The Changing World of Work
The Covid-19 crisis forced us all into the biggest ever work from home experiment. Not only has this been a test of our technology it has also tested trust and rapidly accelerated the ongoing trend towards more people centric, distributed workplaces. Businesses are complex with many moving parts that all must work in sync. Companies spend millions of dollars making their business more efficient, making them perform better only to realize that they are playing an elaborate game of whack-a-mole.
Simply making one part of your business more efficient helps, but the business is still only as strong as the weakest part. For many organizations, the workplace is one of the weakest parts. Real estate has a model built on rigidity and permanence, yet the world now demands real time flexibility and adaptability. No longer is this flexibility simply a demand from companies in response to uncertainty, it is now being demanded by teams, by people.
Despite many attempts the real estate industry has not been able to find a sustainable, profitable, financeable way to accommodate flexibility with the core purposes of the office: to create a real deep connection to culture, purpose, to deliver a high hospitality, amenity and service rich environments that makes peoples’ lives easier and to provide the environments that enable the spark of creativity that ignites into an explosion of innovation.
It must find the missing link between the rapidly changing needs of people and businesses and the timelines of the real estate world. Concurrently, it must shift from a top down imposition to a bottom up creation.
COVID – The catalyst of accelerated change
The cost of COVID in human life has been unbelievably tragic. The economic costs will be felt for years, the physiological costs likely much longer. How is this really going to impact the workplace, both in the short term and the long term? In such a rapidly changing environment we can only guess on the human impact. Previously 77% of companies in the US had 5% of their team working from home, a recent survey by Gartner expects that to double to 10%. The workplace was changing long before COVID-19 hit, the current crisis has massively accelerated the change. Specifically, it has accelerated the focus on the people side of the real estate equation. It has proved that people want and need multiple types of environments to be the best that they can.
According to recent research from Gartner, only 30% of employees worked from home some of the time pre-Covid, whereas indications are that 41% of those who are given the option to work remotely will do so for some of the time in the future. While 41% is still a low number and, of course these people continue to work in core office locations some of the time, it does represent a 37% increase.
From a company’s perspective this crisis has accelerated the demand for flexibility and agility as previous economic crises have. From the perspective of people, this crisis has had the previously unseen impact of also accelerating individual demand for flexibility. Companies are more willing to accommodate this given the positive, task-based productivity improvements of Work From Home and despite the negative impacts on creativity, culture, mental health, and relationships.
Is the physical work environment equation solvable?
Despite being the most difficult and cost-heavy aspect for most businesses, people and their performance is the greatest untapped return. Huge investments are being made to solve the people equation in business. Real estate and the evolving workplace also needs a new more democratized solution. What is needed is the right working environments so that people can perform, at their best.
This is not a new concept, the office has evolved from private offices, cubicles with tall walls and grim colors through the lowering of the walls. We focused on lighting, open spaces, different colors for different teams, helping people be more effective. The evolution spread further to open tech enabled spaces and on to super campuses with gourmet food and drinks.
These developments have opened the doors to a variety of amenities, from pets, bikes, sports and much more. Yet the humanization of the workplace is much more than foosball and Kombucha. It is about intense listening, learning, and changing behaviors. It is about understanding psychology, roles, tasks, interactions and the connectivity between people, processes, and technology. If you layer in the blurring of lifestyle and workstyle and the need for continual innovation and collaboration, the equation looks unsolvable.
Taking all these factors into account and redesigning spaces is only part of the solution. We need to work out how all factors fit together, smoothly in sync with each other. The next era of business will be about how we close the gaps between all of the parts of a business and the people that work within it.
The Corporate Campus is Dead! Long Live the Corporate Campus
One of the key innovations in the humanization of the workplace has been the rise of the corporate campus. Although the corporate campus is not a new concept, AT&T created their first one in 1942, one only needs to look at some of the most successful, profitable companies of the 21st century to see how the campus has become hugely human centric. Not only are they havens of collaboration, community, and innovation, they are amenity rich environments that nurture relationships and learning. They provide the physical and technology environments where people create sparks, sparks that lead to explosions of creativity and innovation.
These campuses are rich in hospitality, providing access to all the products and services to remove distractions and help deal with the challenges of day to day life. All the time connecting people with the organization, supporting the creation of a strong culture, and aligning teams with the company’s mission. Much has been written about generational changes, there are many generalizations and stereotypes, yet research has demonstrated time and again that Millennials and Gen Z value a connection to a cause, to a purpose in their work or they will simply move on.
Not only do these campuses provide an amazing truly human environment for business and people to thrive, for large companies they also make financial and rational sense. Allowing for greater density without the feeling of being crowded, making the provision of technology, security, confidentiality, and operational support easier and more efficient. Yet even these super campuses do not meet all of our needs, they do not provide people with all they need to be their best.
The wasted time commuting combined with always on technology lead to a lack of harmony between work and life, disconnecting us from family and friends. Having all teams in one place adds to security and health risks, if one team is impacted all teams are. Talented people are living throughout the world and yet the campus demands centralization with the resulting increase in costs of living and length of commute which causes further hidden costs for businesses.
The insular nature of campuses where people travel on a company bus to a campus work with others at the same time then get back on a company bus to return to home should make us also question whether they are indeed the ideal environment for innovation and creativity. It should make us question their real performance impact as a stand-alone solution. Further, they are only efficient and cost effective for the very largest companies and, even for these companies, the time to build them does not support agility or explosive growth.
