In late 2001, Scott McNealy, the CEO of Sun Microsystems at the time, laid out for me a sweeping vision of remote work. Office buildings would be reduced to meeting rooms surrounded by a large parking lot. Employees would only come to the parking lot two or three days a week and would arrive around 10--avoiding rush hour traffic. They would plug their "sports utility offices" into the company network, letting colleagues know they were nearby if anyone wanted to arrange a meeting inside or just come by and bang on their window for a chat. Everyone would leave by around 3pm--again avoiding rush hour--and go home... to continue working.
McNealy had outfitted every employee with a home computer because, he said, "I do not want somebody at 10 o'clock at night who can't sleep, who wants to work because there's nothing good on TV, to not have full capability to do everything he needs to do to get the job done."
I asked: "Will people have trouble splitting work from home life?"
"There is no distinction," he said.
In my experience, McNealy was prescient about a lot of things. For instance, Sun adopted the slogan "the network is the computer" 40 years ago, long before most of us had even heard of the internet, and McNealy began describing cars as "computers on wheels" almost that long ago, well before most of us were aware of the processors being built into cars. I think he may have been right, if a bit early, about the productivity possible through remote work, too.
Certainly, something is driving the major, recent gains in productivity--up 4.9% on an annualized basis in the third quarter and a further 3.2% annualized in the fourth quarter, after a 1.9% decline during the COVID chaos of 2021 and a 1.2% rebound in 2022.
Productivity numbers are tricky, and it takes years to truly discern a trend -- the surge in the '90s from digitization, including the internet, wasn't fully recognized until 1999 -- but if my instincts are right, and we're at the start of a similar boom, then insurers face a huge opportunity and a challenge.
The opportunity is that all the efforts now underway to improve efficiency can become far more ambitious. The challenge is that they will have to become far more ambitious, because some, even many, of your competitors will seize the opportunity even if you don't.
I realize I'm somewhat biased here, because I've been Team Remote Work for more than 25 years, since I left the Wall Street Journal and became a partner at Diamond Management & Technology Consultants. Yes, given the consulting firm culture of when-in-doubt-get-on-a-plane, I commuted from the Bay Area to headquarters in Chicago two or three times a month, but when I was home, I was home.
If my two daughters, then quite young, wanted to jump in the pool, I could just about always find time to go have my best moments of the day (and maybe theirs). When I needed to get serious, I could just shut the door to my office and get to it. The result was a happy employee and some of my best work -- the magazine my team and I produced for Diamond was once a finalist for the National Magazine Award for General Excellence, the industry's highest honor.
Yes, many jobs require more interaction with multiple people in real time than the editing of a bi-monthly magazine does and don't lend themselves so easily to remote work. I sometimes think of the experience of my younger brother, who, like me, started on the copy desk at the Wall Street Journal but who didn't go remote over four decades -- and really couldn't have, even though the act of editing only requires a person and a computer. Instead, he commuted two hours to New York City from a northern suburb of Philadelphia and two hours home every day because, especially as he took on more senior editing responsibilities, he had to be in the mix as stories changed and as copy did or didn't arrive on deadline.
There are, of course, also many jobs that simply can't be remote -- in construction, hospitality, healthcare and more.
But I think most insurance jobs have more in common with my experience editing a bi-monthly magazine than they do with putting out a daily newspaper or with the jobs that have to be in person. Someone underwriting, handling a claim or working with people to sell or service a policy certainly has reasons to interact with others but is doing the productive part of the work on their own.
The jury is still out on whether innovation can happen as easily when people work remotely and whether any sense of isolation is harmful, but a lot of benefits are clear-cut. Employees are happier and thus less likely to leave. You've just given them what amounts to a raise by cutting their commute expenses and have given then back maybe an hour of each day they don't have to come in. You've made it easier for them to juggle any responsibilities with children or with aging parents and to work around any family illnesses.
You also reduce your need for office space and for relocation expenses. (The WSJ paid to relocate me five times in my 17 years there.)
This article in the New York Times explores in detail the potential for productivity gains from remote or hybrid work. It also introduces the prospect that AI, especially recent developments in generative AI, are already feeding into productivity improvements.
Personally, I think that may be optimistic. It took close to 20 years from the time personal computers appeared in the late 1970s and early 1980s until major productivity gains from digitization registered. And, while I think there is much more low-hanging fruit to be harvested with AI than there was with massive IT projects in the '80s and '90s, I still think we're in the beginning stages of the Gen AI revolution.
But it will happen. And I haven't ever heard anyone say insurance is an efficient industry. We've made great progress in the past decade and will continue to do so, but there is an awful lot of white space still there for innovators.
We now seem to have two waves to ride: first, the switch to remote work, then the long, deep benefits from the adoption of generative AI.
As I often say, I take to heart the Silicon Valley mantra that you should never confuse a clear view with a short distance, and I may be violating that adage here. But even if you add a few years to my guesses, we're still in for profound change, and I think we can all aim higher.
Cheers,
Paul
P.S. My best work-from-home moments came when my younger daughter got home from pre-school. I'd hear the front door slam, then the sound of her backpack landing on the hardwood in the foyer, followed by her little tennis shoes slapping against the floor as she raced toward my office. I'd turn my chair to face the door, so she could launch herself into my chest and land in my lap. She'd give me the biggest hug, and we'd chat about her day. Occasionally, she'd fall asleep in my arms. I'd never dream of putting her down, so I'd take phone calls with her on my chest and even type emails or edit articles around her little body.
I doubt anyone has ever had a better experience working in an office or come away more energized.