People, Place, Work.

By now you know the score: we’re moving through a significant economic shift; Business value increasingly accrues at the intersection of the physical and virtual worlds; Our connected cars, intelligent homes, emerging crypto currencies together signal a raft of new market niches and commercial opportunities that were unheard-of a mere 5 years ago. The power behind economic performance is irrevocably linked to how well a company innovates and marshal’s data around its value chain versus its competitors. The prize is lucrative for those that get it right. And the number of organizations that are beginning to get it right is growing (Bosch, GE, DHL etc. See my previous post).

Those lumbering organizations once struggling with legacy business models, bloated cost structures and zombie workforces are, we think turning a corner. They’re getting “match fit” for the opportunities ahead. The metabolism for innovation is rising as agile ways of working, higher rates of collaborating, and partnering proliferate while the platform becomes the default organizing principle for work. I think the job is only half done however. Until organizations radically change form to follow function, then they risk a digital stall. I’m keen to know if there is a radical need to realign not only people but also the places where people go and get work done. After all, place is still a proxy for culture.

I am beginning to think that the relationship between the places where work gets done and the people that work there is starting to change. This is because the dynamics surrounding how we work—nomadic work cultures, the growth of the gig economy, and the rise of talent clusters in many smaller, regional cities—are changing the concept of place and space for an organization and triggering a profound set of questions about what constitutes the corporate norms of how and where we work. Leaders have to ask themselves not just how employees will work together but where they will work together? What skills and capabilities does your firm need and how and where will it locate them? I think there is something more profound happening and its shows the relentless march of technology into every aspect of our lives. Our cities where people traditionally work are starting to change their look and feel.

Check out how the world’s tech giants, dripping with money and power, are changing the dynamics in and around our largest cities. From California to London, Google, Facebook and Apple are employing the world’s best architects to build awe inspiring symbols of their immense wealth and global power. Your jaw will drop when you see Apple Park: it’s a circle of glass designed to foster creativity and innovation and its obsession with detail is mindboggling: Its (German manufactured) windows provide the largest panels of curved glass anywhere on the planet while the planned underground theatre is truly something to behold. Then go and explore Google’s newly announced plans for its London HQ in the once seedy Kings Cross. It’s being called a “land scraper” with 92,000 square meters complete with a running track installed on its roof. These symbols of wealth and power could well be the smartest office space on the planet. But how far will the interaction between people and the place they work evolve? Will it be the shiny new world of Buck Rogers or the ominous territory staked out by Black Mirror?

Expect the tension between employers and their employees to grow. The implicit contract of trust sitting between both sides skews as intelligence grows around buildings and the occupants that work within them. A recent news story backs this up—Three Square, a US technology company wants to microchip its employees. The chip is the size of a grain of rice and will be implanted underneath the skin between thumb and forefinger (a bit like the bead inserted behind the ear in the ever ominous Black Mirror). The chip is optional (for now) and uses the same NFC technology that’s found in our contactless cards. With the chip employees can pay for food and drink, open doors, log onto computers and use other corporate resources. It makes sense when you consider that Three Square writes software for vending machines. That said, is there a danger that our employees become bits and bytes that can be tracked and gamified across the company? Would that work for you in your place of work?

Last year’s Future of Talent described a new work platform enabling employers to better understand the productive behavioral patterns of their workforce. We wrote how Bank of America uses sensory data to better understand employee performance dynamics and learned that; call center performance increased when staff had “hang time” with others in their social circle during lunch breaks. It then deliberately overlapped these lunch breaks, leading to a 23% increase in performance. So if we were to extrapolate...who would you choose to have in your team? The rabid “Brexiteer” or a bleeding heart liberal? What if a clever algorithm could augment your teams or co-locate staff to ensure space at work is harmonious and productive. Or perhaps you think a little “grit” makes a pearl.

Whatever you think, the places where we work are being supercharged with technology but the truth is they act as cultural barometers for people and the companies that inhabit them. Our previous work offered insights on how to enable people and how to enable leaders. Now we’re going to explore how to enable place?

