Why Face-to-Face Still Matters

Jon Reades (with Martin Crookston)

Are digital networks a complement to, or substitute for, face-to-face?

‘Layered’ Structure

Moving ‘stuff’ around
Making markets
Doing deals
Talking shop
Face-to-face now
What, then, for 21st-Century places?

But for us to make that claim, we wanted to look back through the history of economic geography at how infrastructures, markets, firms, and people work. And how previous technological changes have impacted cities and businesses. Things like containerised shipping. The telegraph. The railroad. Low-cost flights. The mobile phone network.

In doing that we developed a ‘layered’ structure in which infrastructures create potential, markets create risks, firms seek out opportunities, and people make things happen.

To test these ideas we then went out and interviewed nearly 50 people about their work, their meetings and conference calls, and working lives.

And we wrapped up, as I will today, with some thoughts about what this all might mean for the future.

My talk today will broadly follow this structure so this is just to get you oriented.

Just one small thing…

This Time it’s Different…Or Not

General Haig is supposed to have said: “The news from the front is never as bad, or as good, as it is first reported.” And we think that’s a good way to approach the post-Covid city: we’ve all been through a lot and we don’t think it’s unreasonable to be asking “How can we possibly go back to how it was before?”, but by the same token, assuming that this is all going to end in the not-too-distant future what is the first thing you’re going to do? Try to do everything that you couldn’t under the ‘new normal’!

And we’d point out that, historically speaking, cities have experienced pandemics, economic upheaval, social unrest, even war, and bounced back before. So we think a better question to ask is why: assuming that we get Covid-19 under control, why should it be different this time?

And to answer that question we need to do two things: 1) to look back at history for a better understanding of what has driven change over the years; and 2) to integrate that understanding with a better grasp of what cities do now.

So this is a talk about economic geography and, indeed, the history of economic geography.

And it is also a talk about today. What people do in London, whether they are artists or bankers, consultants or designers. More on that in a bit.

Moving Stuff Around

Our first chapter is about how infrastructure networks – road, rail, sea, air, phone, and data – can be understood to overlay and inter-penetrate one another so that it’s not about geographical distance, but network distance.

So in light of this, and in light of the way that digital networks have reached into every sector of the economy and society, it’s quite reasonable to think that the long-promised ‘death of distance’ is finally here.

But our argument – in line with arguments that ‘the world is spiky, not flat – is that the ways these networks are laid out – their topology – creates a kind of ’surface’ of potential upon which locational choices rely.

But for a little perspective on this, we can look back nearly 3,000 years! To our modern eyes Orkney can seem like the end of the world, but think back to what the land was like, full of dangerous predators and people of uncertain friendliness, and suddenly we can see why accessible places like Skara Brae were found at the centre of long-distance trading routes.

Run history forward more than 2,500 years and really the only big change is roads. Roads connect towns and cities, but in terms of economic development what they privilege is the places where goods can be taken off of boats and put on to carts, porters, and (eventually) canal boats. Then rail arrives: so fast compared to what came before that early observers worried that the engine driver and passengers would pass out!

In the 1830s all of that changed. Or, I should say, could have changed. Because that was the decade in which the telegraph was invented. For the first time, data didn’t need to be carried by actual human beings. We’re now in the age of information flows! And what did the telegraph change? The answer is ‘a lot’ and ‘very little’.

It’s why New York made the cut, and not, say, Boston which was much older and more established. Because New York has a port that is ice-free year round!

To make sense of this look at the interactions between:

cost
speed
bandwidth
connectivity
convenience

One of the nice things about taking the long view is that you start to see the similarities and worry a little less about the differences because they often turn out to be superficial in quite interesting ways.

Two things – a blast furnace and a data centre – can look so different that it can be hard to think how they can have anything in common. But to an economic geographer we might think in terms of inputs and outputs, and how far and effectively these can travel.

For the blast furnace there are a lot of constraints on inputs: moving the raw materials around is expensive, but good quality steel can be shipped anywhere the world. I use the term ‘quality’ on purpose because Germany shows how you can have high labour costs and still compete… if you’re the best in the world.

We tend to think of data centres as completely different, but they have a geography as well. The primary costs of data centres are: 1) power; 2) cooling; and 3) interconnections with the Internet backbone. Probably in that order. So Facebook has a data centre in Finland and many of the others are in places that look out of the way given who uses these products. That’s because the output – data – can be transported anywhere fairly easily.

