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10 Inside Tips Of Leading A Virtual Business (From The CEO of #1 Purely Virtual Co.)

I work on the management team of a purely virtual company — as in, we don’t have any physical office.

At about 70 people, we are the largest purely virtual company I know of.

Note: see a recent update on 2 other virtual businesses at the bottom of this article.

Sure you may know larger teams of telecommuters out there — but they are typically part of a larger organization that has a physical office…we have none!

In fact, part of me sharing this posting is to find out if you know of any other sizable purely virtual teams out there!

In the meantime, I thought I’d share with you some of the pros and cons of a virtual business:

Virtual Team’s Pros & Cons

Benefits of a Virtual Business

  1. You Can Hire Best of Breed — Arguably the most valuable benefit of working remotely is that you can hire THE best person for a role (as opposed to settling on hiring in a specific region).
  2. Potentially Physically Healthier — Your team has the potential to lead a more healthy lifestyle if they work virtually as they’ll have more opportunity to exercise and they will also likely eat more meals made by themselves (which are typically smaller/healthier portions) — I recommend that you emphasize to your team to take advantage of this opportunity!
  3. Lower Overhead — You save the cost of renting, leasing or owning physical property.
  4. More Flexible Scheduling for Your Team — Your team can have a little more flexibility for determining their working hours; for example, if a team member wants to take off a half-day of work on Friday and then make up for the work on a Saturday afternoon, that becomes easier.
  5. No Commute Time — Your virtual team has the potential to work more hours than they would in an office since they won’t be commuting…this will also save them commuting costs (car, bus, train, etc.).
  6. Lighter Carbon Footprint — Your virtual team will be producing fewer greenhouse gas emissions per person.
  7. More Time With Children — Your team can see their children (or pets) more often.
  8. Metrics Become Dominant — My experience is that a virtual environment has an interesting positive bi-product: you will need to utilize metrics even more than usual (since you won’t be able to see as much in-person proof of results)…this is a good thing.
  9. Increased Travel Opportunity — Allowing your team to work virtually means that if they have the proper setup, they can work from different locations (allowing them to travel to new and exciting places that will help them grow)
  10. The Team Saves Money on Food — Your team will likely spend less on food when they work from home.

Challenges of a Virtual Business

  1. Difficult to Express Emotions — It’s way more difficult to read emotions in a virtual work environment — for example, if a person is about to cry, you can not as easily tell that over the phone that you can in person.
  2. Difficult to Visually Represent Thoughts — It is tougher to represent information virtually than in person. A giant white-board is way more efficient for communicating than any Web application I know of.
  3. Tougher to Post Job Listings — Many job posting sites — including Craigslist and LinkedIn — do not let you do a job posting to the whole world (they force you to name a geographic area)
  4. People Can Hide Things More Easily: More Difficult to Hold Accountable — In general, you will have to work harder to hold people accountable when you’re working virtually — it’s just much easier for someone to “drop the ball” virtually than it is for them to do so in person.
  5. Physical Dormancy — Watch out for your sitting posture. Working from home typically means that your body will be in a static seated position longer than if you were going into an office (since going into an office means you’ll typically be taking more walks to conference rooms, restrooms, outdoor breaks).
  6. Street Noise — You may find more street noise working at home. For instance, I work in my home which is one-story up on a relatively quiet street yet I still have construction work outside, yard work by neighbors and couriers buzzing my doorbell.
  7. Time Zone Management — You will typically have more your people spread across multiple time zones which means some creative scheduling. In the case of our management team, for instance, we have three of us in the Pacific Standard Zone (PST) and two others in the Eastern Standard Zone (PST); which is three hours apart.
  8. Lack of Physical Touch — I have learned that physically connecting with a team member — whether through a hug or a high-five — is helpful to team bonding…you have much less of that with a virtual environment.
  9. Fewer Opportunities to Bond Away From Work — When your team is working remotely, you will have fewer opportunities to bond outside of work because: A) There may be more of a physical distance between your homes and B) You won’t have a mutual office in which you can say: “Let’s go grab a drink together after work” or “take a jog together during lunch break.”
  10. Communication Becomes Even More Important — Effective communication in business is always vital; as you work in virtual environment, you will want to err on the side of over-communication to make sure your team is as much on the same page as feasible.

