If Pandemic Productivity Is Up, Why Is Innovation Slowing Down?

A new study finds that productivity has remained stable or even increased for many companies that shifted to remote work during the coronavirus pandemic. However, innovation has taken a hit as both leaders and employees feel more distant from each other.

Businesses tend to spend less money and take less risks during uncertain times, but researchers also attribute the current innovation deficit to the difficulty with collaboration that often comes with working from home. Videoconferencing and instant messaging apps can’t perfectly replicate the dynamics of being together in the same room, hashing out ideas and feeding off the energy of co-workers.

“It’s a challenge to feel connected, confident and communicate effectively with the team, and we know from a lot of research that creativity and innovation largely happen through collaboration,” Wharton management professor Michael Parke said during a segment of the Wharton Business Daily radio show on SiriusXM.

Parke supervised the survey-based study, which was commissioned by Microsoft and conducted by Boston Consulting Group and KRC Research. The study polled about 9,000 managers and employees in large firms in 15 markets across Europe, with about 600 respondents per country.

Only 15% of companies in the survey had flexible work policies before the pandemic. By summer, that figure jumped to 76% as the pandemic spread across Europe and the rest of the world, forcing firms to rethink what the traditional workday should look like. And the majority of respondents — 88% — said they expected some hybrid form of remote working to continue after the pandemic ends.

“Given that context, we tried to see what were some of the benefits and what were some of the challenges, and how workers adjusted to those challenges,” Parke said.

Sweatpants and a Dog Under the Desk

Significantly, the study shows that fears about lost productivity during the pandemic are largely unfounded. Employees haven’t slacked off just because they are at home. In fact, some home comforts are helping many employees stay at the same level of productivity or reach even higher. They enjoy dressing down, having their pet nearby and personalizing a workspace they don’t have to share with nosy neighbors peeking over the cubicle.

“Employees can really focus; they can be comfortable in their own setting,” Parke said. “They’re gaining things like less commute time, not having to get ready or dressed up for work. A lot of those factors, just the comfort and casualness of working from home, came through [in the survey].”

Another positive in the productivity column — at least for those without young children to care for — is less disruption while working. “Think about all the meetings, all the times you’re interrupted, which we know historically has been a major source of people’s lack of productivity,” Parke said. “You can kind of structure your work a little bit more effectively when it’s just you in the office.”

Virtual Innovation Is Possible

The dip in innovation is the biggest downside to remote working, according to the survey. But Parke said there are three simple steps that managers can take to overcome this hurdle.

The first is to make sure that employees have access to a wide range of collaborative tools. Don’t limit them to Zoom or email, but onboard a number of different platforms so that each employee can find what suits them.

“The reasoning here is that when people have the flexibility and variety, they can pick tools that work better for them and their own personality and communication style,” Parke said.

Second, train employees on how to work remotely. It’s not an inherent skill, so a little guidance can go a long way. Parke said the study found that training was “another major factor that contributed to employees’ collaboration effectiveness, their empowerment and their ability to share information across their team.”

Finally, establish a routine way of connecting with your team, and stick to it. The study found that workplaces where managers had regular meeting routines — town halls, one-on-one reviews, brainstorming sessions, etc. — were better at transitioning to remote work because they maintained those routines.

Parke said one of the bigger lessons in the study is the “learning opportunity” that the pandemic is providing for companies. Researchers fully expected to find a drop in productivity. Instead, they found a surprisingly different problem with keeping innovation high.

“This experiment that was forced upon us is showing that employees are able to be productive, and there are some things they really enjoy about that autonomy, so that trust is something organizations should really increase,” he said. “At the same time, [they should be] developing the capabilities to maintain good collaboration in this remote working environment, because flexibility for individuals obviously can create some collaboration challenges as well.”