But at the limit, there are companies that will pay outrageous amounts of money just to be a couple of kilometres closer to the financial markets servers because that might give them a microsecond advantage in trading. The actual length of cable matters.

So when we look at moving ‘stuff’ around, whether it’s people, packets, or goods then we can see that it’s never just about the money. Though it’s also about the money. Some people will pay a lot more money to try to get faster, more, more connected, more accessible interconnections with transport and digital networks.

London has a hidden Internet provider that only connects about 25 cities including London, New York, LA, Auckland, Vancouver… Any idea what these have in common? They are all involved in film and TV production for the global market. The provider is called Sohonet and it exists to offer speed, bandwidth, and connectivity that you simply can’t buy on the open Internet.

What’s the bandwidth of an A380?

(In)Flexibility

Infrastructure and technology change power both a centrifugal push from and a centripetal pull towards central places:

Flexibility key to understanding reliance of firms and households on infrastructures.
Differing needs determine whether push or pull is the strongest for a sector or business.

But the needs of an A380 in terms of supporting infrastructure: roads, airports services, runway length, technical skills, and on and on are immense. They are much less flexible than a small plane which can land on grass or a regular road. So if you’re planning on launching major routes your choices are a lot more constrained than if you’re launching minor ones or offering the super-rich a point-to-point executive jet service.

You all remember, I hope, when this one ship apparently held up £10 billion worth of goods every day. That’s because more than 200 equally large ships immediately became stuck in the canal as well, and there are 200 massive boats there because 12% of global trade uses this one short-cut between Europe and Asia.

And this points gives us one more critical concept: flexibility. The needs of an A380 in terms of supporting infrastructure: roads, airports services, runway length, technical skills, and on and on are immense. They are much less flexible than a small plane which can land on grass or a regular road. So if you’re planning on launching major routes your choices are a lot more constrained than if you’re launching minor ones or offering the super-rich a point-to-point executive jet service. And, clearly, the same goes for container ships and supertankers!

So every business relies on moving products, people and data around, but because their reliance on these different elements differs, not every business needs every network, and not every business needs the same mix. To bring this all back down to the mundane: does Internet or mobile phone access usually factor into your decision about the best place to live or go to school? This is the paradox of flexibility. The more flexible your requirements the less location factors into your thinking. Firms with the least flexibility will have the most reliance on central places where many different types and qualities of network overlap.

Making Markets

Obviously, if it were just about infrastructure overlap then couldn’t we just build more somewhere else? Somewhere a little less hectic… than a big city? To make sense of why people still want to deal with Heathrow it helps to understand that there two more things that central places provide:

Better ways of dealing with risk and uncertainty
And easier ways of searching and signalling (by people and firms)

And this is where people come into it. I sometimes call this the milk question: if we want to understand why some ‘central places’ — like London or New York — dominate some markets but not others then we can compare milk and art. You wouldn’t travel halfway across the borough to buy a pint of milk, let alone halfway across the world. But for the best art, financial advice, and programming skills it’s a whole different story.

What a lot of the most ‘centralised’ markets share is that they are ‘opaque’: they are sectors where it’s not just about data but about judgement and confidence. The art market is a great examples of this: from a utilitarian standpoint art isn’t really worth anything, and yet people will pay tens of million of pounds for it! And sometimes it even turns out to be forged such that something worth £20 million ten minutes ago is now worth £1,000. At best.

To mitigate the risk and uncertainty of the art market you rely on relationships – with dealers, artists, brokers, and so on – to access information and send signals to the market about who’s hot and who’s not. Developing and maintaining those relationships requires regular proximity and F2F interaction so that’s one benefit to cities (they’re easy to reach) but it is also the place to be if you’ve got the rare networking or artistic skills (or the money) to participate in this market in the first place.

Both New York and London have gallery areas where it should be easy to comparison shop and bargain people down. Instead, each gallery specialises and the benefit of ‘being there’ is that you signal to potential buyers that you’re legit – only a successful gallery can afford to be there, ergo you’re a successful and trustworthy gallery!

Doing Deals

To make sense of markets, look at the transactions:

Are they standardised or one-offs?
What are the search costs?
Does confidence make or break a deal?
Does ICT shift the boundaries of these?