PS. If you think chipping people won’t happen here in Europe then think again. A Swedish rail company started offering it’s passengers options of using a chip implanted into their hand in lieu of a paper train ticket...and we’re getting used to handing over our bodies to make our lives frictionless! The UK’s TSB bank announced it would become the first bank in Europe to introduce iris recognition on its mobile banking app. This stuff is creeping up on us fast.

A Future that Works

The places in which we work are changing dramatically. Just 20 years ago, the offices of large organizations were clustered in capital cities or economic hubs, and work took place almost exclusively in those offices. The offices themselves were a sea of nondescript cubicles, with leadership cocooned away in the stereotypical penthouse office suite.

At this time, offices were simply a place to congregate to create output, much of which revolved around the fulfilment of rote tasks, such as manual invoice processing within an accounts payable department. Capital cities were, by and large, hubs for these large organizations, clustered into vertical “regions” within the city, think Bank in London or Wall Street in New York.

Now, however, we are seeing a rapid change. Work is beginning to move outside of capital cities, with start-ups and innovation centers now clustering around talent, such as in the emerging tech hubs of Bristol, Madrid and Lisbon. The phrase coined in the 1989 movie Field of Dreams (“If you build it, they will come”) no longer seems relevant to the modern business world.

Digital disruption, coupled with economic growth, has fueled an intense talent war, with organizations struggling to fill vital digital roles, such as big data, analytics, creative, social media and digital strategy specialists. As such, the global emergence of attractive regional talent hubs in which organizations can build “hot houses” for “start-up-like” teams within their business are becoming, and will continue to become, increasingly familiar. Organizations such as Barclays, Accenture and even the HM Revenue & Customs have moved internal start-ups and innovation units away from central London and into regional hubs, such as Newcastle and Bristol.

From Location to Office Design

Cities are one thing, but what about where people actually “do” work?

The office's role in business today has undergone a massive shift. No longer is the office just a space to produce and congregate; it is now an enabler of creativity, production, innovation and company culture. The metrics needed to evaluate office space effectiveness need to change, as the previous metrics of productivity, e.g. receipts processed, calls answered, emails sent, are no longer relevant.

FANG organizations have been fundamental in making this shift. Think of Google’s offices, which ooze company culture through every primary colored writeable wall and slide, or the open work spaces that encourage chance meetings and, therefore, collaboration or innovation. The ethos of these tech firms is now shaping many legacy businesses in terms of culture and office design as traditional companies adapt to enhance internal collaboration and innovation to drive digital strategies in their organizations.

Office function doesn’t end here, as these spaces also need to operate as talent incubators or nurseries. The idea that millennials want freedom to work remotely is false. The real story is that millennials want to work closely alongside their boss to learn and also to make a good impression. Office design, therefore, needs to foster this, from seating arrangements that put management within touching distance of graduates, through to collaboration and break-out areas that encourage chance encounters of differing hierarchies in the business. Google has made an art out of the “chance encounter,” specifically designing office spaces with layouts that maximize “casual collisions”.

From moving to regional talent clusters to pulling down those grey cubicles and replacing them with standing desks in open plan offices, it’s undeniably apparent that businesses are rethinking space. Cities and offices are no longer viewed as just congregation points for business.

Office location and design are fundamentally linked to talent, innovation, collaboration, culture and productivity. Therefore, effective use of these spaces needs to be viewed as a critical strategic imperative as organizations look to drive digital initiatives and succeed in the Fourth Industrial Revolution.

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How FANG's killed the Legacy Office

The need to work is something very few of us can avoid. To provide for ourselves, our futures and our loved ones is pretty crucial. But beneath the obvious need to work, there is also a desire, a desire to prove ourselves, to gain fulfillment, acceptance or praise.

So the question should be, why do we want to work, and more fundamentally why do we want to work at a particular company? These are the challenges businesses face today, or at least they should be. A recent report indicated that companies are now facing the largest talent deficit since 2007, with 40% of organizations struggling to fill roles.

