Archive for July, 2009

Virtuality — Part 2: Strategy and Technics

Virtuality part 2: Strategy and Technics

gettysburg “Muzzle-loading weapons sound awful primitive. They didn’t seem primitive to them. They were a new kind of infantry rifle that is deadly at 200 yards. That was a tremendous step forward. And the tactics were based on the old musket, which was accurate at about 60 feet. And they lined up shoulder to shoulder and moved against a position, and got blown down because they were using tactics with these very modern weapons. They were using the old-style tactics with very modern weapons. A few of the men realized that, Bedford Forrest for instance. He would never make a frontal attack on anything with this new weapon in their hands. But too many of them, including Robert E. Lee and U.S. Grant, followed the old tactics against these modern weapons. That’s why the casualties. There were 1,095,000 casualties in the Civil War. If today you had that same ratio, you’d have something like 10 million casualties, to give you some idea of what happened.”

- Shelby Foote, Civil War Historian

“They were using the old-style tactics with very modern weapons.” History has demonstrated again and again that military strategy and tactics lag the available technology. This is also true in business, where the adoption of advancements like the telephone, fax, email, the internet, software-as-a-service, virtual meetings, voice-over-IP telephony, web 2.0, social networking, viral marketing, etc, have been impeded by the previous generation’s management best practices.

As was the case with previous generations, today’s managers encumbered by yesterday’s vision face an insurmountable competitive disadvantage from those embracing the current technologies and practices available to them. At WebFeat, we were able to defeat companies as much as 100 times our size, simply because we were much more efficient and more productive than our bigger, slower, traditional adversaries. How was this possible?

Two words: opportunity cost.

When I attempt to recount the benefits of the virtual office to a stranger, I invariably am (preemptively) told that office rental is the #1 advantage. While office rent might make my top 100 list of reasons to go virtual, it is far from #1. Number 1 is the cost-effectiveness of my work force. Our virtual office easily yielded double the productivity of our traditional competitors. How?

strategytechnicstable1

This may not seem like a lot, but it adds up:

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27.5 years lost in a 100 person organization. That’s the equivalent of 27.5 extra people!

In addition, in my own experience, I found that my virtual employees tended to work longer hours than those in traditional offices. Typically, this ranged from 20% to 30% more than traditional employee office hours. Apparently this was attributable to two factors:

1. Virtual employees tend to make less of a distinction between work time and personal time than traditional employees, and…

2. It appears I am a hard task master

Whatever the reason, in our 100 - employee hypothetical company, this would add an additional 20 - 30 years annually, bringing the total to 47.5 - 57.5 years of additional productivity — a virtual company is 47.5% - 57.5% more productive than traditional companies.

But wait, there’s more!

While at work, my virtual employees tended to accomplish more than their traditional counterparts. This was due to a number of factors, including:

We held only a fraction of the number of meetings held by traditional companies

When we did hold meetings, they tended to be more productive — why?

Because most of our meetings were held via teleconference, the attendees tended to find silence or “dead air” to be uncomfortable. Consequently, our meetings tended to be short, and they followed classic successful meeting techniques, namely:

  • An agenda was published prior to the meeting, informing attendees what to be prepared to discuss
  • Brief minutes were taken, with action items captured, as well as persons responsible and deadlines
  • If follow-up meetings were required, these action items fed into the subsequent meeting

The bottom line is that we didn’t hold very many meetings, and we got a lot done in the meetings we did hold. Additionally, because our meetings produced cogent sets of action items, the work resulting from our meetings tended to yield better results

Finally, no one “dropped in” to our virtual offices to chat. Granted, some of our more gossipy employees made effective use of online chat, but they had little time to waste at the virtual water cooler. The moral of the story is that the success of the virtual office, as well as the traditional kind, is determined largely by the effectiveness of the management team. However, an effective team in a traditional office will be no match for an effective management team in a virtual office.

While it is difficult to gauge the amount of time consumed in useless meetings and water cooler gossip, consider that if it averages only 1 hour per day per employee, our virtual productivity edge over traditional offices grows to 60% - 70%! How many employees do you know that give up a mere hour each day in meetings and gossip?

