Remote-first is the digital ideal. Designing an operating model that leverages technology to its fullest extent, and focusing on hiring the best talent wherever they choose to live in the world is going to be a major trend in 2021 and beyond.
There is no doubt that 2020 accelerated a trend that had been growing for years: flexibility in the workplace. Most high-performing executives have figured out that they need a good amount of flexibility to retain staff and attract talent.
However, some executives are still stuck in 2019 ways of thinking. There will always be personal preferences when it comes to the proportion of work-in-the-office vs work-at-home. But comments about “getting back to normal” and “getting back to the office” are fascinating given the level of change COVID-19 brought forward.
This new paradigm presents an opportunity for firms that go fully remote and operate in industries where this is acceptable. These firms are likely in technology or professional services and interacting with clients who are also heavily remote.
For the firms that aren’t able to make this shift, the difference in corporate overheads alone will create substantial enterprise value differences over time. If you don’t cut the cost, your competitors that do will be valued higher.
For example, if it costs $25,000 per person to sit at a desk downtown, then keeping 1000 people permanently remote and giving up that office space saves $25,000,000 a year. If you are trading at a 20x earnings multiple you just grew shareholder value by $500,000,000.
There’s no doubt that there will be problems that firms experience because of remote work. But a rising group of firms that embrace remote and move away from offices and in-person meetings will create their own destiny in 2021 and beyond.
I predict that some firms will keep executive suites, meeting rooms and collaboration spaces but over time these will have smaller and smaller footprints. Innovative design that focuses on delivering a fantastic employee experience if they choose to visit the office during the week will be crucial.
There is also a likelihood that offshoring and outsourcing will continue to grow as radical assessments of what the right target operating model needs to look like are demanded from boards and shareholders.
What remote-first means in 2021 is building a target operating model that revolves around people being located where they want to live and delivering value to the business through their output, not through their physical presence in the cubicle next door.