Creating Cultures of Innovation in the Hybrid Workplace
Introducing the dogma
Organizational leaders often claim that frequent co-located work is necessary for innovation and collaboration. Indeed, these words have taken on an air of dogma over the last several months as employers discuss their return-to-office plans. To call it dogma is not to say it is false; it is just to say that it is the kind of claim people accept without much justification. Though organizational leaders say that all their employees should be in the office at least a few days a week to achieve these outcomes, it’s far less common for them to explain why we ought to believe we get more (or better) innovation, culture, and collaboration when people are that frequently co-located. When we look for evidence for this claim, it actually turns out to be quite mixed. While some relationship exists between frequent physical proximity and innovation, it varies in strength, is not obviously causal, and changes depending upon background conditions.
Frequent physical proximity is one of many factors that drive innovative and collaborative cultures. The evidence summarized below suggests that frequent physical proximity is neither necessary nor sufficient to achieve these results. To build cultures of innovation and collaboration post-pandemic, managers need to move beyond thinking solely about physical proximity and focus on other dimensions of proximity which are critical for innovation.
Beyond optimizing the proximities that lead to collaboration, leaders need to critically examine what kind of cultural and performance management practices best enable high-performing teams that have discovered new preferences for flexible work — especially given that these preferences sometimes exceed managers’ willingness to provide it. Teams working within companies that practice outcomes-based performance management create level playing fields for those who do not benefit from office-centricity — they may find themselves dominating the innovation landscape in the years to come.
The research on proximity and innovation
While empirical work on the relationship between innovation, collaboration, and remote work is somewhat limited, there is a broader body of work on the relationship between geographic proximity and these variables. This work usually examines the relationship between physical proximity and organization-level, team-level, and individual-level innovation.
For example, recent research from UNC that looked at the relationship between individuals’ patent rates and their proximity to headquarters appears to reveal a small but meaningful correlation. The researchers found that the further an inventor or facility is from headquarters, the less likely they are to produce a patent. Unfortunately, results like these are often complicated by the non-random distribution of an organization’s inventors and facilities — it could be, for example, that more innovative workers happen to prefer living in metropolitan areas, in which case an observed relationship between their inventiveness and physical proximity to headquarters may be purely correlational. Research can try to eliminate this bias by searching for exogenous sources of randomness, but these are rare and do not always eliminate confounding factors.
Not all results in the literature follow this pattern. Studies on distributed collaboration and innovation in academia over the past several decades show diminishing returns from sustained face-to-face interaction. These findings are particularly illustrative examples for managers at knowledge firms because of the place that academic work occupies on the knowledge frontier. The fact that we observe no material impact of increased face-to-face interaction on academic research productivity or quality may make us suspicious of the idea that knowledge innovation requires sustained physical proximity. What the research does find, however, is that periodic face-to-face interactions (at conferences, colloquia, or campus visits) often lay the groundwork for future collaboration. So, while physical proximity may still play an important role early in the innovation cycle, it is less likely to make a difference after that. It is also important to note that, when this proximity occurs too frequently with the same people, it can lead to “lock-in” effects described below.
The broad failure of open office plans to drive more collaboration, creativity, and innovation also adds a layer of complexity to the proximity story. Open office plans were designed to make knowledge work mimic the spontaneity, collision, and vibrancy of a coffee shop — but, in reality, they turned out to be overwhelmingly distracting, had a negative impact on creativity, and have come to be generally ill-regarded. It is not uncommon to hear knowledge workers pine for the return of the cubicle or cite the benefits of closed-door offices. As their organizations contemplate space redesigns and new location expectations, this history offers a cautionary tale about the gap between theory and practice when it comes to optimally gathering people for knowledge work.
Despite the mixed findings, one important insight has emerged from this literature. Intuitively, we recognize that there are several other dimensions of proximity beyond physical proximity, that could be just as important to predicting innovation outcomes. In addition to proximity in physical space, it is plausible to suppose that people can be more or less proximal in social, cognitive, institutional, and organizational space. It turns out that their distance from each other in these different spaces can predict both their level of collaboration and the innovation that results. Indeed, some have found that being too close in any of these spaces, including physical space, can cause a phenomenon called “lock-in” which actually hinders learning and innovation. This multi-dimensional proximity theory predicts that non-geographic factors should correlate with innovative activity, and indeed that is what the literature finds.
While we don’t know the exact degree of proximity that’s necessary for optimal innovation within each of these spaces, the theory at least gives leaders more levers to pull than just physical proximity when trying to create the conditions for innovation. Organizations can use digital tools to lower cognitive proximity barriers; they can use workplace social media to lower social proximity barriers; they can periodically mix up or create new teams to maintain the right levels of organizational proximity; and they can encourage more engagement at industry events to facilitate institutional proximity — or encourage collaboration across institution types (public-private partnerships, for example) if too much institutional proximity leads to lock-in.
