Work as We'll Know It

[This is an internal memo that I shared with the company this week and which we discussed on our all-company call two days ago. I've been on the fence about whether to share it publicly because there's some stuff in here that pushes the edge of what makes sense to be out in the public. However, I feel pretty strongly that what's laid out below is where the office sector is headed and I think it's relevant not only to people who work in real estate, but to pretty much anyone who, before COVID, spent some part of their week going to an office.]

I’m really proud of how we’ve navigated the past two months. But amidst all the plans, the tactics, the relentless execution, we haven’t had much opportunity to step back together. And as they say, “If you want to build a ship, don’t drum up the men and women to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.” 

I don’t know if I can quite make anyone yearn for the sea (that would be one hell of a three-page memo), but this is my attempt to lay out what I think the sea has in store for us, and why it’s time to sail into it. 

Retail came first. Office is next.

Here’s my suspicion: as transformative as the last decade was to retail, the next decade will be to office.

I know I don’t need to convince anyone how different the mall and retail world looks now versus 10 or 15 years ago. Retail giants like J. Crew, Toys-R-Us, and Barnes and Noble weathered a lost decade or more before e-commerce ruled.

When we look at office, by contrast, there’s no single driver for this transformation. There are a lot of different factors at play, but the most important isn’t “flex,” “amenitization” or anything else the big brokerage firms write reports about. It’s something you’re probably sick of hearing me talk about: the democratization of real estate. 

Instead of companies making their workplace decisions in an entirely top-down way -- the CEO lives in Greenwich so the HQ is in Stamford; the C-suite thinks their clients will find a marble lobby impressive, so they need to find the city’s most stately building -- companies are increasingly solving for the needs of the worker who walks into work every day. They’re focusing more and more on what their employees want, what they need, where they live and want to work, what actually matters to them. 

A top-down approach to real estate inherently erases individual differences, but this pandemic has cracked open just how different each employee's needs really are, and there's likely no going back to a model that ignores that. 

Work from anywhere is the inevitable – and necessary – change in our industry

The meaning of productivity itself is shifting from something cold and inhumane -- how many widgets of output can I get per hour of labor input -- to something much more human: not “how do I get the most out of my teams,” but “how do I get the best out of them?” 

Some employees commute hours via public transportation, while some can walk to the office. Some have sick family members, or are immunocompromised, while some can't wait to get back to their desk. Some have families and have to deal with childcare, others are years away from any of that. Recognizing the human element and removing in-office mandates means giving employees options – work at headquarters, from a local no-commute office, attend periodic retreats, adopt the home office -- and letting them choose where they can perform their job the best. 

Faced with that reality, the companies that get this right are already coalescing around a concept that could easily become the animating workplace model in the coming years: Work from Anywhere. 

Where have we seen this before?

I remember reading an article in elementary school about an IBM mainframe and being blown away. The article basically walked you through just how powerful it was compared to the Apple 2GS I had at home. It could do up to a million calculations per second. At the time, GM had 800 mainframe computers to do its computing work.  

Eventually, a new, disruptive, competing concept emerged. Instead of computing by giant monoliths, a network of smaller, interchangeable servers was created that looked more like personal computers. They weren’t as powerful, but if you could hook thousands of them up to each other, they could do the trick. You could scale up, scale down, and if one went on the fritz, you could swap it out rather than bringing the whole system down. By sharing capacity with other companies, you could create giant server farms that serve thousands of companies faster, with more redundancy and better outcomes. 

Nowadays, if you look at Google Cloud, or Amazon Web Services, or Microsoft Azure, that’s exactly what they are.

In the same way, Goldman Sachs’ HQ is like a mainframe. It’s impressive, but it’s hard to make it grow or shrink. And if you’re an employee or a client, it doesn’t do you much good if you can’t make it to Lower Manhattan. It’s infinitely less versatile than a network of workplaces.

Just as the mainframe-to-server-farm transition unlocked more versatile, cheaper, better access to data and enabled so much of what we interact with every day (including the phone in your pocket), the same shift to a distributed network of workplaces will put power and choice in employee’s hands.  

