Co-Located vs. Remote/Distributed Teams: What Works and Why

In February 2013, Marissa Mayer, the new CEO of Yahoo, decided to put an end to remote work at the company. In the memo, the company stated “to become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices.” All Yahoo employees were expected to give up any remote working arrangements and get back into the office.

I had a similar experience several years ago at a company I worked for when a new executive came on board. After a short period of time, he introduced a similar policy to the one above. We were much smaller than Yahoo at the time, but had been an extremely remote friendly organization up to that point. He described his motives as much the same (though he did let slip a few times that what he wanted was to look out of his office window and be able to see everybody in his department, for whatever that is worth).

So is it true? Do co-located teams truly perform better? Are communication and collaboration truly better when physically close?
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The conventional wisdom today seems to believe that co-located is significantly better. I’ve been personally told that all the research points to that. But having experienced both poorly performing, co-located teams as well as high performing distributed teams, I wanted to take a closer look at some of the research as well as experiences of others.

​Some of the Research

There have been a number of studies that have taken a look at co-located and remote teams. While there could still be significant research done in this area (and I look forward to more of it), there has been quite a bit written and there are some key points we can glean from these studies.

How organizations support distributed project teams: Key dimensions and their impact on decision making and teamwork effectiveness
In this study, the researchers looked at how organizational support impacts project teams both in the decision-making process and the overall effectiveness. Ultimately, it found three key contributors to success:

1. Strategic staffing is significantly associated with team effectiveness. The team members are a critical part of the overall success of distributed teams.
2. Training and tools provided by the organization are critical in high-performing remote teams.
3. Team autonomy is incredibly important for quality decision making, especially in remote teams.
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Exploring Agility in Distributed Information Systems Development Teams: An Interpretive Study in an Offshoring Context.
While the primary focus of this study is on the agility of distributed teams, and the difficulties presented by remote work, it also has some key takeaways for the success of distributed teams that I found helpful.

1. Agility is multi-faceted. It has to do with the team members, the team culture, the technology, and the processes employed by the group.
2. Understanding and collaboration are key to success and effectiveness.
   
   

Leadership Dynamics in Partially Distributed Teams: An Exploratory Study of the Effects of Configuration and Distance
This study took a look at leadership in partially distributed teams, analyzing the different dimensions of distance such as geographic, cultural, and temporal.
The key conclusion was that leaders must assist the team in bridging the distances. It took a different kind of leadership to make this happen on the teams, and ultimately took effort from leaders and team members to be effective.

Supporting the development of shared understanding in distributed design teams
Shared understanding is a key measure of communication effectiveness, especially on distributed teams. Reaching and maintaining shared understanding is critical, both perceived shared understanding as well as actual shared understanding.

For teams to reach this level of communication and effectiveness, they need appropriate training and support. The tools that teams have access to are also very important in their ability to communicate, work on tasks, and reach a shared understanding.

This study also highlights the difference between homogenous and heterogeneous teams, noting that more diverse teams (diverse in background, experience, location, culture, etc.) will require more support initially.

Project Risk Differences Between Virtual and Co-Located Teams
It shouldn’t be taken for granted that there are different risks in creating and managing virtual teams as opposed to co-located teams. This study looked at 55 project risk factors that other studies have identified as important to project success.

Of the 55, seven were identified as greater risks for virtual teams as opposed to co-located teams. These included insufficient knowledge transfer, lack of project team cohesion, cultural or language differences, inadequate technical resources, inexperience with the company and its processes, loss of key resources, and hidden agendas.

Effects of team member psychological proximity on teamwork performance
Some studies have claimed that as team-member physical proximity increases, the frequency and quality of communication increases, resulting in better team performance. More recent studies have found that there is no effect of team-member proximity on team performance. The missing factor may actually be the idea of psychological proximity, which takes into account all the aspects of proximity for a team.

This study analyzed the psychological proximity factors (spatial, temporal and social) and their impact on teamwork quality factors (communication, collaboration, coordination, and cohesion). Ultimately, reducing social distance helped overcome spatial and temporal distance, and was the most important factor in team quality. Social ties are incredibly important among team members. The spatial distance can be overcome with the right tools and coordination, especially when supported by the broader organization. And some sort of synchronous interaction is needed for overcoming both social and temporal distance.

Summary
Most studies I reviewed showed that there are hurdles to remote/distributed teams. But these challenges can be overcome with certain adjustments. We’ll take a closer look at some of those below in addition to a few examples from other teams.

​Some Team Experiences

I personally have had the opportunity to work on successful satellite teams as well as high-performing distributed teams. The success of these teams wasn’t by chance.

