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Summary:

Many businesses are embracing the virtual model, with employees working from their homes rather than a corporate headquarters. Saving money on office rental, pricey IT infrastructure and travel costs are compelling arguments for an office-free life. But can any organization be virtual?

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When you hear the phrase “virtual business,” it’s likely that the names of pioneers such as Amazon and eBay spring to mind. Hot on the heels of these two goliaths, you may also think of online retailers such as Dell, Zappos.com and ASOS. However, thanks to advances in high-speed connectivity and the rise of cloud computing, going virtual isn’t only for organizations selling physical goods online. Any business without a full-time physical office and a geographically dispersed workforce can be considered virtual.

Perhaps unsurprisingly, many technology start-ups are virtual businesses. Using Software-as-a-Service tools, such as Highrise CRM, Zendesk and Shoeboxed, small companies can now deploy technology that was previously reserved for large organizations. As well as not breaking the bank on enterprise software, the team has the ability to work from anywhere and not waste large amounts of cash on renting office space. Whether it’s a shed at the end of the garden or a bedroom, an employee’s physical location is irrelevant. Take for example Nononina, the company behind Alltop. The team consists of (and I quote the site): “one guy in home office (Will Mayall), one gal on a kitchen table (Kathryn Henkens), and one Guy in United 2B (Guy Kawasaki).”

At the other end of the scale, we’re starting to see established organizations and more traditional industries venture into the realms of virtual business. Rimon Law Group, for example, is one of the first high-end virtual law firms in the U.S. The organization claims to be nearly paperless and, rather than having centralized offices, its attorneys operate “local work hubs.”  While the company opened a new San Francisco headquarters this month, the firm maintains that attorneys still have the option to work from “wherever they like, whenever they like.”

Saving money on office rental, pricey IT infrastructure and travel costs are compelling arguments for an office-free life. But can any organization be virtual?

In a nutshell, no. There are some industries, such as manufacturing, that require access to specific equipment and facilities. Think of a car manufacturer with an assembly line – a central physical location is required to construct the product. However, I believe that the majority of organizations across many different industries can benefit from elements of the virtual business. We’re already seeing a rise in distance learning and streamed lectures, telediagnosis in the medical profession, and traditional enterprises rolling out remote and flexible working practices. In the UK, there are already an estimated 4.3 million remote workers, while research by Forrester back in 2009 found that there were 34 million Americans working from home occasionally.

Businesses that lend themselves to going virtual are those where people are the key commodity. For example, consultancies and creative companies, such as marketing and PR agencies, can provide the same service to their clients regardless of where they are located. Armed with a laptop or smartphone and an Internet connection, PR and marketing consultants can still produce campaign ideas, copy and collateral, and organize meetings with journalists and analysts. Search for “virtual PR agency” and you’ll find a wealth of organizations from all over the globe. Without pricey city offices, agencies such as Joshua PR promise to deliver experienced staff and the best results without the large fees. Hospitality management and consulting firm OnSite Consulting has a 65-person workforce, but no headquarters. Employees go to wherever the client is based.

Going virtual isn’t just about technology, though; it also requires a cultural shift. Journalism should be well-suited to virtual working: the team of writers at GigaOM, for example, are based all over the world. However, consider the differences between an online publication that was born and bred on the web and a traditional print publication. Many of the processes that result in the creation of your daily newspaper have remained unchanged for decades. The day starts with the editors’ morning conference, during which the content for the publication is decided. Articles move from reporters to section editors to subeditors as the print deadline looms. There’s the laying out of pages, the newsroom discussions and the face-to-face collaboration with colleagues. These are routines and procedures that the workforce has grown accustomed to. To simply close the office doors and tell everyone to work from home would cause chaos.

The right support network needs to be deployed and processes need to be amended to fit the virtual business. For example, rather than gathering together in the same room for an editorial meeting will it be held by phone or video conference? For many traditional enterprises, going completely virtual may be impossible or simply too daunting. However, a hybrid approach that gives people the opportunity to work from home a few days a week is possible. Traditional newspapers have people based in physical offices as well as journalists out in the field.  By balancing practices such as home working with a central office, organizations can still benefit from the efficiency and cost-savings associated with a virtual business without changing their whole model.

Andy McLoughlin, Co-founder and EVP Strategy at Huddle, can be reached on Twitter @Bandrew.

Photo courtesy Flickr user Seth W.

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  1. jodie_microsoft_smb Wednesday, January 26, 2011

    For those that are virtual and/or work from home, web conferencing may be a good tool to have for “face-to-face” meetings. Office Live Meeting is one option and can be purchased a la carte or with the Microsoft BPOS suite. This link will give you more details: http://smb.ms/Outreachdzy7p6

    Regards,
    Jodi E.
    Microsoft SMB Outreach Team
    msftoft@microsoft.com

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  2. There are certainly many benefits to virtual organizations. If you are living in highly populated areas such as Amsterdam (Netherlands) where I am from, working virtually replaces wasting your time in traffic jams. Where ever you might live, if you manage to create the right attitude and daily routine then working virtually can have immense benefits for your family/social life as well.

    Especially small organizations can reap the benefits by creating an agile and effective organization which does not rely on expensive offices and IT infrastructure.

    I for one am glad to be able to work virtually a lot of my time. Wish more people can discover this very fulfilling work and life style!

    Bart

    http://www.lumoresearch.com

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  3. It’s definitely great to have the option for the virtual offices, etc. Agreed that it’s not for everyone all the time – as you said, manufacturers and the like can’t completely go virtual. But they can use these tools to streamline meetings and have these meetings span the globe. It’s great to no longer be restricted by space and time.

    A great provider for international conference calls (and much more) is http://www.tollfreeconferencing.com You can also find some great tips and advice in the article section and on the blog for conference issues and the like. Lots of good info!

    Thanks for a great post!

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  4. I think the reality of remote/virtual/home office is that it doesn’t work for everyone.
    Sure you work from the comfort of your home but you are alone; contacting fellow colleagues is less easy than walking over to their desk.

    It can also be a less productive environment for many people – but then again others will say that in a traditional workspace they get constantly interrupted, and that home-working gives them the needed isolation.

    So it’s not ideal for every kind of job/industry, but it’s also not ideal for every kind of personality and human needs. Stop glorifying it.

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    1. I agree that remote work doesn’t suit everyone, but I’m not sure that Andy is exactly glorifying virtual work in this post, Yvo, as such. He says that it is possible for many businesses, but that for it to be effective, the right support networks need to be put in place.

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    2. Yvo – totally agree (hence ‘… going completely virtual may be impossible or simply too daunting’) but you cannot argue that in many cases it opens up opportunities for productivity which simply didn’t exist 5 years ago.

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  5. While many would argue that starting a virtual business is not for everyone or every type of organization, no one would argue that regardless of the type of organization, you must be prepared to have a virtual office. There are so many tools to choose from these days for online conferencing, collaboration and communication and someone in your organization needs to be prepared when the need arises to go “virtual” or “mobile” for a season if not the entire future. Good stuff.

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  6. [...] team used to face-to-face work entirely online? Last week, Andy McLoughlin discussed this topic in Going Virtual: Can Any Organization Do It? He pointed out that while some companies requite a physical location, many can have at least part [...]

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