How the New Economy is Changing the Workplace, Part II

As the economy shifts, so do the spaces that best support the innovation and ideas necessary to sustaining a business. In part two of his three part series, and in advance of our series of summer events exploring the workspaces of startups valued at over $1 billion, Bob Fox looks how disruption plays into all of this, how your workplace can ensure the long-term sustainability of your business, and whether it’s more valuable to improve innovation and the development of new ideas, or to cut costs. Read part one here.

Spotify's office in New York. Image courtesy of FOX Architects.
Spotify’s office in New York. Image courtesy of FOX Architects.

How does disruption play into all of this?

Change is a constant, but when the speed of change increases it becomes a much different animal. Incremental business improvements are much easier to manage, and are a necessary part of all businesses. We tend to think linearly, so disruptive change is the real risk. The challenge with disruptive change is that it is often unpredictable and it generally conflicts with the core competency of a business. What’s more, it can come from other industries.

There are many examples of disruptive change like this. Amazon is a good one — it completely changed how we think about purchasing books. The company has continued to grow and it’s now disrupting where and how we shop. So today, if you are a real estate developer, people are not coming to the mall to just shop. They can buy what they need from the comfort of their home, so if they go to the mall, they’re going for something else: maybe social interaction, the sensory input, or the interactive experiences that they cannot get on Amazon. If there happens to be a product that they see and like while they are there, they will buy it. But you will probably go to REI to try the climbing wall before you will go there to buy the boots.

While disruptive change and innovation are likely the cause, it’s the inability of most businesses to deal with or react to those challenges over time that’s the death knell. We think tomorrow will be just like today, and we don’t have the workspaces to effectively share, question, and iterate ideas and leverage innovation to sustain our organizations through tough challenges.

Nigel Cameron, president of the Center for Policy on Emerging Technology, defines this challenge as the “kink in the curve”:

There is a widespread human tendency, with which we are all of us familiar, that can be simply expressed as the “kink” in the curve where the past meets the future. The exponential line of human technological progress, long driven by information and for the past generation by the power of the chip, is kinked. It is kinked, inevitably, at the present. We look back and see it rising inexorably and constantly faster. We look ahead and (admit it) see it leveling off. There are many telling examples around us, not least the current valuations being placed on hot digital properties like Google and Facebook. We look back seven years and there was no Facebook. The idea that if we look forward seven years, or five, there may be no Facebook – or that the brand may continue but essentially as a commodity service lacking the capacity for economic profit – is unthinkable to most of us.

And why? Because the entire principle here is one of knowledge-driven disruption, at an exponential pace; not of the establishment of new, stable, corporate technology-based empires in the stead of the displaced old. Indeed, the point is broader. For most people, the “digital revolution” has happened; and it has bequeathed us Blackberries and iPads. Yet the revolution has barely begun. As if shielding our eyes from too bright a light, we cope with the Future Shock of which Alvin Toffler warned us (prophetically but as it turned out much too soon) by squinting. The curve has a kink. And it just happens to be today.

If I had told you 15 years ago that in the future you would have a device that you could carry in your pocket where you can get your mail, make a video call, carry thousands of your favorite songs, take pictures and videos and share them, check the stock market in real time, get the latest headlines immediately, get directions instantly to wherever you wanted to go, make a dinner or hotel reservation, invite your friends and that all of it would be essentially free, you would have thought I was some kind of nut. But look at us now.

How the workplace plays into ensuring the long-term sustainability of your business

You don’t have to look far to see the tragic results of that kind of myopic thinking. It’s endemic to business today and it should not be taken lightly. Over 50 percent of the companies listed on the S&P 500 have fallen off the list in the past 10 years. In 1960, the average time a company was on the list was almost 60 years; today, it’s only 15. As the speed of change increases, our ability to innovate and or react to it is significantly reduced. There are a number of factors involved, but most of them are connected to the workplace. Many of these business risks can be mitigated through a high-performance workplace

So what about your company? Today, right now, what has been done to ensure the long-term sustainability of your business? Most people would probably say nothing—thinking that tomorrow is going to be just like today. If I asked you what have you done to maximize the potential for building value in your companies, how would you answer that question? Do you think that your workplace is critical to the successful performance of your company, or will any office space suit your needs?

Is it more valuable to improve innovation and the development of new ideas, or is it more valuable to cut costs?

One of our biggest challenges is that we need to think differently about our workplaces. Traditionally, office space has been viewed as an overhead expense. From an accounting standpoint, it is on the cost side of the ledger. Those kinds of expenses have always been kept to a minimum, squeezed, standardized, made more efficient, and even cut.

But when we compete, performance matters. If we look at automobiles and racecars as an analogy to our businesses, performance matters. There is nothing on a racecar that is not essential to its speed and handling, but if we used the standard off the shelf parts, we would never win. If we drove identical cars, we could not go any faster than the other competitors. We have to tune the car to how we best drive it.

To achieve maximum performance in the workplace it is essential to build space that is ideally suited to meet the organizations’ needs and optimally support the business so that we can better compete against competitors in the market. Otherwise, we greatly inhibit our chances to exchange ideas and survive over the long haul.

Innovation is the only thing that can combat the high risk associated with the destruction of disruptive change.

The ways we work and the types of work that we do today are very different from what we did even five years ago. Each of our companies has different goals, different operations, and different cultures. Our spaces should reflect those differences.

So what is the new workplace about, and how do you make the transition? Find out next week, in part three!

Join us for a live conversation about these same topics on June 23 in DC, Chicago on July 30, and/or San Francisco on August 11! Tickets and details for Chicago are available here, with more details on San Francisco to follow.
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