Location, Location, Location: Does Where We Work Matter?

Does location matter in business? Is physical proximity an obsolete concept in today’s technologically advance world? Through emails, phone calls or Skype, we can instantly contact people who live on the other side of the world. Through the internet we have access to almost unlimited information and we can easily share information and resources with our colleagues through email. If I need to get the advice of a colleague who is on the other side of the world, all I need to do is pick up the phone at an appropriate time.

Yet physical location matters hugely. Organisational clusters, the phenomenon whereby firms from the same industry gather together in close proximity, is a perfect example of this. Michael Porter, who is Professor at the Harvard Business School’s Institute for Strategy and Competitiveness and has been studying organisational clusters for some decades writes

“location should no longer be a source of competitive advantage. Open global markets, rapid transportation, and high speed communications should allow any company to source anything from any place at any time. But in practice, location remains central to competition.” (Porter, 1998)

A good example of this is the Silicon Valley, to where, in the 1990s, huge numbers of tech companies began moving. This geographic concentration of similar businesses increases productivity with which they can compete. There are a number of reasons for this, such as access to labour and suppliers. However, one of the most important reasons is the directness in relationships that geographical proximity brings. Despite all the many advantages that technology has brought, we need physical encounters.

This is because much of the most valuable information is obtained not electronically but from face-to-face meetings. Informal learning, acquisition of know-how, and building trust require the face-to-face contacts that occur through social, professional or trade, and business situations.

When we meet someone face to face, communication is enhanced, as facial expression, tone of voice, dress and the actual words used all add to what is communicated. Without this, opportunities can be missed. Furthermore, we base conscious and unconscious judgements about traits such as likeability, trustworthiness and competence on people’s faces. In fact, one study has found that physicians spent more time looking at diagnostic scans when they were accompanied with the photograph of the patient. It is suggested that this picture is a reminder that there is a real person behind the scans, which leads to greater ethical commitment (Turner & Hadas-Halpern, 2008).

If organisations are located close to one another, the number of meetings is also increased. Workers can much more easily speak to those who work around them or pop their head into their colleague’s office next door than call someone on the phone. It is also often in casual meetings, over coffee, or by the water-cooler, where important information is shared. In areas with organisational clusters, workers often end up living in the same neighbourhoods, where they are much more likely to meet each other outside of work, for example in pubs and bars. This deepens the relationship, builds trust and will increase the amount of information sharing there is.

Being together in the same place, at the same time also reinforces belonging in groups and communicates worth and importance. People who work away from rest of their team can quickly and easily feel isolated.

Physical encounters lead to greater connectedness. High levels of directness lead to good quality communication. This is why location is still a source of competitive advantage, even though in theory, in an era of global competition, rapid transport and high speed telecommunications, it shouldn’t be. It explains why different organisations in the same industry cluster together and the large amounts of money spent by companies in getting their staff together for their annual conference. It should encourage us all to make time for face to face meetings and think about how we can encourage directness in our organisations and communities.


M. Porter, ‘Clusters and the New Economics of Competition’, Harvard Business Review, Nov-Dec 1998, p77.

Turner and Hadas-Halpern ‘The Effects of Including a Patient’s Photograph to the Radiographic Examination’, Radiological Society of North America 2008 Scientific Assembly and Annual Meeting, February 18 – February 20, 2008.


Relational dysfunction: a silent killer

“We never manage to do what we intend to do as an organisation.”

“Our strategy looks good on paper but we never manage to actually make it happen.”

We are all familiar with organisations that are no longer able to implement their strategy or deliver their plan. In some cases, it has always been a struggle for them. For others, it just seems to be getting harder. Organisations often look for external explanations. Or perhaps they have tried changing key personnel to inject fresh vision. Cutting staff and tightening up inefficient practices is another common approach. Introducing new systems and performance improvement programmes will usually be attempted.

Yet for some, the ability to implement strategy remains elusive.

From our relational perspective, there are clear signs that there is something dysfunctional going on inside the body corporate. Yet, we meet many leaders who appear to be in denial.

“It can’t be a relational problem because people aren’t actually shouting at each other.”

“Checking whether there are relational issues will only give us bad publicity and won’t solve anything.”

“Let’s keep trying these other things and wait and see; maybe the problem will solve itself.”

Individual relational issues within or between organisations are usually about personality clashes or personal chemistry. Such personal issues are very visible and tend to get addressed (by changing the people or avoiding each other). Organisational relational issues are more insidious and pernicious and more easily ignored. Just as geographic proximity can influence how well two teams work together, relational proximity is a key ingredient of a smoothly functioning organisation.