Bonus Tips for Virtual Environments

  • Virtual Team Communication Tools
    • Skype — Effective for two-person video conferencing calls
    • ooVoo — Interesting application we’ve been testing for video conferencing beyond two people (we’re only on the free trial so far so we’ve just dabbled with three-person video conferencing so far)
    • Google Docs/Apps — We use the Enterprise Version of Google Apps/Docs and are pleased with the collaboration abilities
    • Live Meeting — We use Microsoft’s Live Meeting to show our desktops to each other
    • FreeConferenceCall.com — We use this Web site to set up free conference calls
  • Managing Virtual Teams
    • Daily Huddle — Just about every person on the team is involved in some type of daily huddle with their team (ideally 7 or fewer people) (see The Daily Huddle article I wrote.
    • Team Calls — We do a conference call with the entire company on a bi-weekly (every two weeks) basis (we cover general updates and training)
    • Ask “How do you feel?” more often — I find it useful to ask our team how they feel more often than I would in an in-person work environment. This is especially important for the “Feelers” on your team (check out my article on Top Types: 16 Myers Briggs Personality Types (8 of the personality types are feelers). Go to the same Introverts — For the more quiet introverted people on our team, I try to get them more involved by asking them their opinion on conference calls (for more on introverts, check out TopTypes for more on introverts.
    • Regular in-person get-togethers (including for Strategic Planning) — I’ve found it useful to get our smaller teams (e.g. our Management Team) together in person on a regular basis (quarterly or monthly is ideal if you can afford it) — in person meetings are most effective for Strategic Planning meetings (such as setting 3 year plans, 2-year plans, 1-year plans, etc.) where you need to do exercises such as a SWOT Analysis.

Another important lesson I found is that working in a virtual workplace tends to be really easy when your business is performing well and super-difficult when your business is having performance challenges.

That means that you’re really going to have to be at the top of your game during the tough times.

If you know of any purely virtual companies larger than 70 people, please comment below.

And you may enjoy this 5 Tips For Managing Your Virtual Team article I wrote.

Update On Other Larger Virtual Companies (Sept. 5, 2012)

There was an article in today’s Wall Street Journal that identified 2 other large virtual businesses: 1) Automattic has having 123 employees working in 26 countries  with most everyone working from homes (though they do have a small San Francisco office for occasional use)); the article also mentioned Kalypso LP which claimed they have 150 employees around the U.S. and in Europe with no corporate offices.

5 Comments

  • Aleebrahim

    Please take a look the following articles:
    SMEs; Virtual research and development (R&D) teams and new product development: A literature review

    International Journal of the Physical Sciences Vol. 5(7), pp. 916–930, July 2010

    Small and medium-sized enterprises (SMEs) are indeed the engines of global economic growth. Their continued growth is a major subject for the economy and employment of any country. Towards that end, virtual research and development (R&D) could be a viable option to sustain and ease the operations of SMEs. However, literature shows there has not been a great deal of research into the diverse characteristic of virtual R&D teams in SMEs. This article provides a comprehensive literature review on different aspects of virtual R&D teams collected from the reputed publications. The purpose of the literature review is to provide an outline on the structure and dynamics of R&D collaboration in SMEs. Specifying the rationale and relevance of virtual teams, the relationship between virtual R&D team for SMEs and new product development (NPD) has been examined. It concludes with identifying the gaps and feebleness in the existing literature and calls for future research in this area. It is argued to form of virtual R&D team deserves consideration at top level management for venturing into the new product development within SMEs.