^ Where you get volume you can get economies of scale that don’t rely on ‘being there’. Amazon doesn’t need to be on your doorstep because they sell things in bulk that are ‘searchable’ meaning that we can ascertain their value at a distance: a ladder, a computer, a book.

But where transactions are one-offs, whether it’s land allocation deals as in this photo, or high-finance, or high-art with a price-tag to match, then you are always looking for the next deal and it helps to be where your customers are even if that’s also where your competitors are. We tend to call art and financial contracts experience goods, but the best example of this is a university education: it’s only after you’ve paid your tuition fees and gone to your three or four years of classes that you will have any idea if your degree is ‘worth’ anything to you. I don’t mean just in terms of post-degree work opportunities, I mean according to **any* criteria!

So for experience we rely on things like reputation to give us confidence that we’re making the right decision. And location can, as we’ve seen, be a short-cut to reputation, but does all of that matter as much after a year of online-only education? Well, yes and no. What the past year has shown is that you can do a lot online. And that it works better than many of us – well, certainly, me – expected. But it’s also obvious to everyone now that an online-only education is, at best, a second best experience. The students who don’t come to my lectures in the normal course of things are getting something else out of their time at university and that is what this year’s students are missing.

So depending on the nature of the deal, we’d argue that several things can happen…

Just because firms can be found together doesn’t mean they’re interacting with one another in meaningful ways. They could just all see the benefits of being near the airport or the station or the corridors of power.
The term agglomeration gets at how groups of firms can add up to more than the sum of their parts. Here you’d expect to see competitors, their vendors, and their clients, clumping together to benefit from aggregations of supply and demand. This could be of labour – in economic geography we’d call this labour pooling – or of specialist tools or products. The M11 corridor to the West of London is a good example of this: if you work for Oracle, or Microsoft, or Telefonica, or a host of other big ICT firms then chances are you are based in Slough, Maidenhead, Reading, or somewhere nearby.
But the engineers from these firms aren’t networking and spinning out new ideas and companies like they do in Silicon Valley, or Hollywood, for that matter. So I think we have to reserve the word clustering for firms grouping together in a way that is somehow ‘more’ than ‘mere agglomeration’. We’d suggest that that is about the role that knowledge flows – both informal and formal – play in clusters and the way in which it encourages a kind of promiscuous ferment (to mix metaphors a bit).

Talking Shop

Here is the office of Silicon Valley firm that is very much of the ‘old school’. The information surface in these two environments is utterly different: it’s not that face-to-face meetings and gossip don’t happen in Reading, it’s that they’re tightly controlled by the owner of the space such that the interactions are all internal… you probably don’t send the hard core engineers to meet with the client, and the clients probably don’t want to meet them anyway.

In contrast, the ‘new’ Vally talks a very different game. The better comparator for Silicon Valley here in the UK would be what Cameron helped brand (and probably destroy as a result) as Silicon Roundabout and what they are trying to create around King’s Cross as the Knowledge Quarter drawing on the presence of the British Library and Google, amongst others. But in these spaces it’s about ‘buzz’ – being talked about, gauging what your competitors are up to over coffee, cultivating connections. If one person tells you their script writer or software developer is amazing and saved the project you might file that away for the future, but if you hear it from several different people then that is buzz. The kind of background noise that helps us to know who’s in and who’s out. Hot. Or not.

What Do They DO?

So that’s a bit of the theory, though certainly not all it:

Some firms need basic infrastructures — any off-ramp will do — while others have extraordinarily complex and rigid ones. It is the differing degrees of flexibility that determine whether the centrifugal push or centripetal pull is the strongest for any given business or location. Greater connectivity is always more attractive than less, but which connectivity? Not every business needs every network.

Transport (and to a less extent communications) infrastructures determines the degree of specialization that each can support through its centrality on the network. If you are in a completely transparent market and can use ICT to find and buy everything that you need then there is little point in remaining in high-cost locations. Firms operating in opaque markets still find that uncertainty rules, and in such cases information is often deeply local and potentially distributed across a large number of actors.

And when we make markets more complex, we also make transactions – the act of buying or selling something – more complex too. Long before all-pervasive ICT, locational choices were being determined by the nature of transactions and by whether businesses needed to incur the costs of a big-city setting. In analysing firms’ structures and their spatial organization, we’ve stressed their focus on reducing risk at manageable cost and related this to why clustering together helps in many sectors. We’ve seen how ICT is widening choice for many firms, but making less difference in many of the high-touch activities.

