Conventional wisdom holds that while remote work may boost productivity in the short-term, it threatens to harm cooperation and innovation over time. Even after a full 18 month experiment with large-scale telecommuting, many prominent experts continue to view the benefits of remote work as somewhere between modest and grossly overrated. But are these experts right?
In a recent podcast interview with Auren Hoffman, Tyler Cowen makes a compelling case for why remote work may prove transformational for innovation.
[Auren Hoffman] Now, if we're moving to a world that is going to be more virtual, in some ways, it means that one could interact with more people, right? And do you think that's going to expedite innovation? Or do you think that will quell innovation, because you don't have as many repeated interactions with the same person?
[Tyler Cowen] So far, it has radically accelerated innovation, there is this question, are we eating into our organizational capital by doing so many things at a distance, but I'm very bullish on the trend. It could be like only 20% of previous work becomes work from a distance. But if you can bring to bear on your team, the smartest people from Pakistan, Nigeria, South Korea, wherever, I think that's going to be amazing. And yeah, you wish you could see them more, you fly them in once or twice a year, that's efficient. Like that's probably all still true. But the value of getting some key people from everywhere, I think, will be very, very high. And especially for America, and especially for Silicon Valley.
So much of productive collaboration is about bringing the right people into the right space. In the past, this has meant gathering people into the same physical spaces but this may not be essential in the emerging digital economy. Productive collaborators can inhabit the same idea space, without necessarily sharing physical or social space. Rather than impeding collaboration, remote work may enable workers to collaborate more frequently and with higher quality collaborators from around the world.
How will this all work logistically? Tyler predicts a greater emphasis on performance-pay, which may drive increased productivity all on its own.
[Auren Hoffman] Now, how do you think their reward should work? Companies like Google have made a public statement that they're actually that they've chosen to pay people differently based on the location where they live. So if you move from New York to Indiana, you get paid less than if you moved from Indiana to New York, you get paid more. Other companies are saying, “okay, wherever you live, if you're doing the same work, you get paid the same”. What do you think is the right approach? Do you think there's a certain type of model that will win long term?
[Tyler Cowen] I think we'll be forced to move to an even higher degree of pay by performance in bonuses and measurable output. As people are at a distance, and this goes on for years, in part, you don't know, you've got to measure it. So everything will be more bonus driven, more metrics driven, and the person in Nigeria, they're going to accept a lot of pay risk, that like even the downside, they'll be able to live in Nigeria, I think they'll be willing to do that. And it won't be like an upfront salary is the main part of the deal. You'll get too much shirking with that.
In a tight 45 minutes, this conversation has a lot to offer. Do check out the whole thing.
Mind-blowing stat, HT to Robin Hanson and Adam Ozimek:
"In a sense, remote work will allow the creation of a massive online labor market that is subject to many of the same forces of agglomeration that cities experience. … A remote labor market that was just over 6% of the labor force would be bigger than any city in the country."
https://www.overcomingbias.com/2020/08/remote-work-specializes.html