The results from the literature on proximity and innovation are suggestive, but they should also be taken with a dose of healthy skepticism. Case studies are interesting but should be suggestive directions for further statistical research; they should not be taken as indications of broader patterns. Statistical surveys can be revealing, but it can be hard to ensure that they use truly randomized samples. Meta-analyses (where they exist) can help cut through this bias, but even historical patterns can shift as human behavior shifts. It is quite plausible, for example, to believe that pre-COVID patterns between remote work and various business outcomes may not persist in a post-COVID environment simply because the environment itself has changed substantially, because most global knowledge workers have now experienced remote work at scale. At least for a few generations, we cannot go back to a world where most knowledge workers have no memory of remote work. This history complicates our interpretation of historical evidence.
Rather than taking a wait-and-see approach, we might try to look for experimental studies which attempt to demonstrate interesting relationships between remote work and select business outcomes, but unfortunately these are often notoriously difficult to replicate. Remember power poses? Other things being equal, we should suspend belief about experimental results in business management until these results replicate. Unfortunately, chances are that if the results are interesting, replication is unlikely.
Beyond the collision theory of innovation
In spite of an inconclusive literature, there is no denying that we are in a historic moment for those who are trying to create the conditions for innovation. Firms are abandoning their office space and employees have the chance to return to their hometowns, potentially reducing brain-drain. Meanwhile, there is growing realization in economics that the developed world has been in an innovation drought for some time, where innovations are getting harder to come by and more expensive.
And yet, as measured by the rate of patent filings and new business starts, the pandemic does not seem to have been an entirely bad time for innovation. Some even believe that we are on the cusp of an innovation boom. These data demonstrate that innovation can boom even if managers can no longer expect to simply bring people together on lavish corporate campuses and headquarters to get ideas out the other side. We may be witnessing the last breaths in this legacy view.
Call it the “collision theory of innovation.” The collision theory of innovation assumes that the most valuable innovations occur primarily because of spontaneous physical interactions — that spontaneous, face-to-face interactions are the most important predictor of successful innovations. It is a surprisingly common view. At the margin, the collision theory almost likens people to particles in an accelerator — surely, the collision theorist might think, with the right space and amenities, sparks will fly if we can just bump these people together frequently enough.
In contrast to the collision theory, more expansive theories about individual- and team-level innovation assert that other variables beyond physical proximity are better predictors of workplace innovation. And this is indeed what we see in meta analyses.
So why should so many seem eager to accept the collision theory? Perhaps it is because the other factors, which are better predictors of innovation, are so embedded in our lives that we hardly notice them in comparison to the collisions which tend to stand out when we think about our experience with innovative activity. Or, perhaps it is because some managers acknowledge the importance of those other factors for innovation, but believe physical proximity is the best way to maximize those conditions.
Whether or not that was true in the past, the challenge now will be to make sure that the memory of lost location-flexibility does not negatively affect the conditions for innovation in the future. Now that would-be innovators have had a taste of the freedom that remote work can bring, it may be hard to force them back into the collision theorist’s accelerator — at least, more often than they would like to be there. For that significant minority of knowledge workers who want the ability to work remotely full time, we may see a rotation back to the garage tinkerer, who is empowered with tools to collaborate across space and time, belongs to a team that allows psychologically safe risk-taking and is encouraged to maintain Goldilocks-proximity — not too close, and not too far — across all the dimensions that predict their likelihood to generate fruitful ideas.
Addressing employer-employee empathy gaps
The risk for those who accept the collision theory is that, once back in the office, these collisions may generate more friction and fewer sparks if employees are resentful because their location freedoms were taken away. It is probably not the best time to risk disrupting the innovation pipeline (which, after all, comes from happy people who feel empowered to do their best work) when the ROI of R&D is on the decline and reaching historic lows.
When navigating decisions about the future of work, we sometimes observe an empathy gap between manager and employee preferences. This should not necessarily be alarming; indeed, it is entirely predictable. After all, even if they work for the same organization and live in the same geographic region, senior managers and employees often lead very different lives. Differences in power and privilege, especially those related to class, gender, race, ability, wealth, neighborhood, and social capital, can have a significant influence on how people feel about whether and how often they would like to return to an organization’s offices. Those who have easy access to comfortable commutes, who can afford childcare and housing near offices, and who have overwhelmingly positive social experiences when they’re actually in offices may be puzzled by those who insist upon location flexibility. Leaders need to guard against the confirmation biases that can easily creep into their decision making here, even when they have asked their workforces about their return-to-office preferences. The majority of workers in an organization probably do not have work-life experiences like those of their senior leadership.
