The age of SaaS has reoriented thinking about how corporations should function and be structured. If an application can reside on servers scattered around the globe, a development group located overseas or on another continent, a customer service group operating out of Southeast Asia, and marketing communications provided by a bevy of temporary consultants and freelancers, what is the need for the traditional corporate model of a big building packed with local employees managing and conducting business (particularly during the years of early growth) primarily from a single patch of real estate?
In The Invisible Organization, Mitch Russo argues that there is no need. Mitch is a software industry veteran who has built virtual corporations previously and is in the process of building a new one as the CEO of DiiDit, Inc, a new online company (sorry, they’re in a quiet phase). Prior to co-founding DiiDit, Mitch has done extensive work with marketing luminaries such as Tony Robbins and Jay Abrahams in building virtual companies. He describes his biggest project in this regard in the book’s introduction:
I personally built one of the world’s largest business coaching and training companies, with over 300 people at its peak and generating over $25M per year in revenue, all from a spare bedroom.
With this stake in the ground, The Invisible Organization provides the reader with a structured blueprint for creating a virtual company.
The first sections of the book deal with how virtual companies can save money by dramatically reducing the infrastructure costs associated with bricks and mortar infrastructure. Using a line by line breakdown, Mitch describes how one practitioner of his techniques reduced monthly overhead $17,001 per month to $5,065 for a yearly savings of $143,232. Those are the type of numbers that should make the eyes of startup founders, to whom every dollar is precious, gleam.
The book also delves deeply into the issue of whether cube firms and now open floor plans are more productive than enabling your employees to roll out of bed every morning in jammies unkempt hair and get down to work sans transportation costs, parking woes, and time blown waiting in traffic or pacing on train stations waiting for the 5:45 every morning.
Conventional wisdom holds that those minutes spent chatting around the water cooler are key to building company rapport and teamwork, but author Russo quotes some interesting statistics from a 2014 Study from Stanford University entitled “Does Working from Home Work?”
“First, the performance of the home workers went up dramatically, increasing by 13% over the nine months of the experiment. This improvement came mainly from a 9% increase in the number of minutes they worked during their shifts (i.e., the time they were logged in to take calls). This was due to reductions in breaks, time off and sick days taken by the home workers. The remaining 4% improvement came from home workers increasing the number of calls per minute worked. In interviews, the workers attributed this gain to the greater convenience (the ease of getting tea, coffee, lunch or using the toilet) and quiet of working from home. Second, there appear to be no spillovers to the rest of the group. Comparing the control group to similar workers … we see no performance drop despite the control group’s having lost the treatment lottery. (note: The “control group” is the group which was not sent home and used as the comparison to the those sent home to work.) Third, attrition fell sharply among the home workers, dropping by 50% versus the control group. Home workers also reported substantially higher work satisfaction and had more positive attitudinal survey outcomes. Fourth, one downside of WFH appears to be that, conditional on performance, it reduced rates of promotion by about 50%.”
From this foundation, Mitch goes on to make the point that the key to creating a successful virtual workforce is performance. As he notes, we’ve all met people at work who always seem to be busy, yet accomplish little. Organization acknowledges that not everyone is a good fit to working at home, but notes that new technology enables executives to measure productivity from any location.
The book then proceeds to examine each of the common objections that naturally arise when attempting to implement a virtual company, including staff objections, time allocation, leveraging technology to automate processes, the problems of remote hiring, training your sales force, and more. But if you’ve been following the evolution of online communication, the rapid adoption of systems such as Slack, Streak and others, the increasing use of distance learning systems, and the rush of companies to host their new systems on massively scalable backbones such as AWS and Azure, the concept of the virtual corporation makes a great deal of sense.
One of the book’s key sections is three, where Mitch describes in detail how to:
- Create a plan to build your virtual organization.
- Setting up a virtual call and communications center.
- Building staff productivity and tracking activity and performance.
- Establishing a training regimen and leveraging a learning management system.
The balance of the book is loaded with practical examples of how to hire sales people for virtual firms, incent your sales group, and later on, some fascinating and overlooked examples of how firms (yes, high tech) can leverage radio and TV in different markets techniques via tactics few firms have learned about while obsessing over Linked In, Twitter, and Facebook.
A grim statistic that every startup should memorize is that 90% of startups fail. One of the principal reasons for failure is that many firms, despite good ideas, smart executives, and the ability to execute, run short of money and resources.
Another point the book makes is that even if you’ve decided completely virtualizing your company is you need to analyze what and if there are parts of your company that can be. Softletter’s recently released information from its staffing survey and report sheds more light on current employment trends.
The virtual corporation offers your firm an increased chance of success. The money the model saves and opportunity to grow more quickly at a critical point in your company’s existence is something you need to learn and study. Mitch Russo’s book is the most complete guide and blueprint you can buy on the topic, written by someone who’s successfully built virtual companies and is building another.