My Team
At one company, I worked for several years with a highly functional, and highly distributed, development team. Our lead developer was remote as well as our UX designer. Two other team members were primarily remote, and everyone else on the team was partially remote on any given day. As the product manager, I shifted my mindset from an “in-office” focus to a remote focus. Even being in the office, we utilized the tools for effective collaboration across the entire group. It gave everyone the chance to either be present physically or dial in, whether from their desk down the hall or from their office across the country.

This type of mindset was across the team. We often took time to call other team members regularly, even just to chat. This mirrored the kind of discussions that often happen sitting together. Our developers pair-programmed on the phone and shared screens regularly. Our UX designer and I regularly brainstormed and prototyped over video calls.

Our team was intentional in our effort. We had to be, given our distributed group and the fact that we were working on the single most important product for the company. We made it work and were incredibly successful in developing and launching a brand new product (more on that in another post). We hadn’t read any of the studies above, but seemed to understand intuitively or from previous experience that we needed to put in the effort to bridge the gaps and create a cohesive, effective team.

By the end of my time with that specific team, we had successfully launched our new application to over 100,000 students, saving the company millions of dollars and setting the stage for significant growth thereafter.

InVision
I’ve been interested in companies that either have remote teams, are fully remote from the start, or have transitioned to being remote. InVision is a prime example of a company that built remote work into their ethos from the beginning, and then transitioned to being fully distributed as they grew.
If you’re not familiar with InVision, it is a prototyping and design tool widely used across the technology industry. I’ve been using InVision personally for many years. Since it was founded in 2011, InVision has grown to over 1,000 employees and is used by over 5 million people at thousands of companies worldwide.

The benefits of being completely remote have been significant according to the founder, Clark Valberg, and CPO, Mark Frein. These benefits have included the ability to hire without geographical restrictions, saving millions by not having office space, and building a better product.

InVision has been incredibly successful, and has done it with a completely remote workforce.

Automattic
Automattic is the company behind Wordpress, a popular content management system and site builder that is behind many websites on the internet. And it is a fully remote organization. While it also didn’t start out that way, it moved to being fully remote when it realized that it could better empower its employees by allowing them to work when and where they wanted, and after deciding that too few employees were showing up to the office anyway. Automattic now has hundreds of employees across more than 60 countries.

As described in this HBR article, there are numerous lessons from Automattic, as well as some very compelling reasons why remote work has worked so well for them. One of the keys is creativity. Creativity thrives online, and allowing people to find the best way to work allows them to be far more creative than they might be otherwise. That means allowing employees to work when they are most productive, and from wherever they are most productive. Additionally, being distributed allows Automattic to hire the very best people regardless of location (a common theme among the companies I looked at who favor remote work).

Automattic has been very intentional in developing its culture, and it ensures there is ample communication on teams by hiring right, providing good onboarding and tools, and then bringing people together periodically. Those steps have allowed Automattic to thrive as a remote organization, as evidenced by its growth and continued popularity of its products.

Zapier
Zapier has been a remote company since its founding in 2011. It has literally written a book about the subject as well. For those unfamiliar with the company, it allows a user to easily connect apps together to automate processes or accomplish any number of tasks. It essentially allows non-developers to accomplish development tasks that wouldn’t have been achievable before.

Many of the lessons described so far are the ones that Zapier offers as well, as described in an interview with the CEO. The key benefits of remote work for the company have been in attracting and retaining talent, and in overall employee satisfaction.

Basecamp
No discussion of distributed organizations would be complete without discussing Basecamp. Its founders have long been proponents of remote work, and they have also literally written the book about working remotely.

Basecamp was founded in 1999, and has had a longstanding remote-friendly environment. Though the company has stayed intentionally small, it’s longevity and growth is a testament to its values.
The keys to success at Basecamp revolve around the idea of allowing employees to do deep work — limiting synchronous communication, interruptions, and meetings — and allowing employees to do their best work, however and wherever they do that.

Basecamp’s style is significantly different than many other companies. It may even seem radical. But the general principles are similar to other remote companies and they’ve clearly found success in what they’re doing.

Key Factors to Success

So what can we take away from this? How can we make our teams successful and high-performing?
In order to be successful, forming and maintaining a remote or distributed team needs to be intentional, as some of the keys to success are different than co-located teams. While either structure (co-located or distributed) can be effective, both types of teams need to be designed and led with intention.
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1. Team Members: As a company and team, you have to get the right people on board. One of the core principles for hiring at Automattic is the idea of no heroes. Everyone has to be a team player and getting hiring right is one of the most important steps. It doesn’t matter if an individual is the most skilled person at what they do, if they aren’t able to function within the team with good communication and minimal psychological distance, then there are likely going to be issues regardless of whether the team is distributed or co-located.
   