But there is more to relational proximity than geography. Unbalanced patterns of influence and communication can trigger misalignment, causing people to work at cross-purposes. Lack of mutual knowledge and irregular periods of contact can reduce momentum and cause people to despair of effective change. All of these give a sense of relational distance.

It is not only possible to clearly identify where such issues are occurring, it is also possible to do something about them.

Whilst basic business processes and the usual measures of activity in an organisation might appear to be working normally, core relational issues may be silently hampering its ability to deliver. A sound strategic plan will include an understanding and assessment of relational dynamics, enabling you to deal with organisational silent killers before they take hold.

This article was originally published by Renuma, one of our member organisations, and is republished here with their permission.

Is talent enough?

This week England cricketer Kevin Pietersen was told that he won’t be considered for selection for England this summer, thus effectively ending his England career. This announcement was made on the back of scoring an astonishing career high 355 not out for Surrey. Andrew Strauss, the new England Director of cricket, made the announcement, citing a “massive trust issue” as the reason.

This whole saga has brought the issue of team relationships in sport high up the agenda. How important is trust in sport? More broadly, how important are relationships in sport? Is it enough just to have the best players? Should coaches and managers care about team relationships?

With Kevin Pietersen, many ex-players have expressed their dismay at the decision, arguing that all that matters is that you have the best players on the pitch. Cricket itself however, is a different sport from many other. No-one bowls to a team mate or hits the ball to a team mate in cricket. Players play very much as individuals. It is well known that the great Australian team of the 1990s and early 2000s did not get on particularly well, yet they were incredibly successful.

Nevertheless, it is being increasingly recognised that strong team relationships are fundamental to team success. In invasion sports (sports where you invade the opposition’s side of the pitch), skill and talent are not in and of themselves enough.

Gain Line Analytics

Ben Darwin is a former Australian Rugby player who has recognised the importance of relationships. He has set up a company called Gain Line Analytics which looks at team cohesion and unity. He argues that there is a basic misunderstanding about how teams work. The general public and many sporting journalists look only to player skill and talent and a coach’s ability as indicators of sport success. The reasoning often goes that if a team is successful, it’s because their players are so talented, or they have a fantastic coach, or a mixture of both. What people are missing though, is the importance of relationships between the players within the team.

Gain Line Analytics have developed something called called the Teamwork index (TWI), which measures cohesion and unity of a team through the strength of the relationships between the players. They have found that the “higher a side’s TWI, the more unified the team, the more likely the club is to enjoy sustained on-field success, off-field stability, and heightened brand engagement.” Talent, skill and an excellent coach are therefore not enough. Indeed, team cohesion is so important that they calculate that you have to spend vast amounts of money to overcome the poor cohesion in a team.

Manchester United provides a good example of the importance of relationships in sport. After 26 years in charge of Manchester United, Sir Alex Ferguson retired in 2013 and chose David Moyes as his successor. David Moyes had an excellent record at Everton and was Ferguson’s choice of successor, but he failed. There are a number of reasons for this, but a major factor seems to have been relationships. He failed to realize the importance of continuity in a team and the importance of relationships the players have with the coaches. When he came in, he immediately sacked the assistant Manager, the first-team coach and the goalkeeping coach. He also changed the way that Manchester United played. And the team ceased to be the world-class team it had been, dropping from first in the Premiership in Ferguson’s last season, to seventh.


This cohesion is based primarily around ideas of continuity. For example, the length of time players have played together, whether they played together at Junior grade level etc. For example, the Canterbury Crusaders, one of the most successful sporting teams in the world over the last 15 years, have an exceptionally high TWI, built up on the fact many of them grew up playing rugby together. Their work shows how important continuity is for teams and organisations. To have effective relationships, whether that’s your understanding with your fellow centre-back in the football team, or an effective working relationship with colleagues in the office, continuity is needed.

Building these strong relationships, requires time. It’s not something that can be built in a few days, weeks or even months. It can take a long time for new players who have been brought in from another club, to reach their peak again, because relationships (and fruit of those relationships like trust, motivation and understanding), take a long time to build.

Therefore, high staff turnover is a particular problem, because it stops strong relationships being formed. In business,this decreases efficiency and hinders innovation, as well as bring additional costs in the form of recruitment.

Ben Darwin also argues that when you lose a player, you don’t just lose that player’s skills, but you lose that player’s relationships with others as well. You break the relationships that person had in the team and there by reshape the whole network of relationships within the team. Without knowing, you can replace several players on a team with more talented players and actually undermine the success of the team.

