Kjartan Rist for Forbes

Several centuries ago Europe and the USA underwent the industrial revolution, a transformation of our manufacturing processes enabled by the development of new machinery to support repetitive assembly line tasks within large factories.

The revolution served to bind workforces to specific locations and rigid working hours, triggering a fundamental societal shift as countries saw mass population migration from rural areas to the cities. Post-revolution life would never be the same again.

The question is, with millions of people currently working from home and showing little appetite to return to the office, are we witnessing a new industrial revolution across the knowledge economy?

A decade of change overnight

The jury is still out on whether our way of life will permanently change as a result of the pandemic, and the extent to which working from home will become the new normal for knowledge workers.

“Many companies have opened up for remote work during the pandemic, including Google, Facebook, and Twitter, and we’re now seeing a proliferating trend among companies who were previously against home-based work,” says Allan Christensen, COO at productivity tech company Doist, whose business has been fully remote-based for nine years. “That said, working from home isn’t for everyone, and there will still be a need for social interactions at work.”

Having just announced that it is extending its office-based presence across six US cities, it appears that Amazon and Jeff Bezos agree with Christensen.

Nevertheless, it’s clear that today’s ‘machinery’ – the internet- and software-based tools that our knowledge economy businesses are built upon – has alleviated the absolute requirement for employees to work together in the same place at the same time. Venture capital has been a leading driver of this trend, turbo-charging the development of the communications, collaboration, and project management tools that have made productive remote-working a reality.

In fact, before Covid-19, the primary barrier to home working was usually organizational reticence or indecision. The pandemic has forced our working practices to catch up to the technology, provoking a decade’s worth of organizational change overnight as our corporate world has been turned upside down.

The agility and flexibility demonstrated by the thousands of businesses that have successfully shifted to home-working have saved the global economy. In the VC industry, one of the latest talking points is around which next-generation technologies will support an economic recovery driven by a predominantly home-based workforce.

Will the revolution stick?

The two key aspects of any knowledge economy business – productivity and wellbeing – have already been brought into sharp focus by the pandemic. Many employees are claiming to be happier and more productive at home, with fewer office distractions, no need for hectic and stressful commuting, more family time, and, of course, less chance of exposure to the virus.

The core argument for working from home is that it allows people to adapt their work to their life, rather than the other way around, leading to a host of direct and indirect benefits for both employee and employer.

“We’ve successfully transitioned to 100% remote working without any impact on productivity, as well as rejigging elements of our culture to support the move. As such, it doesn’t make sense to return to a full office, although we have made provisions for our team to work together in person as needed at a global workspace. We’re certainly now future-proofed in case there’s a resurgence of the pandemic,” says Kenny Alegbe, CEO and Co-Founder of HomeHero. “As a business, we’ve also pivoted towards better connecting people to their local communities. This is more relevant than ever in the wake of Covid-19. Life has become hyperlocal.”

Similar to the industrial revolution, the home working shift and the resultant impact on communities could carry profound societal consequences – from reducing global emissions to reversing the trend towards urbanization and rethinking how we design cities. For example, if 20 percent of the workforce shifts to full-time home-working, that’s 20 percent less demand for city-center goods and services, impacting a variety of industries such as retail, hospitality, and transport. While the biggest cities may pay a price, home-working presents us with a huge opportunity to revitalize and rejuvenate struggling local economies, while some employers will also find they can lower their wage bill and overheads by relinquishing their city-center presence.

However, we should not take this future for granted. Nor should we push ahead blindly without fully considering the consequences of a predominantly home-based knowledge economy.

The flip-side of home-working

While many commentators have highlighted the societal benefits of ‘working from anywhere’, there are distinct drawbacks to entirely decoupling employees from the physical working environment. Not every team member is enjoying the experience. Mental health and isolation are legitimate and growing concerns, while employee engagement has become something of a rollercoaster ride. Many employees still crave a return to the workplace, especially younger team members who prefer to live in urban areas and enjoy the cultural benefits of office life.

Andrew Lynch, COO of co-working hub provider Huckletree, explains that many people, himself included, saw lockdown as ‘living at work’ rather than ‘working from home’. “We’re big advocates of flexible working and our hubs are now seen as the place you go to get a break from the living room and to get your ‘head back in the game’. The overwhelming feedback from our members is they’re glad to be back and forgot how productive they were in the more structured setting of the workplace.”

Alongside this, many employers are struggling to create effective processes for remote management and HR support, or to create virtual workplaces that balance agency and accountability, trust, and control. They’re suffering collaboration issues, lower levels of knowledge-sharing, and diminishing organizational culture by not being in the same location. They’re increasingly concerned about how to build customer/client relationships without a physical environment to host them in.

Then there are the technical barriers to delivering the home-working revolution. IT security was already a problem even within the physical workplace, which is why there’s widespread concern about employees using personal laptops and mobile devices to access corporate networks over home and/or public internet connections. Other team members are struggling with poor internet speeds and various other IT support shortcomings. Effective home working often requires additional IT spend, and yet organizational spend is set to fall 7% due to Covid-related cost cuts, hardly the sort of propulsive investment one would normally expect with the acceleration of a business trend.

Finally, at a nationwide level, some countries are far better equipped for working from home than others. Many of those worst hit by Covid-19 – such as Italy and Brazil – are amongst the least able to make the transition quickly and effectively. This is in stark contrast to the likes of Sweden, where all workers have been advised to work from home until the year-end.

VC can get us to the best answers more quickly

While knowledge economy businesses are undeniably better placed than organizations in other sectors when it comes to living with Covid-19, a closer look at the home-working revolution reveals that this is by no means a level playing field. Not every organization can transition at the same speed. Nor will 100% remote-working be right for everyone. Most businesses will likely have to alight upon hybrid operating models, striking a balance between office-based activity versus home working, meetings versus Zoom calls, traveling to conferences and trade shows versus virtual attendance, and so forth.

Most critically, we need to kick-start a new wave of rapid software development to plug the productivity and wellbeing gaps that have been exposed by such an unexpected and dramatic shift in organizational working practices. According to Mathias Mikkelsen, Founder of digital workplace tools business Memory.ai, “I think there are shortcomings across the board. One of the most interesting aspects is around presenting and audience reactions. How do we make this comparable to the real thing? When does the mute button need to kick in? If you make a joke or a bigger point about something, how do you know if it resonates or not? Facial expressions and sounds make up a big aspect of presenting and right now the tech is drastically far from doing it live.”

We now have the data and experience to identify these shortcomings, and to recognize where innovation, new technology tools, and efficient venture capital funds can be deployed to address them. Better knowledge-sharing systems that promote a more engaged and collaborative culture must be a key investment priority. Greater innovation is also needed in IT automation, helping to ease the transition from the physical workplace – where IT services and support are readily accessible – to a home-based ‘self-service’ world where non-tech-savvy users have to manage their localized IT setup themselves. The VC industry is uniquely placed to help society get to these solutions faster thanks to decades of experience within the tech ecosystem. Activist VCs already spend their time forging connections, building networks, and sifting through hundreds of thousands of startups to gauge their viability and usefulness based on an unbiased understanding of trends and best-practice approaches to problem-solving.

The industrial revolution was not a singular historical moment – it was a sustained period of transformation and innovation. The same is true of today’s home-working revolution. The pandemic may have accelerated us along the transformation journey, but further investment, innovation, and perseverance are still needed if we are to truly realize the biggest change in organizational working practices in two centuries.

Original Forbes Article