   
2. Shared Purpose and Understanding: A team has to have a shared purpose and it must achieve a shared understanding. This was a critical component in one of the studies cited above. Shared understanding is achieved with a common vision and actual communication. 
    
   Whether it is a remote team or a co-located team, achieving a shared understanding is critical. And it can’t be accomplished with documentation alone. It has to involve the right conversations. 
   
   In the case with product teams, I’ve seen the idea of “good documentation” take the place of conversations. But that simply won’t work. Good documentation is often the result of good conversations, but the documentation is often a lagging indicator (or a facilitator) in product development. It shouldn’t be seen as an end in itself. I’ve seen co-located teams struggle with this often. So achieving shared understanding must be intentional, regardless of whether the team is co-located or distributed.
   
   
3. Leadership: As the study referenced above indicates, leadership is also a key to success for teams, especially distributed team. This is a common theme throughout the company examples as well. Successful remote companies have to have solid leadership in order to make it effective. 
    
   This is true at the team level as well. It takes a different type of leader to manage a distributed team. So getting the right skill-set and the right mindset is crucial to success. This is where decisions have to be intentional. It may be possible to have weaker leadership when a team is co-located without impacting the team. But to have a successful distributed team, there is less room for weak leadership.
   
   
4. Technology and Tools: A theme throughout the research, as well as the company examples, is the need for the appropriate tools. This is far more important for distributed teams than co-located teams. Having worked on remote teams and satellite offices, I can attest to the importance of this. If the tools aren’t there to support the team (specifically the remote folks), then the team can’t be successful. Fortunately, there are tons of tools available today. I’ve utilized many common ones such as Zoom, Go-To-Meeting, Slack, Teams, Lucidchart, etc. But there are so many others that look great (that I need to experiment with). The key fact is that bridging the distance with tools is critical.
   
   
5. Organizational Support: The successful companies above were supportive of remote work. And that’s a huge key. They were able to build a culture of remote work. This is critical for companies moving to remote friendly work (which should be everyone in my opinion). The organization, particularly those in the headquarters or in the main office, needs to be cognizant of remote employees. More on that in another post, but thinking “remote first” will help get everyone adjusted to the idea of distributed teams.
   
   
6. Effort: As cited above, a critical component in team effectiveness is the social aspect of the team — the relationships among team members. While this may be easier with everyone in the office together, that doesn’t necessarily mean that relationships will develop between team members. In fact, other studies have found that even working in the same office won’t ensure that teams build the appropriate level of trust. This happens when the distance is perceived as far, even if folks are a few seats.
    
   There is a certain amount of effort that has to be put forward to build teams, whether they are sitting together or are distributed across the globe. Without that effort, the perceived distance between folks will be large, and thus the performance of the team will suffer.

Conclusion

When managed correctly, distributed teams perform just as well as their co-located counterparts. But therein lies the rub: you can’t simply put any team together and hope for success.

It would seem that co-located teams may generally perform better because they take the path of less-resistance. There is more room for mistakes when everyone is together in an office. You may not need as strong leadership or as many tools to make co-located teams effective. The effort to communicate can be smaller and the amount of time to bridge some of the distance can potentially be shortened. That’s perfectly fine. But let’s stop claiming that one outperforms the other.
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With intentional leadership and design, we can create high performing distributed teams. As we’ve seen from the research and the examples above, the limiting factors to remote work are often in the effort put in rather than inherent in the nature of the team.

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References:

Cash, P., Dekoninck, E. & Ahmed-Kristensen, S. (2017). Supporting the development of shared understanding in distributed design teams. Journal of Engineering Design. 28(3), 147–170

Cha, M., Park, J., & Lee, J. (2014). Effects of team member psychological proximity on teamwork performance. Team Performance Management.20(1/2), 81–96

Drouin, N. (2013). How organizations support distributed project teams: Key dimensions and their impact on decision making and teamwork effectiveness. The Journal of Management Development. 32(8), 865–885

Ocker, R., Huang, H., Benbunan-Fich, R., Hiltz, S. (2009). Leadership Dynamics in Partially Distributed Teams: An Exploratory Study of the Effects of Configuration and Distance. Group Decision and Negotiation. 20(3), 273–292

Reed, A. & Knight, L. (2010). Project Risk Differences Between Virtual and Co-Located Teams. The Journal of Computer Information Systems. 51(1), 19–30
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Sarker, S. & Sarker, S. (2009). Exploring Agility in Distributed Information Systems Development Teams: An Interpretive Study in an Offshoring Context. Information Systems Research. 20(3), 440–461