How working from home is screwing up Israeli startups and what can we do about it?
Photo by Med Badr Chemmaoui on Unsplash. Israeli home offices will never look like this.

How working from home is screwing up Israeli startups and what can we do about it?

For a Hebrew version of this article, click here.

Are employees trying to avoid work while working from home, or are the entrepreneurs and CEOs complaining about it just imagining it? Along with the benefits of remote and hybrid work models on the personal and organizational levels, there are crucial factors that are harming team productivity. The majority of Israeli tech companies have adopted a hybrid model without adapting their management techniques. What are the key factors behind the inefficiency of the hybrid model? Why are Israeli tech companies suffering from reduced yields? And more importantly, how can we manage it in times of crisis?

The interview with Or Offer, CEO of SimilarWeb, has sparked a heated debate about working from home. How effective is it? Is it here to stay? In my current role as a consultant and advisor to Israeli startups, I get to work with companies that are struggling to be efficient in hybrid models. I’m also seeing this topic often discussed in entrepreneurs’ networking groups. While opinions vary, it seems to me like more founders and CEOs are expressing concerns that working from home is chipping away at their ability to deliver results.

As a two-time entrepreneur and R&D site manager for two multinational companies, Autodesk and Dropbox, I thought a lot about team co-location and how it affected productivity. At Dropbox, I was in charge of transitioning the TLV site to 100% remote work as a part of the company’s Virtual First strategy. Based on that experience, it’s my opinion that this topic is too complex for a short response, tweet, or comment. The shallowness of the discussion that started as a response to Or’s post, though suitable for the times we live in, disturbed me. After a lot of thinking, I believe I was able to capture the essence of the issues with working from home in the Israeli tech sector. It’s not going to be a short read, but I believe it’ll pay off.

What has happened to us since 2020?

So yes, I do believe that CEOs aren’t delusional and that there’s indeed a problem here. But first, let’s get the timeline right. On February 2020 we all started working from home due to the lockdowns. Though highly disruptive, the majority of feedback about working from home from employees and employers was positive. This includes Or Ofer's feedback. Even though working from home was not easy for everyone, particularly working parents of young children (I’m in that group), it seemed that most people were able to remain efficient.

I believe it did work for many of us at first. But productivity gradually deteriorated, and we’re still experiencing this slump. My explanation for this phenomenon focuses on three main pillars. I’ll first break them down and then piece it all together:

  1. Trust
  2. Uncertainty
  3. Communication Cycle Time

Trust

Trust plays a role in many team-building models. In my favorite model, The Five Dysfunctions of a Team by Patrick Linconni, trust is the foundation of teamwork. One of the most fun aspects of Israeli culture is the way in which we form trust: through relationships and comradery. This isn’t a stereotype. It’s backed by research (a summary, one of many research studies on this topic). I’ll summarize: Israeli culture is somewhere in the middle, with western influences but somewhat closer to the eastern types of culture in the way we approach trust. We rely more on trust that’s formed through close relationships based on shared time and experiences. It’s a lot of fun. But it takes time. Most of the people I coached on how to work with people from the US (I know I’m generalizing as US culture within itself varies, but still) have commented to me about the introductions section that is typically the first phase in a meeting. "It feels vain," they say. They fail to realize how this part of the meeting helps cultures that respect titles form trust. In our culture, titles play a lesser role. We take the long route. To be clear, I adore it and do not advocate for its modification.

Israeli tech office culture typically includes long group lunches and coffee breaks. These pauses aid in the formation of trust. Without them, trust is formed more slowly. These breaks are also one of the reasons for the low labor productivity in Israel. That’s not a stereotype, but a fact. The Israeli tech sector enjoys better labor productivity compared with the rest of the sectors in the country, but still less than on-par with OECD countries. It’s important to distinguish between labor productivity and yield. Labor productivity means a lower yield per hour of work. According to the Knesset research, the Israeli labor market compensates for this issue by requiring more working hours, resulting in a sufficient total yield.We’ll get back to labor productivity later on.

We’ll conclude the section on trust by stating that when working from home, starting with the COVID period and onward, our trust-building time has been reduced. It worked at first, as relationships existed prior to codification. But that trust got diluted over time. Teams without trust will struggle to remain productive.

Uncertainty and Communication Cycle Time

We’ll analyze the other two pillars together. First, let’s define them.

Uncertainty represents how sure or unsure we are about something in the project the team, group, or company is working on. It could be in the business realm, like a target market, value proposition, or product decision. It can be an aspect of the user experience of the product we’re not sure of or a technical strategy that needs decisions to be made.

