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September 24, 2018  |  permalink

Why Companies Are Creating Their Own Coworking Spaces

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(Haworth’s Gabor Nagy and I have just published an essay at Harvard Business Review on what might be called “corporate-to-corporate coworking” — essentially shared workspaces run by companies for the benefit of their employees. Drawing on his research and my reporting, we teased out lessons from the best spaces and argue why we believe this is the next big trend in coworking. I’ve republished the text below.)

Nestled in the Silicon Sentier district of Paris, the Villa Bonne Nouvelle (“House of Good News”), or VBN, initially appears to be another new coworking space. But what sets it apart is that only half of its 60 occupants are freelancers. The remainder work for Orange (née French Telecom), which launched VBN in 2014 to teach its programmers and engineers how to work with and learn from people outside of the company.

The experiment succeeded: Teams temporarily stationed there worked better and faster than colleagues elsewhere, and they reported greater satisfaction and engagement (along with bouts of depression upon returning to the office). Even the HR executives managing the space were surprised by their bonhomie. More villas are now in the works.

Orange describes its approach as “corpoworking,” a cousin to coworking. It’s not alone in trying to jump on the trend of shared workspaces, of which there are now around 19,000 worldwide. Dozens of companies, ranging from telcos (Sprint, AT&T), to tech giants (SAP, IBM), to automakers and insurance companies (MINI, State Farm) have launched similar experiments. The real revolution in coworking may have less to do with freelancers or startups than with employees of large companies working beyond the boundaries of their organizations.

A case in point is WeWork, the provider of coworking spaces, which has grown its enterprise customer base in the last year by 370%. As of June 2018, corporate occupiers make up roughly one-quarter of WeWork’s members and revenues. It’s also creating stand-alone locations for individual clients such as IBM, UBS, and Facebook.

It’s typically assumed these companies are seeking a jolt of hipness. But our research and reporting show this isn’t the case. We’ve separately toured and interviewed principals in more than a dozen corporate coworking spaces in the U.S., South America, and Europe over the last three years. We’ve found that these companies and their employees are searching for the same qualities freelancers and entrepreneurs report from their experiences in shared workspaces — learning skills faster, making more connections, and feeling inspired and in control.

In addition to coworking spaces for individuals and those that partner with employers, we’ve identified two types of corporate coworking. One is what we call open houses, in which companies offer workspace as a public amenity, typically for brand-building. In Brooklyn, for example, MINI, where one of us works, runs A/D/O, a combination coworking space, café, concept store, and fabrication lab. Its mission isn’t to sell cars, but to attract and learn from local designers.

The other type we call campsites — internal, invitation-only spaces where teams from one company co-locate with peers from another. Campsites are temporary, affording coworkers stationed there opportunities to learn, ignore org charts, and collaborate across corporate boundaries. Orange’s VBN is one example; another belongs to a large telco in Silicon Valley, where its teams huddle alongside those from customers to prototype products and services. Projects that would have taken months of calls are finished in weeks, demonstrating the importance of co-location in innovation.

Some companies are aggressively testing both. SAP’s HanaHaus in downtown Palo Alto is an open house that charges walk-ins $3 per hour, or roughly the cost of their Blue Bottle coffee. (Notable visitors include Mark Zuckerberg.) A few miles away, at its Silicon Valley campus, is AppHaus, one of five such campsites worldwide, where SAP engineers work with local customers and startups to explore consumer software.

But what are the goals of these corporate coworking spaces? Who uses them? And what do they look like? Here’s what we’ve learned.

The purpose of these spaces can vary widely, but they typically fall into one or more of three groups: transformation, innovation, and future-proofing. In the case of transformation, the space is designed to be a Trojan horse, sneaking new ways of working into an otherwise staid organization. This is explicitly the goal at Orange’s VBN, which Ava Virgitti, an employee experience lead for Orange, describes as an “HR lab” to test and learn how teams behave in the presence of leaner and meaner startups.

Innovation is the goal at other campsites, where diverse stakeholders are assembled with specific tasks and equipped with special facilities and methodologies (say, design thinking) to achieve them. Future-proofing is more open-ended; these spaces are designed to generate new contacts or ideas, which seems to be the thinking behind HanaHaus.

For these reasons, users are typically quite diverse in rank, role, and affiliation, and are present for only a few months before rotating out or back into the company. This is a critical feature of campsites in particular — a revolving door means a constant stream of fresh insights and expertise. Orange’s VBN uses nine-month “seasons” to reset the space; others switch participants as necessary.

