By Marie Louise Mors & David M. Waguespack
Over the past year, we have all become used to working in dispersed teams. But now that it’s becoming possible to go back to the office and work side by side with colleagues, it’s natural to ask how much we will do so.
The benefits of dispersed teamwork are well-documented. There’s plenty of research to show that bringing together teams across organizational or geographic boundaries allows companies to leverage diversity in people’s backgrounds, attitudes and capabilities. This diversity promotes improvement, creativity and innovation. Yet the same research has also recognized that communication problems, cultural misunderstandings or disagreements about when and where to meet may lead to coordination costs.
In an effort to find out whether and under what circumstances the benefits of team dispersion would outweigh the costs, we examined 5,250 teams in an online community, many of which were distributed across different organizations and geography. The members of this community work for a variety of organizations, including large organizations like Microsoft and Cisco, and the teams we studied had voluntarily come together to work on establishing standards for the internet.
The results of our study were surprising: We found that dispersed teams were more efficient than nondispersed teams, but only when the outcome of the project was successful. Conversely, co-located teams were quicker to abandon failing projects but were less efficient in working on projects that did succeed.
In general, dispersed teams spent less time and went through fewer iterations before reaching success than the co-located teams. This suggests that team members are aware that it’s difficult to coordinate when people are located in different organizations or when they have to coordinate across geographic boundaries. So if the teams themselves choose when it’s worthwhile to work across boundaries, they are likely to do so only on projects that they believe will be successful, and they will work harder to achieve success.
In contrast, co-located teams don’t need to make an extra coordination effort to complete their project. They have fewer incentives to work efficiently. They may also be more willing to take a risk in selecting a project, as they will perceive lower coordination costs going into it.
We also found that co-located teams moved on from failing projects more quickly than dispersed teams, which kept working for a longer period before giving up. This might be because dispersed teams feel more committed to what they believe to be good ideas or think that their superior team will overcome any hurdles. We also observed that dispersed teams invested more effort in projects early in the process, which could be making them prey to the sunk cost fallacy and risking an escalation of commitment.
Studies also suggest that dispersed team members may find it more difficult to communicate around a failure or reach agreement on when it is time to abandon a project. In contrast, co-located teams may find it easier to meet up to discuss the progress of a project and agree when it is time to let it go. It may also be easier for nondispersed teams to get started on new projects, so they may be less reluctant to abandon failing projects.
Research in entrepreneurship has shown the benefits of encouraging teams to take risk and embrace so-called fast failures, where teams fail often and quickly in order to learn. Our study suggests a qualifier to this recommendation: If teams are dispersed, they may not be very good at failing fast. And when dispersed teams hold on to failing projects, it is costly: When involved team members are unable to learn and move on quickly, they consume resources that could be freed up for investment in other projects. In other words, the real costs of dispersed teams lie with the failing projects that the teams are reluctant to abandon.
So how can companies limit the costs of failure in dispersed teams?
Dispersed teams may need help identifying upfront which projects are more likely to succeed or fail. Putting in place better coordination mechanisms may also help dispersed teams reach agreement on when it is time to abandon a project. Failing this, management may have to step in. In particular, the following interventions should be considered:
1. Screening: Dispersed teams may need support to ensure that they commit to projects that are really more likely to succeed. Actions to take could include scenario and risk planning, presenting ideas to colleagues or management before committing to projects, or putting in place situations that allow teams to seek critical input upfront. Such conversations may also make team members more open to the fact that the project can fail and therefore leave them more ready to give up if it does.
2. Synchronous working: When dispersed teams coordinate across time zones, they often structure tasks so that they work on the projects at different times. This makes it simple—and when things go well, also efficient—to get the work done, but it also generates little opportunity for communication when work is actually done. And so discussions of problems that indicate that the project is failing likely get delayed. Dispersed teams may therefore need to put in place mechanisms whereby work is done on the projects with some overlap in time to allow for synchronous conversations.
3. Management intervention: Managers need to follow up more closely with dispersed teams than with co-located ones in order to ensure that progress is made and to look for indicators of when projects start to fail. Dispersed teams may also need more help in abandoning projects when they start to fail. With intervention at the right time, fast failures for dispersed teams can unfold so that resources are freed up quickly and can be redeployed on new projects. When it comes to co-located teams, management may need to pay attention to what projects are started, so as not to waste resources on projects with little potential.
As managers contemplate the lessons from the giant experiment in dispersed working that the pandemic imposed, they need to examine critically just what worked and what didn’t. They should also remember that co-location and dispersion need not be mutually exclusive. Parts of a project may require co-location, while other components may not. Whatever the overall design, though, project managers need to ensure that the weaknesses of both working modes are properly addressed.
Marie Louise Mors is a professor of strategic and international management at the Copenhagen Business School. David M. Waguespack is associate professor of management & organization at the Robert H. Smith School of Business & Ed Snider Center at the University of Maryland.
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