    Virtual Teams: A Literature Review

    Australian Journal of Basic and Applied Sciences, Vol. 3, No. 3, pp. 2653-2669, 2009

    In the competitive market, virtual teams represent a growing response to the need for fasting time-to-market, low-cost and rapid solutions to complex organizational problems. Virtual teams enable organizations to pool the talents and expertise of employees and non-employees by eliminating time and space barriers. Nowadays, companies are heavily investing in virtual team to enhance their performance and competitiveness. Despite virtual teams growing prevalence, relatively little is known about this new form of team. Hence the study offers an extensive literature review with definitions of virtual teams and a structured analysis of the present body of knowledge of virtual teams. First, we distinguish virtual teams from conventional teams, different types of virtual teams to identify where current knowledge applies. Second, we distinguish what is needed for effective virtual team considering the people, process and technology point of view and underlying characteristics of virtual teams and challenges they entail. Finally, we have identified and extended 12 key factors that need to be considered, and describes a methodology focused on supporting virtual team working, with a new approach that has not been specifically addressed in the existing literature and some guide line for future research extracted.

    Innovation and R&D Activities in Virtual Team

    European Journal of Scientific Research, Vol. 34, No. 3, pp. 297-307, 2009

    Innovation plays a central role in economic development, at the regional and national level. In the competitive environment companies are obliged to produce more rapidly, more effectively and more efficiently in new product development, which is a result of research and development (R&D) activities. It is necessary for them to put together different capabilities and services with the goal, through cooperation between suppliers and customers, service providers and scientific institutions to achieve innovations of high quality. Depending on the type of industry, the type of business, the type of innovation and the strategic objectives that have been set, firms will regularly have to modify the way in which their R&D and innovation are organized. Nowadays, shift from serial to simultaneous and parallel working in innovation has become more commonplace. Literatures have shown that collaboration is as a meta-capability for innovation. By a comprehensive reviewing of literature this article after define virtual teams and its characteristics, addressing virtual environment innovation and the relationship to R&D activities. Finally conclude that innovation cannot be successful, unless the knowledge and information in the R&D project are effectively captured, shared and internalized by the R&D project’s virtual team members.

    Virtual Teams for New Product Development: An Innovative Experience for R&D Engineers

    European Journal of Educational Studies, Vol. 1, No. 3, pp. 109-123, October 2009

    New interaction tools such as internet allow companies to gain valuable input from research and development (R&D) engineers via virtual teams. Consequently, engineers also get more expertise in diminutive time frames. Virtual R&D teams present the key impetus to the technology acquisition process. The present knowledge-economy era is characterized by short product life-cycles. Virtual R&D teams may reduce time-to-market, make available a large pool of new product know-how and provide greater flexibilities, which are the key success factors in a competitive market. This comprehensive review contains almost 100 references and covers the recent literature with emphasis on the topic. The review has focused on authentic and reputed publications and extracts the results. This article presents the type of virtual teams and their main features and explains how virtual R&D team can play a prominent role in developing new products. The article is evolved future study guideline and also illustrates how to apply virtual interaction tools and integrate engineers into the innovation process. Management of virtual R&D teams in new product development (NPD) processes in an innovative, effective and efficient is of a high importance, but the issue has been poorly addressed in the previous studies. Findings show that virtual R&D team provides valuable input for new product development and R&D engineers are able to attain virtual experience.

    Modified Stage-Gate: A Conceptual Model of Virtual Product Development Process

    African Journal of Marketing Management, Vol. 1, No. 9, pp. 211-219, December 2009

    In today’s dynamic marketplace, manufacturing companies are under strong pressure to introduce new products for long-term survival with their competitors. Nevertheless, every company cannot cope up progressively or immediately with the market requirements due to knowledge dynamics being experienced in the competitive milieu. Increased competition and reduced product life cycles put force upon companies to develop new products faster. In response to these pressing needs, there should be some new approach compatible in flexible circumstances. This paper presents a solution based on the popular Stage-Gate system, which is closely linked with virtual team approach. Virtual teams can provide a platform to advance the knowledge-base in a company and thus to reduce time-to-market. This article introduces conceptual product development architecture under a virtual team umbrella. The paper describes all the major aspects of new product development (NPD), NPD process and its relationship with virtual teams, Stage-Gate system finally presents a modified Stage-Gate system to cope up with the changing needs. It also provides the guidelines for the successful implementation of virtual teams in new product development.

