Innovation is the currency of the modern world. Naturally, we want to figure out how innovation happens and how to get more of it. The current recipe is to gather smart, passionate people together in a city, add a dash (or mound) of investor capital, and let the magic happen.

Why cities? Ideas thrive when they’re easily exchanged, combined, discarded, and built upon. If ideas live in people, then people need to be near one another to most efficiently swap ideas. Population is densest in cities, so in theory, ideas and innovation should be too.

This has produced incredible results. But it’s not without drawbacks and limitations.

Innovation hubs, like San Francisco, face rising rents, social unrest, and declining diversity as lower-income professionals flee to more affordable locales. Further, borders and immigration restrictions prevent talented people from traveling between countries, and therefore the cities that drive the information economy.

There’s a common thread here: The past few centuries (even millennia) have been about making the most of physical space to let innovation thrive. But we may be reaching physical and political limits. Thriving cities force tough trade-offs, and immigration policies won’t change overnight. Solving these problems could dramatically increase the global rate of innovation by letting the top people work on the most important problems, no matter where they live.

So, what’s the answer?

The digital workplace faces none of these problems. Space is unlimited. Physical location is less relevant. Traveling between areas takes seconds. Political borders are blurred. No passports or visas are needed. If it’s proximity ideas want, then this century’s equivalent of the city is online.

To date, however, we’ve been unable to replicate the intangible (yet obvious) value of face-to-face interaction. This is a prime hurdle to bringing work online—but it’s about to come down.

The Virtual Reality Office

The dream of a fully distributed team has been around for a long time, and many companies are successfully running remote teams today. Without fail, though, these teams have a common list of complaints. In distributed offices, it’s harder to get employees to maintain focus, and company culture inevitably takes a hit. Worst of all, it’s difficult to replicate the spontaneous interactions that are so critical to empowering high-performance teams.

Even with modern communication tools like Slack and Skype, we aren’t making distributed teams as socially and intellectually expressive as those in traditional offices. With all of the advances in communications technology in recent decades, at the end of the day, most great ideas come from a group of people working together in a room.

There’s nothing else that even comes close.

At least there wasn’t, until now. The virtual reality revolution is in the early stages of providing us with the tools necessary to create global collaborative networks that combine the flexibility of remote work with the traditional benefits of a real-life office.

So why is virtual reality different? After all, we can email, IM, or video chat with our coworkers from anywhere today. Has anything really changed?

It all boils down to one concept: presence.

Presence is what happens when your brain is convinced on a subconscious level that the virtual scene you are inhabiting is real. Presence is an extremely powerful sensation, and understanding presence is the key to understanding the current hype behind virtual reality.

With social presence, you really feel like you are in the same room as the other person. With social presence, you can finally communicate across distances with the ease and clarity of face-to-face communication. Nonverbal communication, gestures, and subtle facial expressions are all critical to communication but have been difficult to express digitally. With social presence, we can make digital communication as natural as the real world.

So how much is the power of social presence worth? At least $2 billion, according to Mark Zuckerberg, who bought Oculus to help ensure that Facebook is competitive on the leading social platform of the future.

By harnessing the power of social presence, we’ll soon be able to create virtual reality offices and spaces where people can meet, talk, work, and debate just like they were together in real life. The ephemeral barriers to communication that exist for teleworking will melt into the background, and we’ll be able to seamlessly communicate with one another.

That’s only the beginning—it really gets exciting once we start incorporating elements such as 3D data visualization and digital simulations into our offices.

If virtual reality can nail social presence, we’ll open up the global talent pool, and what happens next may be as world-shaking as when humans settled in early cities.

The Global Talent Pool

“The main lesson … is that innovation is usually a group effort, involving collaboration between visionaries and engineers, and that creativity comes from drawing on many sources. Only in storybooks do inventions come like a thunderbolt, or a lightbulb popping out of the head of a lone individual in a basement or garret or garage.”—Walter Isaacson, The Innovators

As our world dives headfirst into a world of constant innovation and technological disruption, it is impossible to overstate the power of small, driven teams. Software is eating the world, and start-ups are building the best, most innovative software. Relatively small teams with big-time software, like Uber, Airbnb, and Facebook, are rewriting the source code of our daily lives.

We now live in a world where a team running on two pizzas can challenge a Fortune 500 company for market dominance.

A great paradox of the modern world is that while we can communicate better than ever before across great distances, the top teams are placing increasing importance on personal interaction. Simple transactional work can be done easily over email or videoconferencing, but true collaboration still requires getting a group of innovative thinkers together in a room.

And what’s more, the best companies and organizations all want to be in the same place, which is why companies are flocking to San Francisco, Boston, and Washington, DC. These innovation centers are crucial to the modern economy. It’s not an overstatement to say the modern technological revolution wouldn’t have happened without them.

But there’s a huge problem.

No matter how many smart and talented people you gather together in any particular place, you won’t have the vast majority of top performers there. That means that every company in the world is being massively hamstrung by not having access to the global talent pool. While we’re starting to unlock this problem with the “gig economy” and sites like Elance, coordination with remote team members can prove more difficult than the task that’s being worked on.

Now imagine that there’s a way to eliminate the physical distance between everyone in the world. A programmer from London, a graphic designer from Shanghai, and a user-experience engineer from Mexico City get ready for work and find themselves in the same office without having to commute. We would see an absolute explosion in innovation and productivity as the best people from around the world could form teams without regard for distance.

The virtual reality office will make the entire world one large innovation hub with no boundaries or spatial limitations.

Rewriting the Innovation Source Code

Our current innovation and managerial framework is a technology like any other, and it is about to be disrupted. And just in time. In many ways we’ve innovated ourselves into a corner: industrialization has caused global warming, biotech terrorism presents a new and chilling threat, and of course, the information economy promotes excessive gentrification and immigration stresses.

Perhaps soon we will be holding VR interviews with anonymized avatars, to prevent unconscious bias while hiring. Or we will create international war rooms to fight the next infectious disease outbreak. At the very least we’ll be wasting less time sitting in traffic.

The virtual reality office is not the silver bullet to solve all of these global issues, but it does offer us a new and unique opportunity to create tools in the fight for a greener, safer, and more equitable world. It not only can help us iron out the flaws in our current system, but can allow us to create new organizations that move at lightning speed due to their access to the global talent network.

The Internet brought us a new breed of organization that can harness digital tools to allow a small team to make extraordinary impacts on the world. With the rise of the virtual reality office, we could see another breakthrough on the same scale. Let’s make it happen.

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