Margaret Wheatley warns about this in business. Writing about the dangers of reorganisations, she argues that many “strategists focus on rearranging the boxes of the organisation without realising that they’re ripping apart the networks of relationships employees constructed to help them perform better.”

To return to our question, Gain Line has shown that in sport individual talent is not enough. We are so often preoccupied with individual skill, that we miss that it is relationships that make teams and organisations work. Relationships need continuity over time to work and if we focus on this, for example by reducing staff turnover, or keeping in touch regularly with stakeholders, we can create healthy relationships that drive organisational success and ultimately personal happiness.



Brave enough to challenge your boss?

Many will recognize it: the fear of speaking up to point out a mistake of someone senior to us. But this lack of ‘parity’ (power balance), which prevents us from speaking up, can have destructive consequences.

In 1977, two planes collided at Tenerife airport killing 583 people, making it the deadliest accident in aviation history. There were numerous factors contributing to the crash, but perhaps the most fundamental reason is that Captain Veldhuyzen van Zanten decided to take off without clearance from Air Traffic Control. The more junior first officer and flight engineer spotted this mistake but were hesitant to speak up against him.

The fundamental problem was a lack of parity in the relationship between the pilot and the first officer and flight engineers. These junior co-pilots were powerless to question the actions of the Captain. In the airline industry at the time, there was a culture of ‘the pilot is always right’. Furthermore, Captain Veldhuyzen van Zanten was one of the most respected pilots in the airline and had recently trained the pilots himself.

The significant disparity in the relationships in the cockpit meant warning voices weren’t heard and thus the tragic accident happened. Since then new training procedures, known as crew resource management, have been brought in to enable junior staff to speak up to more senior staff, including pilots, if they believe they have made a mistake.

The airline industry know that parity reduces risk. And so does the medical industry. For example, when some young children died during heart operations at a Bristol hospital it was found that nurses were unable to make their concerns heard.

As a result, pilots have been helping to train medical staff to stand up to their bosses. It is hoped this training will give doctors and nurses the boldness and language to challenge more senior staff when they believe a mistake has been made. Strong relationships with parity of power between staff reduce risk. When the balance is right, junior staff can question a senior colleague if they believe they are making a mistake.

When power is fairly used it increases organisational effectiveness. It empowers the effective participation of all involved which causes achievement to increase because it enables the contributions of others in time, skills and knowledge.

Parity is fundamental for interpersonal relationships to flourish. However disparity can reduce respect. This might mean failing to recognise a company’s history or working practices, or it might simply lead to bullying.

Through tragic accidents, the airline industry and the medical industry have been able to learn the importance of parity and the importance of effective relationships between colleagues and therefore equip staff to avoid future accidents. However, for many people, communities and organisations, there is a complete lack of awareness of the significant problems that can be caused by disparity. Yet, as the airline and medical industries have shown, the risk is great. Get parity wrong in a relationship, and the effects can be devastating.

Read more about ‘Parity’ and how it affects relationships here and here. For Partners of the Network more documents can be found in the Resource Hub in the Partner Section of the website.

Also, if you are interested in topic, why not come to our ANNUAL CONFERENCE where we will be exploring what happens when relationships are stressed and damaged, and what kind of risks organizations are exposed to through the relationships they depend on.

Where does capacity come from?

“Don’t tell us we need to change. We can’t: we are already working beyond our capacity.”

“I don’t even have time to think about whether I shouldn’t be doing this.”

“I will think about doing that when I get the chance.”

There should be a fundamental difference between a group of a hundred individuals and a well-functioning organisation of the same size. Yet when individuals are working at their capacity, a hundred people can look like nothing more than a hundred people. Organisational capacity is created by good working relationships and the fluid connections they make.When an individual is working at full capacity, any curve ball, any change request, in fact anything extra, will be treated as a distraction. Even an offer to take some of their workload requires a decision, a hand-over and co-ordination. Adding more people requires all that, plus training and orientation. At full capacity, therefore, individuals become bound to do things that someone else might be able to do more effectively and efficiently.

Effective, efficient organisations realise that investment in relational connections is fundamental to building organisational capacity. Relationships are required to enable the right people to do the right things at the right time. Stop and think about that: without the right relationships, it is likely that the person, activity or timing will be wrong. Inefficiency and reduction in output follow.In order to make change happen, capacity must be used to build relationships and maintain them. Thus, ironically, in order to be in a position to increase the overall volume of work, it is necessary to be working at less than full capacity. If your organisation is already at full capacity, it becomes extremely difficult to create the relational space necessary for change.

