Innovation is booming across all industries.

Despite the upheaval caused by the COVID-19 pandemic—and partly because of it—innovation and digitization have been happening at a record-breaking pace. A McKinsey survey of top executives around the world found that companies accelerated their digitization of customer, supply chain, and internal operations by an average of three years.

Indeed, over the past two years, countries around the world have set records for new business formation, new patents issued, venture capital invested, and more. The US Census Bureau’s seasonally adjusted business formation statistics data show that through 2021, a record 5.38 million applications had been filed to form new businesses—an increase of more than 50 percent over prepandemic 2019.1 The brisk pace meant there were roughly 409,000 more US filings in 2021 than at the same point in prepandemic 2019. The World Intellectual Property Indicators also showed that aggregate global filing activity across 150 authorities grew in 2020, even amid the global health crisis.2 Venture capital flows have also boomed: in 2021, global venture capital more than doubled from 2020, rising 111 percent.3

What’s striking about these dramatic advances is that they largely entailed people collaborating remotely, leveraging technology in different ways, and being bolder with innovation, automation, and digitization than ever before. For decades, physical proximity has been considered essential to successful innovation. In an influential 1977 book, management professor Thomas Allen described a strong negative correlation between physical distance and frequency of communication, finding that people are four times as likely to regularly talk with someone six feet away from them as with someone 60 feet away, and people almost never communicate with colleagues on separate floors or in separate buildings.4