    Virtual R&D Teams in Small and Medium Enterprises: A Literature Review

    Scientific Research and Essays, Vol. 4, No. 13, pp. 1575–1590, December 2009

    Small and medium enterprises (SMEs) are the driving engine behind economic growth. While SMEs play a critical role in generating employment and supporting trade, they face numerous challenges, the prominent among them are the need to respond to fasting time-to-market, low-cost and rapid solutions to complex organizational problems. Towards that end, research and development (R & D) aspect deserves particular attention to promote and facilitate the operations of SMEs. Virtual R & D team could be a viable option. However, literature shows that virtual R & D teaming in SMEs is still at its infancy. This article provides a comprehensive literature review on different aspects of virtual R & D teams collected from the reputed publications. The purpose of the state-of-the-art literature review is to provide an overview on the structure and dynamics of R & D collaboration in SMEs. Specifying the foundation and importance of virtual teams, the relationship between virtual R & D team and SMEs has been examined. It concludes with the identification of the gaps in the existing literature and calls for future research. It is argued that setting-up an infrastructure for virtual R & D team in SMEs still requires a large amount of engineering efforts and deserves consideration at top level management.

    Critical Factors for New Product Developments in SMEs Virtual Team

    African Journal of Business Management Vol. 4(11), pp. 2247-2257, 4 September, 2010

    Small and medium enterprises (SMEs) are considered as an engine for economic growth all over the world and especially for developing countries. During the past decade, new product development (NPD) has increasingly been recognized as a critical factor in ensuring the continued survival of SMEs. On the other hand, the rapid rate of market and technological changes has accelerated in the past decade, so this turbulent environment requires new methods and techniques to bring successful new products to the marketplace. Virtual team can be a solution to answer the requested demand. However, literature have shown no significant differences between traditional NPD and virtual NPD in general, whereas NPD in SME’s virtual team has not been systematically investigated in developing countries. This paper aims to bridge this gap by first reviewing the NPD and its relationship with virtuality and then identifies the critical factors of NPD in virtual teams. The statistical method was utilized to perform the required analysis of data from the survey. The results were achieved through factor analysis at the perspective of NPD in some Malaysian and Iranian manufacturing firms (N = 191). The 20 new product development factors were grouped into five higher level constructs. It gives valuable insight and guidelines, which hopefully will help managers of firms in developing countries to consider the main factors in NPD

    Virtual R&D Teams and SMEs Growth: A Comparative Study between Iranian and Malaysian SMEs

    African Journal of Business Management Vol. 4(11), pp. 2368-2379, 4 September, 2010

    This paper explores potential advantages of using virtual teams for small and medium-sized enterprises (SMEs) with a comprehensive review on various aspects of virtual teams. Based on the standing of the pertinent literature, attempt has been made to study the aspects by online survey method in Iran and Malaysia. In both countries, SMEs play an important role in their economies, employments, and capacity building. Virtual R&D team can be one of the means to increase SMEs efficiency and competitiveness in their local as well as global markets. In this context, surveys have been conducted to evaluate the effects of virtuality to the growth of SMEs. The study addresses some differences between two countries in engaging virtual research and development (R&D) teams in their SMEs. It is observed that there is a significant difference between the SMEs turnover that employed virtual team and that did not employ the virtual team. The way for further studies and recommend improvements are proposed.

  • http://www.robdkelly.com Rob Kelly

    I use Google+ Hangouts now instead of ooVoo for 3-way video calls (I think it allows up to 10 people). This is a super-useful free tool for working with remote/virtual teams.

  • http://mccom.com/blog/2012/06/the-battle-between-co-working-and-working-virtually-which-ends-up-at-the-top/ The battle between co-working and working virtually: which ends up at the top? | The M/C/C Minute

    [...] of work is done virtually now-a-days, co-working is shown to be just as successful, if not more. Working virtually is both convenient and successful due to the high amount of travel taking place, as well as the [...]

  • Sarah Rose

    Hey, for virtual teams communication, you may also try a R-HUB web conferencing server in addition to Skype, Google+ hangouts etc.

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