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Is the Traditional Office Becoming Extinct?

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Are there dinosaurs among us? If a new joint report from Regus and Unwired called VWork: Winning Strategies at Work  is to be believed, yes. The report on the future of the office in an age of increasingly agile work surveyed 600 businesspeople along with several heads of global real estate. Of course, the lumbering beasts it identifies aren’t giant reptiles, but instead traditional corporate buildings, which the report claims are underutilized, inflexible and a bad fit for the work of today.

But like the dinosaurs, which scientists tell us live on as chickens, the office building of the past is unlikely to become completely extinct, but rather to evolve to meet the demands of new kinds of workers, driven by technological advances and a desire for a lighter, cheaper real estate footprint. So what will this new paradigm look like? To find out, we spoke with Bob Gaudreau, Executive VP of Regus and Philip Ross, CEO of Unwired, about the changing meaning of the office in a wired world.

Jessica Stillman: One of the models for the future you explore in the report is the idea that employees will be allowed to buy their own office space. Can you explain how you envision that working?

Philp Ross: One of the core corporate drivers in the move to agility is a reduction in the cost of real estate. It’s a move from providing a container for work that tends not to be used towards a future where it’s on-demand — that work places are aligned with how people actually want to work.

We found that only 45 percent of desks in offices are used at any one point in time today. So what we’re doing is aligning the idea of “buy/bring-your-own,” which is beginning to get traction in the IT world, with the idea of just provisioning work, so that companies give their employers a stipend, a budget, and the budget is for all aspects of the provisioning of work to suit them and the way they work.

Bob Gandreau: We’re seeing it happen already. Companies like Yell in the UK had 20 properties that were sitting vacant 70 percent of the time. So what they did is they gave everyone a membership to be able to use any of the Regus locations, and these people can go into the location where they want, when they want and work how they want. It’s not totally the worker buying his own, but it is companies giving them a sum of money and allowing the worker to pick the right work setting depending on what the worker needs. What that means for Yell is they’re saving, I think, £1.5 million or 40 percent of all their property costs by working in a much more agile way.

Jessica: If you go super lean and cut back severely on space at traditional offices, how do you plan usage so if everyone wants to use the space, they can?

Ross: It’s a very important point. We identified only 12.3 percent of people want to work from home, but you can also see in the research that people want a very short commute. So I think what we’re identifying really is that people want to work locally. We’re seeing this kind of new hybrid model where there’s a bit of working from home, a bit of working from the corporate office, but also this move towards third space — new spaces that are in the community — and that’s a very exciting trend.

In terms of load-balancing the corporate building, we’ve seen it done around the world. We profiled companies like Macquarie Bank in Sydney who built a kind of on-demand, real-time building. Companies are looking at this to provide places to work, not desks or cubes, so that there is always somewhere to work and also reallocating space based on the work that people actually do, which is moving more and more towards collaborative work, not just working solo in a cube. Again, we found that not only are 55 percent of the cubes empty at any one point in time, people report they can’t get meeting rooms. So I think what we’re seeing is a wholesale reallocation of space in the corporate center, and that also looks like a 20-25 percent of reduction of space at the same time.

Gandreau: In the old days you might see 10 percent of the space as meeting room, lounge and collaboration, now it’s 20-30 percent of the space, because it becomes a destination for people to come together and do that kind of work, which is where the good ideas come from.

Jessica: So-called “third space” seems to play a big role in the future you’re imagining, but are they up to the task today? Are there enough quality spaces available, and if not, do you predict a big boom in the industry?

Ross: There is a mixed range out there – there are some very good ones and some very mediocre ones that don’t quite meet the needs of the corporates. You can see them meeting the needs of the freelancers, the contingent workers, who go in with their Macbook Airs and have a coffee and they’re online, but they don’t meet the confidentiality needs and other services needs that they will have to respond to if Fortune companies adopt third space. I see them becoming, perhaps, more like an airport lounge with tiers of membership where platinum cardholders can get advanced services with teleconferencing, privacy and other facilities. I think it’s got some way to go from the kind of café society to a much more sophisticated offering of the future.

But if we see a huge change, a sea change, in the way that big corporates are working — if they do reduce their property footprint by 30 or 25 percent — we’ll see tens of thousands of new workers looking for someplace to work, especially in their communities, but no that hasn’t yet been provided for.

Gandreau: I see it happening before our eyes when you go out in the community. I was just back at my alma mater in Boston and I went to the library. In the old days, you couldn’t talk in the library, right? Now there are white boards and students collaborating, so I see more and more third spaces appearing in the places you’d least think they’d appear. Another place I’ve seen them, and Regus has looked at locating, is shopping malls. People are actually meeting in shopping malls. They’re naturally occurring in the places where large groups come together – sort of like the piazza in the old days. If you were in an Italian village people would go to the piazza and it was a beehive of activity. Third spaces are the piazzas of the modern century.

Jessica: Your report very much focuses on the cost savings of agile working and shies away from more holistic arguments, including commonly sited things like quality of life and environmental benefits. Why did you make that choice?

Ross: Over the years a lot of chat has been around about touchy-feely, nice-to-have issues around this, but corporates want to see the bottom line. They want to understand the impact on their business — how they can reduce costs, how they can improve efficiency. They are hard-nosed. We’re coming out of a climate of recession. Money is king. Doing more with less is top of the agenda.

Technology trends, the drivers from cloud to devices to connectivity, are enabling us to look at agility from a very different perspective, and in the report we’ve identified this idea of the agility dividend — how we can measure and monetize this, because I think what we found is companies are saying, we want to look at this but how do we present this to the board? The dividend looks at three key areas: reducing costs of real estate, a happiness dividend in work-life balance and improving the working lives of people, and the productivity dividend, making us more effective. If you sit back and look at this picture, it’s a no-brainer: there are lots of other spin-offs from environmental benefits through to the quality of life. We have to monetize it. We need a figure to produce a compelling business case to the CFO and the COO.

Gandreau: Our challenge has been for years to put a number to it. Once you can put a number to it, it becomes a really compelling argument. Once you have the bottom line, the flexibility you get by working in a more agile way just becomes the gravy. But it all starts with the numbers.

Image courtesy Flickr user Rich Anderson.

4 Responses to “Is the Traditional Office Becoming Extinct?”

  1. It’s evident that the mobile worker is not going away but rather becomming the norm. With more and more companies steering away from traditional office spaces. If you are a mobile worker or an entreprenuer working from your house Servcorp may be for you. Servcorp,, is a company that specializes in virtual offices and executive suites in 13 U.S. cities as well as 21 cities worldwide. They also offer other services such as phone/mail handeling, conference/meeting rooms, and personal assitants. Servcorp also offers many different membership levels to fit everyones budget.

  2. I wrote my graduate thesis on managing geographically co-located web design teams. Back in 2004, cloud computing was virtually non-existent, not to mention the fact that video conferencing and Wi-fi were in their infancy. So much has changed, but at the same time, so much stays the same: the need for humans to interact and collaborate with the highest level of fidelity as can be afforded (both financially and logistically), whether that’s in person, or via Skype.

    To that end, I wonder how center city governments will react and respond to third spaces? As traditional corporate centers morph into a collection of leased space (Charlotte, NC is getting that way), how will cities with strong central cores encourage businesses and transients to relocate, when the very businesses that used to dominate the skyline now let their employees work wherever?

  3. What are the effects of this separation on corporate culture? More importantly, how do you preserve or change a culture as more and more people spend less time together?