The workplace has been evolving quickly over the last few years, with everyone trying to convince the world they know what the new way of working will look like. These same people try to paint the new work world order black and white, saying the office of the future is a choice between work from home versus work from the office, activity-based working versus traditional workstations, or flexible versus long-term leases.
As with any complicated decision, the choice is rarely binary. The reality is the workplace of the future is that it will be a combination of all of these things. No matter what the office of the future looks and feels like there is still one metric that is important above all others: productivity.
People dismiss the idea of productivity as an important KPI for office space. They usually say that productivity is too hard to “measure.” Productivity is often looked at as an intangible, but that doesn’t mean you can’t understand its impact in a meaningful, quantitative way.
First, let’s create a formula to understand our framework. If the outcome we are aiming for is productivity, then what we really want to do is increase output. Let’s define output in this case as creativity by revenue. Obviously, output isn’t everything. If output goes up but it takes longer to produce it, you have not changed productivity. So what we are really talking about is efficiency which is, at its most basic level, is cost over time. That means that (CxR)(C/T)=P. Or, to simplify (as math teachers have always told me to do) productivity equals output times efficiency, P=OxE.
Productivity = (creativity x revenue) (costs/time)
If the landlords can find ways to optimize this equation in a verifiable way then both tenants and LPs will seek these landlords out above all others. The low hanging fruit for landlords to help increase efficiency is by automating mundane tasks associated with interacting with the workplace. This can include room or desk booking, access control, and billing. It might seem that shortening these often uncomplicated tasks wouldn’t move the needle but remember that if you multiply this every day for every employee it really does help boost efficiency in a meaningful way.
Output can be increased by an office as well. By enabling collaboration, engagement, wellness, and support, offices can boost both the creativity and the revenue associated with output. Data that offices collect can help companies better use their resources and make a palpable impact on output.
While the pandemic has clearly accelerated people’s push for remote work, the overwhelming consensus seems to be that companies and workplaces will resort to a hybrid model of in-person and remote work. The driver for this hybrid model for organizations will be what creates the most productive output for my organization and what tools do I have to engage my workforce to reach this outcome?
The question for landlords is whether this switch in the way we work is an opportunity or a threat. The change was already underway when WeWork proved the need for flexibility around commercial leasing. And even though WeWork’s execution was poor, that need is still alive and well, albeit sheltering at home for now.
It is important to remember that landlords now have the opportunity to move from selling “four walls,” which will almost certainly be in less demand, to selling productivity. The demand for productivity is robust, inelastic and recession proof. By switching their thinking about what they are actually selling, landlords will be able to capitalize on the community that they have built, provide an unlimited amount of related services for their customers and ultimately create networks that enable the occupants of that built environment the flexibility that they have become accustomed to.
The built environment is still a cornerstone of productivity for many organizations. The need to collaborate, the ability to onboard and train new employees, the creation of company culture, and the vicarious interactions that create so many productive outputs will always be a critical foundation for any organization. Productivity tools are the glue that binds organizations. To put it differently, the workspace is the “Sun” which the workplace “system” revolves around.
Again, we are taking a broad view of what a workplace is. It includes office space, plus frictionless, self service flexible work options, remote productivity tools, network access, perks, amenities, health and wellness and an array of data to compliment all of this.
If landlords don’t step up and build infrastructure to provide productivity as a service, they are going to be relegated to wholesaling their concrete boxes in a commoditized industry that will remain under threat from technology. Becoming a “PaaS” provider is not as difficult as many might think. In the same way that technology has enabled people to work remotely, technology can also enable the packaging, pricing, and delivery of multitudes of services across many silos.
Despite technology being the driver of the change, this is not a decision based solely on technology. It is an operational decision to digitize and automate your real estate portfolio. Technology cannot solve this issue for you operationally. If you are relying on your technology team to integrate your “ecosystem” the likelihood is that it will take longer and cost more than you think. Plus, without a change in mentality to go along with the new tech, the changes will most likely not deliver the outcomes that you want. You need to start with the desired outcome and design both the technology and the organization around it.
Sitting down, from the start, and putting together a framework of where your organization is and where you would like it to go is a prerequisite. This usually means decoupling the individual, disparate technology solutions from the mechanism that packages, prices and distributes the ultimate product that you want your tenants to consume. Other industries that have successfully digitized, have done this using “rights management.” The App Store doesn’t “integrate” with the multitude of apps that it distributes. It provides a framework for the packaging, pricing and distribution of extremely diverse products.
That is why my team at Ility has been focused on developing this robust framework in the form of physical rights management for real estate. With the right planning and execution, a digital transformation of an entire property portfolio can be done in as little as five weeks. Technology can be used to implement the post-COVID return to work strategy but will also create a delivery platform that will enable buildings to greatly increase their service offering and respond to market changes.
If landlords don’t take this opportunity, enterprises will do this on their own, creating fragmented solutions that aren’t driven by the built environment being the center of the productivity universe. The changes that the pandemic has brought to our work lives is just another in a long line. We will continue to change the way that we organize and work. If you are selling “office space” there will be countless threats along the way, even after the pandemic is behind us. But, if offices focus on selling productivity, they will always find that their product is in strong demand.