One way to do guard against leadership confirmation bias is to personify the preferences revealed in employee surveys so that they can be absorbed as more than just raw numbers. Using personas in workshops with leaders, managers, and communications to employees can help everyone understand the surprisingly varied points of view that people have about when, how often, and under what conditions they would like to return to offices. These exercises can spark “aha” moments when they’re conducted with an open mind. Even if leaders do not want to survey their own employees, they can probably learn what they need to know by studying the abundant third-party employee preference surveys that have been published over the past eighteen months.
Culture re-shaping starts now
Most leaders recognize that their organizations’ cultures are neither fixed nor given. They also understand the outsized role that they play in modeling and shaping that culture. For these leaders, the next few quarters are a once-in-a-lifetime opportunity to re-shape their organizations’ cultures to better fit their vision and ideals. Change is in the air, and people expect things to shift as they return to offices and move into new ways of working. Leaders are rarely handed this kind of opportunity to re-establish team connections, norms, and ways of working.
When seizing this opportunity, managers must remember that intentional cultural transformation work can be done, even in distributed or highly hybridized environments. We know that culture does not require co-location, so managers can begin their culture transformation work by examining the gap between their organization’s desired values and the values that show up in behavior. They can then begin to communicate what mindsets and behaviors would constitute moving from the latter to the former. They can re-examine their performance management practices — formal and informal — and ask whether they’re consistent with the culture they want to create. Finally, they can embed their desired values in hiring — especially leader hiring — to make sure that they’re bringing in the culture they want right from the start, and then rely less on water coolers and happy hours to transmit it.
Who benefits from an office-centric culture
As organizations go through this transition, it is critical that they also pause to reflect on the idea of “culture preservation” itself, because the idea is not necessarily innocent. While most leaders understand that co-location isn’t necessary to have an organizational culture, they may believe that co-location is necessary to preserve the particular kind of culture to which they may have become accustomed. Co-location is necessary, the thought goes, to preserve that electric feeling I get by being surrounded by other busy, interesting people who are animated by a common purpose — especially, the thought might continue subconsciously, where that common purpose involves seeking out my attention.
While there can indeed be something buzzy and electric about being surrounded by people clamoring for your attention, organizations need to ask who does and does not benefit from these kind of office-centric cultures. Looking back, very few of us would say we ought to have fought to preserve “boys club” workplace cultures, because we know that their existence depended upon systematic bias, exclusion, and harassment. At the same time, there were surely some who claimed that these ways of working needed to persist, to maintain some hand-wavy connection between their comradery and business results. Despite the protests of those who, no doubt, insisted to the contrary, these cultures were not worth fighting to preserve.
Inclusion and diversity leaders must recognize that workers’ return-to-office preferences are not evenly distributed across lines of race, gender, ability, class, and age. At the very least, these patterns cry out for exploration, deep listening, and empathy. ID&E leaders will play a critical role in helping their organizations build the empathy required to navigate successful transitions into the right kinds of hybrid models. They can help us move past impersonal survey data, soundbites, and our own prejudices. They can encourage us to ask young parents and single mothers why they want to spend more time at home; or ask young families why they want the freedom to live where they want without having to change jobs; ask young people with disabilities why the pandemic shift to work from home felt so bittersweet for them; or ask women of color why a virtual work environments may feel less stressful and more egalitarian than office environments.
Astute leaders who have already returned to their offices may notice that their presence can have a gravitational effect on the rest of their workforces. It will be very difficult for leaders to create remote-friendly cultures if they do not change their own behaviors. Some have recognized this, intentionally joining meetings remotely even while working at their offices, to encourage a level playing field. Others have gone a step further, moving away from office locations entirely to signal that proximity to them is not what will garner recognition and merit in their organizations. Leaders who want to minimize the privileges required to access opportunity would do well to investigate the role that location expectations play in determining that access.
Individual team leaders will no doubt initiate these conversations on their own, but the most effective responses will be the ones that demonstrate listening and empathy from top to bottom. Without listening to people and attempting to understand how deeply power asymmetries show up in the return-to-office negotiation, organizational leaders (who, let us remember, often do not represent the broader population) risk fighting to preserve cultures that systematically benefit people like them.
Revisiting the dogma
The public conversation about returning to offices and the future of work frequently invokes the idea that weekly co-location is essential to organizations that wish to preserve collaborative cultures that yield innovation. Rarely is this idea challenged or justified. Rather, it is just expected that we take its truth at face value. While a dogma is not necessarily false, closely examining what counts in favor of the idea should tell us exactly what does and does not need to change as organizations plan their return to offices and set the location expectations that they will have for their workforces in the future.
Slalom is a global consulting firm focused on strategy, technology and business transformation. Learn more about our ETHOS approach to hybrid work and reach out today.
