A remote working world is here to stay. It has been a technological dream since I was a child, and that is a long time ago, that people will work from home, thus saving time, stress and resources while significantly boosting productivity. It simply hasn’t panned out that way.
Instead head offices and business complexes have been getting bigger and bigger until some headquarters, like the new Apple
Covid-19 has changed all that with everyone who can, now working from home.
Hysteresis is the watch world of the new order. Some use it to describe the difficulty of returning to a norm of pre-pandemic; some use it to describe the change energy injected into the system to create a revolutionary change that permanently means there is no return to that norm. There is likely to have been a lot of the latter and hysteresis for companies to go virtual has struck.
This week cryptocurrency exchange Coinbase—about as leading edge a company as you can get—announced it will now be a “remote working first” company. This of course plays to the distributed concept that powers the new blockchain revolution, but the logic is simple.
A remote working dynamic has many benefits but few drawbacks. If you are a CEO with offices around the world, by definition you are remote working, because you simply can’t be present in more than a tiny fraction of your organization’s operational space. You have to run that business remotely because the half mile from your closest plant or warehouse or outlet may as well be a thousand miles.
So if it works for that kind of the corporate office, why can’t it work for everyone?
The answer is simple; a lot of people like to work in an office. While the “‘on the spectrum”’ nerds may be happy working in their hikikamori basements, a huge proportion of people love to be around people. It is not an efficiency need that creates the desire for offices but a social one. A large number of people actively want to work from an office, as strange as it will seem to many who love working from home.
A tipping point, however, has been passed and remote working will now begin to change the landscape of employment, and the landscape period.
This is terrible news for commercial property companies. Not only is retail imploding, now office space will come under long-term pressure. People think it is a law of the universe that property can only appreciate, but like all good things, at some point the magic must end. This could be it with offices doomed to become as relevant as the once pressing need for horse stables or windmills.
There is also a dark side for employment in all this. Working from home is efficient. An interruption costs 15 minutes of work so someone wandering the office crying “Hey ya” to co-workers 24 times a day, negates their whole value as an employee. Organizations take on a life of their own, as anyone who watches Carl Icahn on YouTube explaining how he fired 17 floors of staff and no one noticed, will appreciate. Remote working will allow companies to treat people as a unit of labor without the mess of tight interpersonal relationships acting as a protection.
Employee isolation will bring a kind of vulnerability that will spur productivity and lead to leaner, probably meaner corporations that have had to produce hard targets and tight measurement to their business processes. Companies will be forced to trim the fat and one is always left imagining that under the old system that represents a significant proportion of the workforce, and that’s before you start factoring all the employment from the support staff needed to satisfy the needs of a commuting workforce.
Like the Covid-19 virus itself, the effects of a shift to remote working strikes every aspect of the economy.
So what is an investor to do?
If you like to play the game of picking up pennies in front of an oncoming steam roller, you can gamble on all sorts of potential outcomes–tech good, location-based businesses bad–but perhaps for now the way to go is to watch to see if this is a slowly rolling revolution or an explosive one.
The market already says companies with virtual businesses are golden. Nasdaq is back at bubble valuations while old economy businesses still wallow well below pre-pandemic levels.
The real call is down to hysteresis. Does the world return to its old ways or are the twin hysteresis waves of change fixing the world on a very different new path. If we are in for great change, then working from home will be a big part of that and that will turn out to be a good thing, all the while leaving a trail of destruction of the old order behind it.
Chambers won Journalist of the Year in the Business Market Commentary category in the State Street U.K. Institutional Press Awards in 2018.