be mentioned.

In the end, you have to put the priority on productivity and effectiveness. Face-to-face seems to be winning over distributed. However, the demands of face-to-face need to be addressed. It becomes a bigger challenge when you are dealing with a start-up which may not be able to afford an office or to have everyone in the same location.

Maybe we should spend some time discussing that in the future because now we are addressing how a startup can execute successfully?