Once an organisation has the space to change it will need to recognise the specific issues with their current relationships, address them and manage ongoing improvements to the way they relate. If relational issues are not addressed, inefficiency in engagement and connection will unnecessarily absorb an organisation’s precious capacity.

When someone in your organisation is failing to deliver (or your whole organisation is failing to deliver) it may well be that you have a capacity problem. In that case, improving working relationships is a great place to start in bringing the availability and capability necessary to increase capacity.

This article was originally published by Renuma, one of our member organisations, and is republished here with their permission.

Relational Thinking International Conference: Relational Risk & Sustainability

This years Relational Thinking conference will bring together thinkers and practitioners from around the world to look at the issue of Relational Risk; how it manifests itself in different contexts and how we can learn to manage and build with it: from business to the environment and from international relations to communities.

We’re pleased to announce that the following speakers are confirmed for our annual conference:

  • Professor Bob White (Professor of Geophysics in the Department of Earth Sciences at Cambridge)
  • Dr. Ted Malloch (Research Fellow at the SAID Business School and former US Ambassador to the World Trade Organization),
  • Dato Dr Kim Tan (Scientist and investor), and
  • Mrs Beris Gwynne (Director Global Advocacy, World Vision).

Conference registration will be up very soon on our website, so watch this space!

RTN Conference


Bullying in the workplace: looking at the relationships as well as the individuals

CAMBRIDGE – A survey of UNISON Trades Union members in 2011 suggested that up to 60% had been bullied or witnessed bullying at work in the previous year. Last year, and for the second year running, 24% of NHS employees working in hospital trusts in England said that they had ‘personally experienced harassment, bullying or abuse at work’ from a manager, team leader or colleague. ‘Bullying culture’ is a term repeatedly used to describe elements of the UK police, the armed forces, NHS and teaching. Abusive environments often appear to originate from the very top of public sector organisations. It is clear that this can radically affect our experience of public service.

But what is going on here? Are these service professions really so abusive? There’s plenty of published and private anecdote to suggest they can be. But it’s also true to say that a stretched and financially embattled service may begin to exhibit a whole load of unintended behaviours. The issue is complex. We are left to wonder how much of the apparent abuse results from unpleasant personalities exerting influence on their peers, their managers or their subordinates and how much results from well-intentioned managers deferring to an oppressive organisational culture or just struggling to manage the pressure. In some cases it may even be that a compliant about bullying is itself a way to bully management.

So a challenge for boards and regulators alike is to be able to distinguish between personal harassment arising from persistent and deliberate behaviour of another and the disempowerment of staff undermined by cultural and structural behaviours (e.g. unmanageable workload). The solutions to these two scenarios are clearly very different. Standard approaches include wielding a performance review stick with which to beat bad managers, pushing workforce through leadership training or values programmes in the hope that culture improves or even quietly shuffling people into other jobs. In isolation, these approaches can risk missing the point or simply being unrealistic and unsustainable.

Another approach is to build a fuller and franker understanding of the relationships at work in the organisation and identify where dysfunction needs to be addressed. On the whole, changing relationships that have abusive consequences is a more transformational activity than dealing with individuals who are bullies. Add in the wider organisational performance pay-offs of improved employee relationship and the investment of effort begins to look compelling.

Addressing relational dysfunction is a challenging activity, especially at the scale of a hospital trust or a Local Government Department. The effectiveness of the intervention is largely related to the quality of the insight into the issue. Relationship can be considered in terms of its strength in a number of related aspects, such as power, communication and history. Each of these aspects can be measured. This detailed insight identifies a range of possible levers for change – effective relationship does not necessarily hinge on individuals liking each other and is certainly not constrained by the involvement of differing personalities. Where some aspects of a relationship are fixed, there are usually other dimensions that can be adjusted to bring the desired improvement.

In partnership with Relational Research, companies like Renuma Consulting are working to help the public sector become a measurably less abusive place to work. They are enabling organisations to invest in their employee and inter-departmental relationships, as well as developing tools that equip boards with a more informative and accurate picture of their organisation’s culture, avoiding the “worrying disconnect” between management and frontline staff.

Renuma Consulting is one of the member organisations of the Relational Thinking network and was established to help organisations understand what is happening in their critical relationships and then find ways to improve those relationships. For more information, contact: info@renumaconsulting.com.