Communication Cycle Time is defined as the time it takes a person to get a response to a question they need an answer for now. Without an answer, they’re stuck. They need to guess the answer in order to make progress or wait.

Now let’s put them together into a mini-framework:

Long Communication Cycle Time hurts team productivity
Note: This model represents my logic and thinking. I might be unknowingly quoting someone, so let me know :-)

A quick analysis: with more uncertainty, teams need to have short communication cycles in order to unblock each other. People become stuck or make incorrect assumptions when open questions are not answered, introducing waste into the process. When uncertainty is low, given some planning ahead of taking on a task (which reduces uncertainty even more), a team can function well with longer communication cycles. They simply get stuck less often. And how did COVID influence this uncertainty and Communication Cycle Time?

Uncertainty

I dare you to find someone who will say that since the COVID period, certainty has increased around the world. Running a business, not to mention starting a company, has become even harder as businesses have to adapt to a new world. This affects business plans, product development roadmaps, and more.

Communication Cycle Time

This pillar has always been a critical factor in teamwork. It appears to me like we somehow forgot about it when deciding to go remote or hybrid. We used to spend so much energy figuring out which teams should be under the same organization and sit next to each other in the office. This is because we know that teams that are more closely situated, both organizationally and physically, will communicate better. When lockdowns began, most people had a good runway of tasks and felt relatively productive with less "disturbance" while working. Top performers on the team might have been able to remain productive as they got "stuck" less frequently. But newcomers, young talent, and people working on high-risk projects suffer from not getting answers to questions soon enough. Teams typically contain a combination of talent types, meaning that long communication cycles added waste to almost every team. I believe that this is the most contentious point between employers and employees. While top performers report better individual productivity, teams as a whole perform worse than before. And this has to be said: at the organizational level, team productivity matters more than individual productivity. It allows for greater workforce diversity. Greater diversity has been proven to improve business results in the long term. Also, we cannot disregard the personal productivity advantage for top talent, being able to better focus while working from home.

The Communication Cycle Time has increased by a lot during the past couple of years. How so? As time passed, people started to realize the value of working from home. A daily stroll in the park, yoga sessions mid-day, a lunch break with the kids, and so on. I want to highlight this first: I believe that the vast majority of employees are trying to do a great job and are working to make progress in their career. Employees are not trying to "screw" their employer by working less. They are simply enjoying the flexibility and benefits of working from home. These benefits also have organizational advantages such as reduced burnout and higher employee retention.

The flip side of these advantages is a longer Communication Cycle Time. People are waiting longer to get their answers. More waste is introduced into the system. There are ways of syncing up teams and making sure this doesn’t happen (thank you, Dropbox). But any such system will require planning, expectation setting, and process. The typical Israeli approach of "going with the flow" and "it’s all going to be alright" will not work here.

Remember the labor productivity discussed before? Other work cultures (which Israelis respect but also make fun of) put more emphasis on processes. The processes help make ownership, responsibilities, and the roadmap more clear. In other words, these processes help cope with longer Communication Cycle Times because they reduce ambiguity from the get-go. Without going into too much depth, I’ll say that multinational companies also suffer from reduced productivity due to working from home, but this has more to do with the reduced quantity and quality of the process planning time. Multinational companies are still better set up to handle long Communication Cycle Times. In contrast to American firms, Israeli firms "went with the flow," relying on our short distances and extended office hours to compensate for a lack of process.

Another observation: the level of uncertainty in startups is, by design, higher than that of incumbents. As a result, they have a greater need for short Communication Cycle Times, which gives them a competitive advantage over incumbents! Employees in big corporates can always be kept busy with responding to surveys or doing some corporate training about how to walk the corridor correctly (just a joke, I love startups and corporates the same ??). Apart from the cost of context switching, expensive as it may be, employees in big companies are less exposed to the risk of waste due to long Communication Cycle Times.

A bad yet common way of solving for long Communication Cycle Time is to provide people with more tasks so they’ll be able to switch once stuck on one task. This is a bad solution for many reasons detailed in Agile / Lean manifestos. I’ll just say that doing that will increase the Work In Progress, which will only make matters worse.

Summary - everything together now

We now have the perfect vicious cycle:

  1. Lower trust, meaning lower team productivity.
  2. High Communication Cycle Times, meaning higher waste. This is worst in startups where uncertainty is high.
  3. Managers see the declining productivity. They also don’t see their employees working in the office, so they assume they’re not working as hard and go blaming them for it.?
  4. Employees’ motivation gets hit, and they show up to the office less frequently, which reduces trust (goto 1).