Dispersed – the “new normal” that isn’t new
Discussions around the dispersed, distributed workforce have been brought to the fore by the recent mass work from home experiment. The concept is not, however, new. While many of us have had the flexibility to work from home, coffee shops, cars, trains, airports for many years, the most forward-looking companies spent the last 2 years focusing on their distributed workforce programs.
Indeed, we at Werqwise have been hosting remote offices for some of these firms, large and small, since we opened in 2018. We have recently all seen the benefits of the dispersed workforce, our challenge is adapting to this new normal and formalizing it on a large scale. As the balance shifts away from super-campuses and offices, how do we make sure that we don’t lose their benefits and cause large increases in employee turnover. The balance between working at the corporate campus, the office near home, coffee shop, while on the move and at home is different for each company, team and individual.
There is no doubt that working from home leads to productivity boosts for many people as less time is spent commuting and there are fewer interruptions from co-workers, but this productivity increase is short lived in many roles given the lack of those unplanned, unintended interactions. And this is without even considering the mental health impact.
Before COVID-19 11% of working Americans reported suffering from symptoms of depression, how much is this going to increase? Recent surveys have suggested that this is now around 30%. Many of us suffer from Zoom fatigue, a feeling of disconnection from the rest of our team. We miss the feedback, learning and growth that naturally happens when we are around others we trust.
While the psychological impact can be enormous, we must not forget the physical impact. The aches and pains of not having our ergonomic chair, the health impact of missing the sit stand desk, even the walk to the office seem to have been taken for granted. Careful consideration does, of course, also need to be given to confidentiality and security of proprietary information, equipment, and processes. Yet there is much more we need to consider. How do we hand a product off from one life cycle to the next, how do we work in a coffee shop without power, with limited internet and surrounded by ever changing people?
Engaging people and ensuring the deep connection with the company culture and brand is already hard when people are in the same location. It becomes exponentially more difficult to build teams, loyalty, focus on a core purpose and a sense of belonging when people are dispersed. Business is a human endeavor and as human beings we crave belonging and social interaction; working remotely, and in particular, from home, has a huge impact on us all.
The largest organizations will, of course, find ways to deal with these problems but what about everyone else? Smaller companies simply do not have the financial, operational and technology resources to solve the problem from even the simple perspective of the physical workplace or real estate. We cannot, however, afford not to solve the problem as getting it right can lead to explosive growth. This growth breaks the physical workplace model because real estate is long term and explosive growth is rapidly changing in real time It demands flexibility from the workplace to be in sync with the rest of the business. Thinking, behavior, process, and traditional norms need to change for real estate to be a contributor to our currency of high performance.
The Currency of High Performance - how must Real Estate respond?
Current real estate structures are not adding to the currency of high performance and in many cases, it is a negative contributor. The addiction to the long term lease caused by long standing views of the value of buildings coupled with the conditions under which financial institutions are willing to finance those buildings have largely stopped the industry from changing in a meaningful way for over 100 years. This enormous industry, $2.7 trillion in America alone, is hard to change but it must change.
The growing void between the demands of ever-changing business, social and human environments, and the current needs of landlords, developers and their financial backers needs to be closed. Flexibility and adaptability are now core business requirements, businesses need to make decisions in real time. Flexible workspace operators were created to solve this problem, yet most build fixed, generic products that try and fail to meet fundamental needs by offering a one-size fits all solution. The flexible workspace industry was founded to serve the dispersed workforce and provide businesses with flexible, turnkey solutions.
The industry should be connecting the different parts of the business continuum like a glue, yet it is often too inward focused. Many operators fail to listen any more than traditional real estate and are too internally focused to provide anything more than lip service to humanizing the workplace, to making it bottom up not top down. Sure, you can get flexibility on term, meet interesting people, share ideas and work in a cool space, but these are the basic fundamental factors. They should go without saying, not be the end point of the solution. While it is easy to find an office near where people live, the support for confidentiality and security is often limited or prohibitively expensive.
For a workplace to be effective it needs to connect people with the culture, purpose, brand, and overall mission of each business, not that of the flexible workspace operator. For the world of real estate to connect with the changing world of work. we need a new solution. We need a new breed of workplace operator providing for all the needs of companies and people now and in the future. An operator that provides the missing link that combines amenity and hospitality rich environments, designed to connect people with their company culture, brand, mission and team, with the flexibility to allow for rapid change on a turnkey basis.
The future of the workplace is dispersed, a hub and spoke model. It meets the needs of business and people with real flexibility. It is a bottom up solution that is diverse and physically, and psychologically, safe. It is rich in amenities, hospitality, and services. It is engaging, collaborative and provides all the conditions for the spark of innovation and creativity to lead to explosions. It allows workstyle to fit into lifestyle.
It is time for a new real estate solution, one that quickly and flexibly customizes spaces for each unique company and team. A solution that meets business requirements for flexibility, agility, confidentiality, and engagement that removes distractions yet encourages the spark that comes from unintended, unplanned interactions. A solution that ultimately unlocks the secret to high performance in the changing world of work with all above existing in a seamlessly connected continuum.
We, at Werqwise, believe we have an answer to providing this missing link between the real estate model built for rigidity and permanence and the world’s demands for real time flexibility and adaptability. Our proof of concept location has proved this can be done. By using technology, unique build systems offering almost infinite modular variation, customization and branding combined with high levels of listening, hospitality and focus on the end user, operators can create this missing link and deliver it in a sustainable and profitable way.