Clearly, I’m not talking about moving the corporate performance needle a couple of percentage points. I am talking about a great big game-changing, Earth-moving, paradigm-shifting fundamental makeover that can enable your business to not only weather the current storm, but enable it to prosper and handily crush its competition.

More to come in part 3…

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Interview with gwabbit president & founder Todd Miller

Interview with gwabbit president and founder Todd Miller about the origins and future of gwabbit

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Virtuality — Part 1: News for the Hard of Hearing

snl-news-hard-hearingIn “My New Old-Fashioned Company,” I’ve discussed what’s old about my company. Is there anything new?

Oh yes!

My company, gwabbit, is a 100% virtual office (as was my previous company). No bricks & mortar office whatsoever. Seriously!

I went virtual with my previous company, WebFeat, in 1998. If we were not the first successful100% global virtual company, we were certainly among the first. I must admit that, at the time, my motivation for going virtual was driven more by finance than vision. My little bootstrap start-up was short on cash and we simply could no longer afford our cool New York City office flat. Now, 11 years later, I can’t imagine running a business any other way.

When I would tell Silicon Valley colleagues about my virtual company, I found that most simply could not bend their heads around the notion of a 100% virtual office. The conversations usually went something like this:

Silicon Valley Colleague: “Where is your office?” (note: I had already explained to colleague that we were a virtual office)

Todd: “We don’t have an office”

Invariably, my colleague would ask the question again, slowly, as though either my hearing or cognition was impaired:

Silicon Valley Colleague: “where - is - your - office?” He asked, slowly

Todd: “We - don’t - have - an - office.” I repeated, slowly

One colleague actually asked the question a third time, making arm motions as though he were drawing a real office (ironically, in virtual space) as though I did not understand the question the first two times it was posited. It reminded me of when Garrett Morris did the News for the Hard of Hearing on Saturday Night Live by simply yelling at the camera.

Once my colleague reluctantly accepted the fact that I was serious about my virtual office, he would proceed to inform me why it could never succeed. The reasons included:

  • Virtual businesses can’t scale
  • You can’t supervise virtual office employees
  • You can’t have too many direct reports

I’ll knock these down one-by-one:

Virtual businesses can’t scale — invariably, my critics could never explain why they didn’t think a virtual business couldn’t scale. It just couldn’t scale. Like many reactions to the virtual company, this was an attempt to assign a rational sounding argument to an uncomfortable visceral feeling — we’ll talk more about feelings in later installments.

Despite the very worst prognostications of doom, our business somehow managed to scale anyway. At the time I sold my company, we had 40 employees. Still a small business, but I see no reason why it wouldn’t scale to 100 or 100,000

You can’t supervise virtual office employees — this is probably the most absurd argument against the virtual company — the notion that management can’t keep a close eye on their employees. My response to this is a simple one: why would you want to hire people that require supervision? Whether your business is virtual or not, don’t you want employees that can work and produce without supervision?

Too many direct reports – another one of the sillier arguments against the virtual office. More than one of my otherwise brilliant colleagues assumed that virtual officing somehow translated into every employee reporting directly to the virtual corner office. My experience has been that virtual offices utilize similar hierarchies and numbers of direct reports as their traditional counterparts.

So I’ve discussed some of the arguments against the virtual office – what are the arguments in favor?

There are many, which I’ll discuss in future installments, but the most compelling is this: in my 11 year experience with virtual officing, I found that a well-managed virtual office is 200% - 300% more efficient and productive than its traditional counterpart.

That’s right – not 20% or 30% more productive – 200% - 300% more productive!

In my decade long experience with WebFeat, our virtual David went up against not one, not two, but three traditional Goliaths. These companies had up to 100 times the number of employees as WebFeat, with relatively vast cash reserves. WebFeat, with no venture capital, funded entirely from operations, and fielding a comparatively puny cast of dozens, smacked down each of its Gigantor opponents, gaining top market share.

How – you might ask?

For the answer, stay tuned for the next installment of Virtuality!

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