WeWork’s model was simple. They looked at the changing tech marketplace and shifting workspaces then aimed to solve the problem. With startups looking for space and small businesses unable to get anything less than a 10-year lease during a moment of spontaneous growth, the solution made sense.
Working so prominently in the tech industry caused a bit of an identity crisis for WeWork. A company that was more of a real estate solution tried to paint itself as a tech product. However, the solutions they proposed were undeniably IRL, even as their clients were a lot more URL.
Looking at the landscape surrounding the failure of their IPO release, it seems like the writing was on the wall. The remote workforce is on the rise. With the number of cheap and efficient tools for collaborating across time and space, the cards were stacked against finding ways to fence in modern workers.
Understanding how this giant fell and what it means for business solutions from startups to enterprise-level operations requires looking at technology and business solutions with a much broader lens.
Co-working Brands Remain Optimistic
WeWork’s crash has been marked by a rejected IPO, the stepping down of CEO Adam Neumann, and the announcement of massive layoffs. One of the reasons that investors were able to halt this overvalued IPO release is because of what they saw with Lyft and Uber earlier this year.
The two ride-sharing disrupters hit the market high and immediately started tumbling. The failure of those two companies helped spur investors to put a halt to the release of the IPO.
Even as WeWork sees trouble, co-working companies Industrious and Knotel are claiming that good days are ahead of them. Jamie Hodari from Industrious sits as CEO over a nationwide brand that’s raised $80 million this year and seeks to hit their first profitable year in 2020. Knotel has announced that it raised $400 million this year.
Even as other unicorns have struggled this year, there’s still a desire to be the next billion-dollar-valued company. Companies want to both stay independent while having the capital behind them to compete with industry leaders. However, traditional business considerations are catching up with these starry-eyed tech disruptors.
What these co-working spaces, so closely tied to the real estate industry, fail to take into account is how volatile their investments are. Extraneous office space is going to be one of the first things abandoned if the market hits another recession. All of that enterprise flex space is easily one of the quickest and easiest things to drop for an enterprise.
No one is asking whether co-working space users are making a transition to jettison their office or for a permanent expansion. It’s rightly assumed that any company looking for a flexible workspace is looking to get more and more over time. However, these expansions could just as easily be a first step toward shedding the weight of office space altogether.
With more workers clamoring to have the freedom to work from home and more businesses seeing the value of outsourcing, the use of a co-working space might just be a passing phase.
The Facts Around the Remote Workforce
As co-working spaces courted investors and bought up real estate in the most expensive cities in the world, the evidence mounted supporting the growth of remote workforces. Studies have repeatedly shown both the growth of remote work as well the positive benefits of flexible work from home policies.
A two-year Stanford study showed a nearly 15% increase in productivity and a 50% lower quit rate when one Chinese firm adopted a flexible work-from-home policy. Any hiring manager or HR specialist will recognize that the quit rate also eliminates the cost of recruiting, onboarding, and exiting staff.
Much is made of the rise of flex space and swing space in the changing landscape of the current marketplace. Flex space helps small businesses start to grow, legitimize, and move out of cafes or living rooms and into a real office. The importance of flex space is hinged on the fact that it’s used in transition toward a permanent space rather than a migration out of the office.
The numbers support the migration of people who prefer to work from home.
Creating a robust work-from-home policy recognizes the needs of staff. Half of the remote workforce reports that they like work-from-home policies because they offer a flexible schedule and the ability to work from anywhere. These digital nomads, which could comprise 1 billion members of the workforce by 2035, aren’t champing at the bit for a new way to approach traditional office spaces.
They’re done with them altogether.
Right now, up to 70% of workers are working from home at least one day a week. While there is still some struggle to implement policies for this new way of working, much of the hesitation assumes that people working from home are watching TV in their pajamas. However, the numbers just don’t support that.
Drill down a little further and you’ll find that managers don’t support remote workforces or remote work on their own teams because of a lack of communication. If there aren’t strong workplace collaboration tools and communication platforms.
This isn’t the fault of remote workers, however. More than 60% of companies are embracing a remote workforce, but half of those companies don’t have any concrete work-from-home policy in place. Without a policy and goals to go with them, remote workers could easily fail to meet invisible expectations.
One of the best ways to ensure that a company doesn’t fall victim to aimless remote workers is to get everyone onboarded with the right tools.
The Tools Changing the Game
With a wide variety of free, scalable, and easy-to-use options, productivity tools make it easy to take the office on the road. Several tools now include mobile app versions so that your teams can be in touch on-the-go. Collaboration can happen in transit like never before.
Video conferencing tools are now being used by companies around the world to have face-to-face conversations with their team members. This helps to increase morale and build comradery.
Web conferencing tools also include robust HD screen sharing options that ensure everyone is in the loop at all times. Being able to see a new project or an idea in action is better than describing it to your team. When it comes through a video chat, questions and answers can be fired back and forth quickly to save time on feedback and revisions.
Many companies are now using their web conferencing tools to screen applicants and hold interviews. One of the limits to hiring remote workers was the ability to get to know these workers in any sincere way. Now your in-office or local staff can get to know them a little more intimately.