So what does it take to unlock Work From Anywhere?

It’s almost impossible for a company to institute a work from anywhere plan without the help of a space-as-a-service provider. For the vast majority of companies, pulling off work from anywhere will require four components:

1. Home office - companies need to assist their employees in setting up and managing home work setups that will work for years, rather than for a short two month sprint

2. No-commute satellite offices - both within a city, having places to work beyond just downtown, and then adding more cities that employees can work from across the country

3. HQ - for companies that still want this, a core gathering place, primarily for meetings and connection, not for daily work

4. Workplace management app - to manage who’s working where, when

Most companies can manage a headquarters, but it becomes harder and harder to self-manage a distributed network of spaces without a broader platform. Imagine a 500-person NYC company that has 70 employees who live in New Jersey. If they want to give their employees a place to work in New Jersey, a space for 70 people would be prohibitively expensive. And the reality is some days 40 people might go in, and others only 2 would. Or maybe everyone would agree to go in on Mondays, and Mondays alone.

As a result, what the company needs is on-demand space. Rather than a fixed, rigid allotment of space that fits 70 people, but sits empty much of the week, they’d have a subscription to use an office or series of offices that fits their needs that day. This allows companies to follow the same trajectory IT infrastructure did: from hardware pricing to functional pricing. 

The other advantage is the ability to move away from giant open floorplan workplaces. Industrious has been working for years to shift the workplace from a static open floorplan pit into a dynamic complex of private spaces that allow employees peace, quiet, and privacy when they need it.

What this means for Industrious

I should say we began thinking about this long before COVID. A small group of us spent January and February working on a project, Luminous, that is Industrious’s next iteration of the workplace.

The core of Luminous is hundreds of individual workspaces, focus rooms, etc. that employees get to work in when they want (the product team and I will share more on this early this summer). The COVID crisis has further diminished the appeal of a big open floor plan space in favor of what Industrious does best: private offices, multiple HVAC lines, space that’s appropriate for the work at hand. 

When done right, this is the rational option for probably 80% of American businesses by offering:

● A subscription to real estate that gives them what they need, when they need it;

● A private office experience (and the accompanying safety) for much less than the cost of a fixed open floorplan; and

● Enhanced virtualization capabilities to deliver the office-at-home employee experience.

Industrious has the opportunity to deliver a distributed workplace network that gives companies the ability to bring down their real estate costs and variegate something that absolutely needs to be variable at a moment like this, while unlocking the right for employees’ to work from anywhere.

Conclusion

In the 19th century, mountain climbing became the craze in Europe, particularly in the decade between 1855 and 1865. That period is known as the Golden Age of Alpinism, and it’s exactly what you’d imagine. Countries and teams were racing to conquer peaks -- higher mountains, faster climbs, risking their lives to plant their flag on summits across the Alps. It had action, drama, exploration, the fear of the unknown, all wrapped into one. 

And as people were inventing the sport while participating in it, two schools emerged: the British school and the French school. The British school relied on careful planning, giant teams of climbers and support crew, and equipment -- lots and lots of equipment. They would bring with them tents for different occasions, every kind of implement for making it up the face, and loads of protective gear for riding out storms. The French school, on the other hand, relied on nimbleness. Climbers would go in pairs, sometimes with nothing more than a rope and an ice axe. While climbing a giant peak with minimal gear might sound crazy, this actually made the effort safer. Instead of being loaded down with so much equipment that it was impossible to change course once you got started, being light and nimble made it possible for French alpinists to make quick adjustments or change the plan entirely, staying one step ahead of coming storms.

In the coming years, businesses need to be like the French alpinists -- minimizing their liabilities and the constraints that will make it hard to adjust to changing times. A workplace strategy that reduces fixed liabilities while also putting choice back into employees hands, rather than forcing them to take a particular route, might be unfamiliar to many companies, but it’s the safest, right choice for the moment at hand. And we’re going to be the partner that unlocks it for them.