Meeting up with people isn’t just about doing deals and completing transactions – the utilitarian perspective – it’s also about building and maintaining friendships, getting the lay of the land, gauging where someone can deliver on their promises. When we’re talking ‘shop’ we’re doing a lot more than just wasting time. Distinction between choosing a ‘big-city-centre’ location and choosing a specific part of the central area. We’ve looked at the interrelationship of centrality with F2F, and the extent to which they are and are not the same thing.

Uncertainty>>F2F>>Shared Context>>Knowledge and so Contact>>Proximity>>Central Places. We’ve not said much about this, but you can also look at the literature on tacit and codified knowledge, types of innovation (this is the ‘knowledge bases’ literature’) and so on for further insights into this.

But all of these ideas can, to some extent, be found in the economic geography literature going back more than 100 years. And there’s been nothing here about Covid, so how do we know if all these ideas are still relevant to people today? Simples. We went out and asked them!

In Practice

Real people talking about real jobs:

Nearly 50 interviews in wide range of industries
Not a statistically-robust sample
Range of roles and knowledge-intensive sectors

What We Learned

Digital in all cases, physical to varying degrees in others.

Need varies by industry, career stage, and relationship stage.
Differential importance of knowledge, trust / confidence, and judgement
All more or less amenable to replacement by ICT

Private Investment

“face-to-face is mission-critical at the beginning, I struggle to see how you could do it any other way. Forming a judgement about someone, do they know what they’re doing, is there reality behind the pitch… can only be done face to face…”

Advertising

“I spend a lot of time in informal meetings — it’s an industry of persuasion: building confidence, getting people ready to back an idea, or to work late for you…”

Property

“You can’t rely on emails — people don’t read them unless the word ‘bonus’ is in the heading!”

Law

“They like to come here. We have better biscuits.”

What, Then, For 21st Century Places?

Much will change…

But as over last 30 years:

Digitisation (virtualisation?) of economy & society continues
Impact on high-value, knowledge-intensive ones that hitherto seemed immune
Impact will be less on great cities and their cores than on second- or third-tier cities

But also surprising continuity…

World Cities

Different patterns of occupation, interaction

Less emphasis on large floorplates and serried ranks of offices or cubicles
Some types of employment and back-office space much more vulnerable
Discovery of flexibility to support WFH / remote working will affect local demand patterns

Wider benefits of agglomeration and clustering still works in favour of these cities.

What is to be done?

ICT will mix themes of change and continuity:
No magic digital bullet , where peripheral towns suddenly attract dozens of firms, never before considered them
Need for careful understanding of scale, location & interrelationships
Build a basis for effective public policy at urban and regional level

And in the end…

Drawing together the book’s themes, revolving around:

Core importance of human contact,
F2F more important, not less; despite ‘e-everywhere’
Because when insight & knowledge matter, F2F will always have the edge
ICT allows more choice, accelerates change, enables unparalleled contact; but it doesn’t replace F2F

COVID-19:

Ran a full-strength test of what an e-only work world could be like.
Will cement and accelerate certain tendencies that already existed
Won’t create fundamentally new ones: by looking backward we can see overall continuity across multiple seeming ‘revolutions’

The pandemic may be the petrol, but it is not the fire.

We see the coronavirus pandemic as an accelerant to already-existing trends.

‘Cities are about uncertainty’:

Their offer of proximity, of the ‘buzz’, and of confidence is vital
Continue to grow, but with a much more mixed picture in terms of jobs, sectors and space

The great World Cities:

will continue to have huge advantages
though success is far from guaranteed if they cannot resolve problems of housing and living conditions

There’s a great quote from Cairncross’ Death of Distance that we think shows how few people have bothered to read it; she wrote:

“As individuals spend less time in the office and more time working from home or travelling, cities will transform from concentrations of office employment to centres of entertainment and culture; that is, cities will become places where people go to stay in hotels, visit museums and galleries, dine in restaurants…”

Final Thought!

“… ‘Being there’ is still at the core of the urban experience. Even in a world of instant digital access and unparalleled connectivity, central places matter, and face-to-face contact is what they do for a living. That is their story, and it will be their future.”

Thank you!

@jreades / @jreades@mapstodon.space / jreades

Why Face-to-Face Still Matters is available from Bristol University Press for £19.99 (Or less if buying direct!).