“Most people don’t understand; it’s not the space, it’s the experience.”

I’ve heard this phrase a hundred times, and each time, until two weeks ago, I brushed it off. I got it: experience is premium coffee, nicer front desk people and no more than three beers. A millennial-oriented side dish to the main course of flexibility. I know flexibility (Mr. O’Moore is one of the people who designed CALC).

I was wrong. I didn’t get it. Until, on a tour of a flexible space, a flexible provider said the following:

“This space is our third design iteration, we are currently on the seventh design iteration.”

It finally clicked: they have done a ground up reassessment and redesign of their space every nine months. They think about workplace design the way that startups think about code: It’s not something to get right but to explore and learn as fast as possible. Collecting data on users, feedback, and pain points, getting better along the way.

The kookiest workplace amenities are what we get hung up on, but that’s a fake out. The process by which flexible providers create new workplace innovations rooted in experience data will revolutionize how we think about value in real estate.

Now you may be thinking: “Couldn’t we have just done this? If it was all that valuable, then why haven’t we been doing it like that forever?” Here’s where agility comes back in. Agility aligns the business model of flexible providers with the experiences of the median office occupant in a way that’s totally new to our industry. If they don’t like it, they can just leave. In today’s “on-demand” environment, creating great experiences for employees has become a matter of survival, rather than just a lofty goal.

In flexible real estate, the end of the lease commitment is right around the corner, always. The flexible provider has a constant incentive to drive value for the tenants in the space. Flexible space is inherently more customer centric than inflexible space, and thus offers greater opportunity (and imperative) to fine-tune a workplace-experience design that meets tenant demand.

ESCAPE FROM THE PRODUCTIVITY TRAP

Ask any 10 workplace strategy leads from the largest companies in the world what they design their workplaces for and they will say “productivity.” The trouble with productivity is that it is a nebulous concept with multiple overlapping subcomponents (efficiency, creativity, collaboration), all of which are difficult to measure. That means that workplace strategy in a large corporation becomes as much an exercise in politics as in design.

No matter how well we do the design portion of workplace strategy—study the users, map their experiences, pull in the latest research—we are pulled back towards the status quo by two forces:

  1. It’s not the employees but the leaders who pick the workplace.
  2. Trying out a new workplace design and having to refit the space off cycle because it didn’t work out is an expensive public mistake and people hate risk.

The pace of workplace experience design in long term space, and ability to judge success and failure, are painfully rate-limited. A quick thought experiment:

Let’s say that a leader of a Fortune 500 company has chosen a poor workplace design more geared towards his/her own tastes and not being disruptive than what good design would suggest. The median employee in this space is less productive than in the “average replacement space.” How do you know? Unless this manager undertakes an expensive and time-consuming study with no possible actionable results besides revealing their own mistake, there is no feedback loop.

Let’s say that a coworking company has produced a location with a suboptimal workplace design unattractive to the median customer. They will lose their shirt. The location will be empty or priced at a steep discount. This creates a tight feedback loop for iterating and innovating on better workplace experience design that ultimately impacts end-user satisfaction.

While many would argue that positive experience does not necessarily increase productivity, the essence of design is not to nail it on the first try: it’s an iterative process of testing and experimentation that guarantees eventual improvement. Even if better experience is only partially in the same direction as productivity, at least we are moving. The old status quo of standing around repeating “it’s hard to measure productivity” has been broken. Good riddance.

"THIS FURNITURE LOOKS LIKE IT'S FROM A COLLEGE DORM..."

I’ve heard many an occupancy planner or a project manager marvel at the high density or the low capex that flexible providers can get away with. Then, when they hear how quickly they can build out new space, there’s a stunned silence. The space is cheaper, denser, and much, much faster. So, the logic of, “cheap, fast or good” dictates that the space is of lower quality, right?

Wrong. The easiest way to understand why is to take a trip over to Japan.

In the Toyota Production System, the precursor to “lean” and “just-in-time” manufacturing, the whole idea is to reduce waste. The most insidious waste of all of these is “over-processing” waste, which is “doing more work, adding more components, or having more steps in a product or service than what is required by the customer.” When Toyota first applied its principals to reduce costs, it found workers painting areas of the car that the customer could not see, designing component tolerances that were arbitrarily low and repeatedly applying polish to the same gleaming car bumper.

What made this so hard to confront was that the workers were proud of the job they were doing. They had an attitude of “we do it that way because that is the right way to do it.” These people were delivering quality, but just not delivering quality that anyone wanted. Without a tight understanding and feedback loop of what end-customers really wanted, the engineers built the car that they themselves wanted.

Experience design is not about the product, it’s about the customer. And for leading organizations, the most important customers are within the company—the employees expected to be happy, perform well and contribute to the company’s success. Delivering a workplace experience responsive to their specific pains and gains is optimized by a faster, more iterative real estate process. Flexible providers have incentive to remove every part of the process so long as the occupancy and pricing stays high.

The furniture may look like it’s from a college dorm, but people liked college.

WHERE ARE WE HEADED?

There will be flexible space that is not a branded experience, and there will be experience-designed space that is not flexible, but the nexus of the two is not an accident. Tighter alignment of incentives and better feedback loops creates enormous imperative for innovation. Corporate workplace design is a free rider of that innovation. Leading organizations are shamelessly stealing the best ideas from flexible providers and becoming more agile by adapting their internal space to better match the needs of their employees and the external space that they can turn on a dime.

After 20 design cycles, the release of a new workplace design from a flexible provider will, I’m sure, be treated with all the fanfare of a new smartphone: “Oh, that’s kind of cool.” But the tricky part about experience is that it eventually transcends both the product and process. Owning a cool phone is as much about publicly aligning yourself with a company known for thoughtful innovations as it is about features of the phone. Real estate, where prestige has always been more about the address than the owner, has never had brands. Where this will lead is anybody’s guess but uprooting the source of real estate values from the specific location and replanting it in branded experience design is bound to have profound impact that we will contend with for years to come.

It’s not the space, it’s the experience.

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