Also, the numbers don’t lie. One study showed that 92% of respondents found web conferencing improved their productivity. With chat, audio, video, and screen sharing, your staff can stay connected through any complex project.
If you have remote teams handling clients dispersed across the globe, you need your tools to help keep your customers close. They need to feel as if they were local to you, right in your backyard. While they might appreciate your efforts to build your business, they don’t care about ways that you’re saving money if your tools put distance between them and the services you offer.
CRM software allows everyone to connect, collaborate, and update information on a shared platform. New data will be updated in real-time, ensuring that everyone has the latest data on a customer or client. If they want to change or adjust their services, everyone will be in the loop as if you were sitting in the same office.
CRM software now integrates with customer service survey tools, so that you can take the pulse of your customers whenever you need it.
A major advantage of CRM software is that you can recall customer information quickly. If you expand your business, hire new staff, or shift responsibilities, you’ll still ensure that customer information is centralized. Remote team members can always pick up where the last staffer left off, ensuring that every customer experience contains a personal touch.
Team Collaboration Software
One common fear managers face before they allow a team to go remote is to know what everyone is working on at any given point. Thanks to the rise of low-cost and scalable solutions for tracking projects, this fear has been alleviated.
For management who have to track a project from start to finish for the sake of C-level executives, team collaboration tools offer a play by play for any team you oversee. The software available also keeps you on track of team tasks from day-to-day. You’ll know about dependencies and make sure that you apply pressure at the right points to get things done.
With simple messaging and notifications, it doesn’t matter where your team is located. As these tools become ever more mobile, you can reach out and collaborate any time, any place. Files can be shared easily, with updated changes pushed to the right people at a moment’s notice.
One major hurdle to working outside of the traditional office is the lack of access you have to essential tools and equipment. Even though most offices are going paperless, anyone dealing with lawyers, doctors, or government offices know that paper still matters. This means that equipment like fax machines are still important in these contexts.
Given the growth of the medical industry and the pervasiveness of government contracts, businesses need to have a way to comply. Thankfully, online faxing software has become ubiquitous, allowing anyone to send vital forms and information through official channels from anywhere on the planet.
Online faxing can be as easy as sending an email. There are free versions for small businesses with minimal faxing needs and paid versions to accommodate larger enterprises. It’s possible now to quickly and easily send a fax from your phone.
Collaboration With Contractors and Remote Teams
With the tools above, collaboration with remote teams, contractors, and full-time staffers should be a breeze. While it might seem that only small companies and startups would implement this kind of setup, it turns out that even major companies are expanding with contractors.
Google now employs around 20% more contractors than their 100,000 full-time on-staff employees. Without collaboration and productivity tools, they wouldn’t be able to work with this many off-site and dispersed staff.
Half of all hiring managers are now embracing more freelancers than just a few years ago. Nearly 60% of these managers use flexible talent. With tools to help everyone communicate, there’s less and less of a reason to pay for an office space and an increasing number of reasons to get rid of it.
Outsourcing is No Longer a Four-Letter Word
Domestic outsourcing, also known as onshore outsourcing, is the outsourcing of work that stays within your own national borders. While the stereotype of outsourcing has long relied on hiring workers from south Asia, the rise of skills in that region has brought wages up too. They’re now comparable enough to domestic wages when you factor in the benefits of a shared native language and working hours.
Domestic outsourcing has taken a lot fo the venom out of the concept of outsourcing in recent years. The gig economy has helped as well. This allows companies to free up, shrink, or eliminate office space without losing productivity or work quality.
International companies like Infosys are turning to the U.S. to search for talent. This means that the outsourcing tide has turned, supporting even highly-skilled workers in higher GDP countries.
While some of this outsourcing is large enough to require putting together a flex space, paying higher wages for U.S. workers means paying to not have to maintain a workspace. Having more remote workers is easy now that a workforce can stay connected throughout the day with Slack Channels, Skype, and productivity software. Even as outsourcing has skewed toward domestic workforces, it’s still based on remote workers who work from home.
Amazon, Intuit, and IBM are just a few of the companies who are implementing domestic outsourcing
What Lessons Should WeWork and Unicorns Learn?
With Japanese firm SoftBank behind two overvalued unicorns whose valuation took a hit this year, they’re facing hard lessons. The grandiosity of buying into techno-utopia versus looking at classic economic factors has slapped many companies in the face. One of the most glaringly obvious problems was the inability for investors to look beyond the promises of their CEO and to see that the traditional office was shrinking.
Adding a cereal bar, a few kombucha taps, and a ping pong table weren’t going to convince anyone that they were better off hopping a crowded rush-hour train than working from home. On top of that, customer acquisition costs never seem to balance with the lifetime value of customers from these unicorns. If a client needed to stay with WeWork for more than 13 years for the company to break even, then this was a recipe for disaster.
Check out our coverage from earlier this year when we looked at all the customer service statistics that every company should keep their eye on. They’ll give you the insight you need to balance your customer service as you implement new software solutions