While the focus of many spaces is to create new digital products and services, evidence from broader coworking surveys suggests other roles could benefit from this practice. In Grand Rapids, Michigan, for instance, Grid70 houses design, business innovation, and product development teams from a grocery chain, shoe retailer, and consumer goods manufacturer — no coding required.

More important is curating the mix of employees, startups, entrepreneurs, freelancers, researchers, and even academics present. While open houses welcome almost everyone as part of their marketing and outreach efforts, campsites carefully vet participants according to expertise, personality, or cultural fit.

The latter is crucial. While the cultures of these spaces vary according to industry, geography, and so on, they are always different from their parent organizations (and often opposed to them). This is unsurprising given their goal of smuggling the benefits of coworking inside. In interview after interview, community managers stressed the importance of members’ initiative, openness, curiosity, and trust, as well as esprit de corps, or what one called “family spirit.”

The role of community managers in fostering this culture can’t be overstated. Traditionally nonexistent in corporate America, they typically help select, vet, onboard, and connect new users with existing ones while organizing the space, arbitrating conflicts, and hosting events. User satisfaction surveys consistently rank them as the favorite aspect of corporate coworking.

The other important aspect in creating these spaces is their physical design. Like the culture, which the design complements and enhances, the layout and amenities of these spaces are a far cry from cubicles. Nothing is stationary — whiteboards, movable walls, and flexible furniture are common. Amenities and kitchens are strategically positioned to “engineer serendipity” and conversations across organizations. And writing on the walls or floors is encouraged, as making a mess is considered a precursor to innovation.

Now, do these spaces work in promoting innovation? This seems to be the case, although, as with coworking in general, their effectiveness is difficult to measure and only quantifiable indirectly, through user satisfaction surveys and interviews.

A few companies we spoke with also offered examples. Orange’s VBN reported a 92% user approval rating of the space, and pointed to the long waitlist for future seasons. At Grid70, one tenant reported a 30%–40% reduction in product development time after a redesign of their workspace.

According to researchers at the University of Michigan, the most common reasons people seek coworking spaces are interaction with people (84%), random discoveries and opportunities (82%), and knowledge sharing (77%). Corporate coworkers seek the same.

As one might imagine, demonstrating the ROI of this is difficult — most don’t even try. Some eschew metrics altogether, gambling they will learn as they go when it comes to measuring what’s important. Many prefer the soft metrics, such as satisfaction and engagement mentioned above, and still others defer measurement into the future, minimizing expenses while awaiting a business case to emerge.

For this reason (and others), strong executive sponsors are crucial for corporate coworking. HanaHaus was instigated as the personal urging of SAP cofounder Hasso Plattner; Grid70 was conceived by a cluster of local CEOs. Orange’s VBN has the firm backing of senior HR executives, and so on. With the metrics so hazy, the decision as to whether these spaces are worth it is being made on a case-by-case basis.

Just as coworking was seen as a fringe phenomenon less than a decade ago, its corporate variant risks being perceived as a vanity project. But in light of the trends animating creative work today — increasingly flexible arrangements, cross-firm collaboration, and employees’ thirst for agency and authentic connections — these spaces hint at a future far beyond WeWork.

We’ve identified a few principles to keep in mind if your company is interested in exploring corporate coworking.

Be clear about your goals at the outset. Is it a Trojan horse for corporate culture, a cross-firm skunkworks, or a public branding exercise and serendipity engine? This decision will drive every facet of the project going forward, including participants, design, sponsorship, and ROI.

Community managers are the key to success. Hire carefully at the outset, involve them at every step of the design and recruitment process, and give them broad latitude in shaping the culture and programming of the space. Your project will likely fail without a strong community manager, and learning how their role could scale elsewhere in the organization is an incredible opportunity.

Don’t overthink the design. Focus less on foosball or Ping-Pong tables, and more on good overall layout principles. Co-locate teams in adjoining spaces for easy conversations; centralize amenities such as kitchens to increase serendipitous encounters (yes, even the unplanned can be planned for!). Empower users to make the space their own, and cut through red tape during construction — no one wants to spend nine months in just another project team room.

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Greg Lindsay is a journalist, urbanist, futurist, and speaker. He is a senior fellow at NewCities and the director of strategy of its offshoot LA CoMotion — an annual urban mobility festival in the Arts District of Los Angeles. He is also a non-resident senior fellow of The Atlantic Council’s Foresight, Strategy, and Risks Initiative, a visiting scholar at New York University’s Rudin Center for Transportation Policy & Management, and co-author of Aerotropolis: The Way We’ll Live Next.

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