How do we manage the situation?

My opinion is that out of the 3 potential modes (100% office, 100% home, and hybrid), the hybrid model is the most complex one to manage. A person working in a hybrid model that has not been managed well needs to switch between "different brains". One brain knows to tap the shoulder of a coworker and ask a question, and another brain knows the communication channels used when working from home.

If you’ve made the decision to allow employees to work from home regularly, you will need to manage your teams differently. Your new managerial goal is to work with your people to find a balance between the advantages of working from home and the need for short Communication Cycle Times. Here are a couple of ideas for how to do that:

  1. Measure how many times your people get stuck during the day and need unblocking by a team member. Then, agree to adjust their joint working hours accordingly. You can actually reward teams with lower rates of "getting stuck" by increasing their working-hour flexibility. You need to work with your team on agreeing on the times when they’re available to answer a question promptly. What you agree on with the team does not need to be a fixed solution. It can change over time. You may find it challenging to measure the "stuck rate," but it’s actually not that hard. A quick glance at Slack, e-mail, or Teams to determine the level of promptness, combined with a GitHub search for the number of open PRs (your work in progress) and the promptness of code reviews, will give you good insight into where things stand.
  2. Agree and insist on having full teams in the office on the same days. This is meant to make sure trust is formed.
  3. Train your managers in project management! Teach them to: breakdown tasks into smaller chunks; have individuals (not managers) do their own time assessment; define task goals and the definition of done; define roles and stakeholders. There’s no more "office glue" that will make up for poor management practices. This topic has always been a pain point, but it has grown in the past years due to hybrid setups and the overflow of funding to startups that has led them to hire and promote untrained managers (this is a topic for a different post by itself).
  4. Invest in trust building workshops and fun days. Remember to highlight that the intent here is to gain shared experiences and not only to have fun (fun days are not fun for everyone). Because that’s what we as Israelis need in order to increase trust.
  5. Meetings: I recommend an even playing field. Either everyone is in the office or everyone is in zoom. It’s not only more effective for the people on Zoom, but it actually helps increase trust.

But most importantly, trust your employees! If you have any doubts that they are trying to do a good job, why did you hire them in the first place? If you cannot establish trust with employees (trust takes two to tango), you will find it difficult to succeed in hybrid or fully remote models.

Another decision you can make is to get back to working five days a week in the office. Transitioning to that from a hybrid model will surely cause friction and perhaps attrition, but it’s a choice you can make. Remember that when employees enjoy a better work/life balance, there are benefits for the organization as well as the employees. But these are long-term advantages, and oftentimes startups are required to optimize for the shorter term. Whether or not experienced employees are OK with a 5-day in-office work week is an open question I won’t attempt to answer. We’ll have to leave that to market forces and time to determine.

Saar Litmanovich

Co-Founder & CTO @Colors-ai | Building the Next-Gen AI OS & Marketplace

10 个月

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Florian Wagner

Software Engineer

2 年

I know I'm late to the party but as a remote employees in a hybrid company this really hits home. Maybe one way to connect two parts: high impact employees often have others ways to reduce uncertainty: -prior experience from other projects - better clued in to decision history (probably correlated to trust) Having been in a process heavy industry and culture when covid hit I can tell you it only partially helped: processes beed to be lived to provide value and it's easy for them to ossify and hollow out when doing them remote. One question I have for you Jonathan Seroussi: what do you think of more structured communication to lower cycle time? On the one hand similar questions are asked repeatedly, which points to a systemic lack. On the other hand it takes active effort to create and more importantly maintain as answers may change slowly but significantly over time.

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Nirit Chen

VP Business Development & Marketing at @iTalent Group

2 年

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Etti Gazit

??HRGP, People, Operations, Recruiting, Mentoring, Coaching?? Mom of 3 amazing kids, Spouse, Sport addicted

2 年

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Fernanda Foertter

Building supercomputers since 2006

2 年

Good article Seroussi! There are other models too. 4d/w-10hrs. I'm in favor of short bursts of planning combined with bursts of working. One of my favorite leadership authors L. David Marquet talks about thinking/doing work and how we need both. Too much thinking nothing gets done, too much doing and we get out of sync. The key for each workplace is to identify how often to return sync up. Also I really loved how when we worked together we built a cadence. Predictability helps people pace themselves and manage their time. Lastly it's ownership of deliverables and a sense of agency. No one likes to be told what to do 100% of the time and motivation wanes regardless of how often one shows up at the office. Lots of knobs to optimize and as always "it depends"

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