When this same report also asked what organizations are doing to address this, the top responses included: offering training and development to existing staff, recruiting outside the talent pool, providing additional perks, paying higher salaries to recruits and exploring alternative sourcing strategies. While these are all appropriate responses, they fail to address the fact that candidates are choosing other companies, and organizations need to find out why.

Yes, with a thriving economy, supply can outstrip demand, but there are certain organizations with an abundance of available candidates, such as the FANG’s. So organizations need to look beyond the data (“We have six open recs with no candidates”) and instead look deeper into why people would want to work for them. The human element in business cannot be understated, especially in talent management, which is – surprise, surprise – a VERY human interaction. Paying staff higher wages and expanding benefits packages is all well and good, but people need to WANT to work for you in the first place.

Cracking the Code

So a fair question to ask is, which companies do people want to work for, and why do they want to work there?

Well, for the fourth year running, Google was found to be the best place to work by Fortune. Desirability breeds demand, and this is roundly backed by Google’s employment stats, with the chances of landing a job at the tech giant standing at one in 400. The reasons “Googler’s” rate the company so highly, in order of importance, include: satisfaction with their job, their work makes a difference, high compensation (only third on the list ... makes you think), ability to work from home (although not many do) and reduced incidence of stress.

Google has, in essence, created an environment that addresses the human element of work, where people enjoy what they do and feel they are appreciated for their contribution. This culture is embodied in the company’s office design. Look beyond the crazy color scheme and push scooters, and what you see is an environment that embodies employee well-being and satisfaction. From free massages to food and child care, it’s no wonder stress levels in the company are relatively low.

This imperative to create an office that reflects Google’s company culture comes from the top, with Google co-founder and CEO of Alphabet Larry Page reportedly tearing up previous plans for the Google’s new London HQ because, and I quote, they were “too boring.” This one statement tells you all you need to know about Google’s stance on office design. The office, the place where its workers spend the majority of their waking time, is fundamental to Google because it represents a critical part of a Googler’s perception of the company.

Learning from the Master

Google has, and will continue to use, working environments as a tool to build culture and employee retention. This design is not without its critics though, who claim the firm's office plans “infantilize” staff and sabotage productivity through unnecessary distractions. Although Google’s work place satisfaction and its number of candidates speaks for itself.

So what can businesses learn from Google? Well, three things strike me:

  • Employee well-being can’t just be a nice to have.
  • Offices need to follow (and sometimes lead) company culture.
  • Work needs to make a difference to the wider society, such as Google’s Lunar X competition.

Ultimately, firms need to answer the basic question of why people work, before they ask, “Why aren’t they working for us.” This will result in a holistic approach to changing what fundamentally improves organizations’ attractiveness in the market.

A Workspace that Reflects Values

Having an attractive office is great, but does your office deliver on improved employee well-being and happiness? Employee health should be a core concern for organizations, which is by no means a “fluffy” idea, as employee absence and lowered productivity will ultimately affect margins.

Office design and perks should mirror this. Food, whether free or from a vending machine, should be healthy, spaces should encourage movement, and companies should consider a “chill-out” room.

Also, does your office “feel” like you want your company to feel? If your employees don’t feel they’re living and breathing your company when they walk in the door, their output won’t always adequately reflect the values of your organization. Walk into IDEO’s San Francisco offices, and immediately you’ll notice the jars lined up at the entrance of colorful paper clips, pens and other tools for creative expression. From the moment you enter, you realize this is an environment for creative expression.

This is how the most sought-after employers attract so many talented workers: They put the workspace at the heart of their operations, and they build their company’s value into their offices.

So make this your Monday morning assignment: What do you see when you walk in the door to your building? What do you feel? Does your workspace accommodate your changing needs throughout the work day? And what can you do to change that? These are the questions that businesses must ask to face the current talent crunch and become a workplace of choice.