Given at WorkTech New York on May 18, 2011 by Bob Gaudreau, Executive Vice-President Sales & Marketing at Regus.
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Large – over 1,000 employees Medium – 100 to 1,000 employees Small – Under 100 employees
BOB Company ABC is in a fix Its locked in a 15 year lease deal which will only ever have upward rent reviews. Its about as un-agile as you can be And let me stress this is a real company in a very real position today Its spending $20million a year which is a $300million liability…. …… or $200,000 a head. But we all know its much more than that
BOB And look at how they use this prime piece of real estate The majority of floorspace is given over to allocated or shared workstations, with some private offices and associated facilities. What is striking about the current typical allocation of space is the lack of meeting and project rooms today – where almost all corporates report an almost total lack of this kind of resource in a world where collaboration is driving teams to need to work together. Lets be clear 3% of the space, just 1,500 sq feet is for meeting rooms; the closest this business has to collaboration space and where most workplace innovation happens today. The rest of the space is fixed – fully threequarters is desks – the lowest value add space Not much of a return on a $200,000 liability a head
BOB But of course we all know that the space will at best be half used at anyone time and in this real example 55% of the desks are never used And no-one can get a meeting room they are always being used and are booked months in advance So that liability effectively doubles to $400,000 a head But ABC considers itself to be an advanced company and arguably it is because it has already introduced hot desking/desk sharing at a ratio of 1.2 people per desk. The building houses 1150 desks, and so the cost per desk per annum is £10,500 ($17,500). At 45% utilisation 632 desks lie empty and the cost of unused space is £6.6m pa and even if utilisation can be improved to an ambitious 70%, the cost of unused space on any one day is £3.6m pa ($6m) with an average of 345 empty desks or offices at any one point in time. Empty desks no longer make sense in a world where mobility and agility will become accepted by people as the most effective and sustainable way of working. As such Company ABC is unable to realise, unable to recognise its AGILITY DIVIDEND
BOB This is a massive figure Who in this room wouldn’t want to be able to go back to their boss, to their board with this 1000lb blue marlin And the fact is that this is just one office, in one place for one company.... Adopting an approach such as activity based working, where the building becomes a real time resource and operates either at 95% occupancy (to accommodate growth) or in 30% less space would save Company ABC between $6m to $11m per annum But there is more…
BOB So we have stablished that the savings are huge and established the journey to achiev it but how exactky is it monetised With a Philip Ross classic! But seriously:- As well as the efficiency dividend from less or more efficient use of space, we have identified two other key dividends that can be derived through agile work - a happiness dividend and productivity dividend: From our survey and other research, there is no doubt that people would choose to change the way they commute. This is a factor of both time and cost, skewed by the ‘rush hour’ commute that correlates congestion and price to the non-agile, traditional working day. Choice allows an individual the ability to rebalance patterns of work and delivers a ‘happiness dividend’ that is part of a broader move towards recognising health and wellbeing at work. We also see the productivity benefits that result from reduced downtime as ‘always on’ cloud technologies and portable devices allow agile work to be adopted. Again user chooser These three elements are then weighted and given a coefficient based on the importance of each factor to the company. They can create an equation for calculating the Agility Dividend as on the screen.
The fact is over time. It will take time to get from a traditional approach to a full variable cost model. And arguably very few large organisations will achieve this but it should be what we are all aiming for There will be some leapfrogging – a coupel fo exampel I will give shortly have been implemented in just a few months for hundreds of people. But the road to virtuality is clear and achievable
BOB Yell and 7-Eleven are two organisations that we have helped monetise Agility, where we have helped them realise an Agility Dividend Neither of these business bought an office from Regus, they bought membership access to our networks, in the UK and the US respectively These businesses have realised that property ownership, or renting from a Landlord is a 2,000 year old model we inhertited from the Romans. For Yell and 7-Eleven:- Their costs are down Their productivity is up Their efficiency is up They are closer to their customers, can work nearer to home. Their commute costs less, they spend less time travelling. The bsuinss does not have to heat, light and maintain empty office etc etc etc In the 21 st C the world is agile and companies are looking for agile working – we’re not Romans anymore and its about time we all reaped the Agility Dividend and you landed that prize Marlin just like Yell and 7-Eleven
BOB Which is buy your own or as I like to call it user chooser Back in 2009, Citrix gave its staff the option to ‘buy your own computer’ or BYOC. A budget of $2100 (£1260) was made available for people to buy the computer of their choice. The fact is that Citrix employees love having the freedom to choose whatever they like. They enjoy the experience more and it has cust costs. But this isn’t just for IT people Kraft did something similar and achieved the same positive increases in experience and cost reductions Could the same ‘buy your own’ approach soon apply to the workplace? Do corporates need their own office space in the future? Can people be provided with an annual budget to ‘provision work’ that includes technology, space and support as suits their job and objectives? The simple answer is yes. It’s the era of user chooser SO lets go back to our old friend company ABC At Company ABC, the cost per person of providing workspace on the current model is £8000 ($13,300) per person per year. If we take the annual cost of workspace provision per person as a measure of monetising agility at work, this aligns with the technology-led vision of BYOC. And so 1875 people on current patterns of work can see the building as ‘home’ or 2000 people with new enablers, activity based working and third space provision, which would give a cost of £6000 ($10000) per person per year for the provision of ‘workspheres’ in a ‘buy your own’ self-service world –a 25% bottom line saving. As we show in the report for companies less advanced, with a more traditional starting point, property-led cost savings of over 40% are achievable. Kraft and Citrix wanted to remove the hassle of providing their people with laptops they didn’t really want. So how can we remove the hassle of providing offices people don’t really want to work from.
VWork: Measuring the benefits of agility at work
Measuring the benefits of agility at work Bob Gaudreau and Philip Ross
The Unwork.com Survey Size of organization Geography Job function
Defining a value for Corporate Agility <ul><li>The 3 V’s </li></ul><ul><li>V irtual how are we working? </li></ul><ul><li>ad V antage what are the benefits to business? </li></ul><ul><li>V alue how do we monetise it? </li></ul>
<ul><li>“ That long standing symbol of the business world, the Corporate HQ, will soon be no more.” </li></ul><ul><li>Anil Gupta, professor of strategy & organisation </li></ul><ul><li>Smith School of Business, University of Maryland </li></ul><ul><li>“ The concept of a corporate HQ will change from a physical location to a virtual network” </li></ul>
@work <ul><li>63.5% still commute to the office four or five days a week. </li></ul><ul><li>Only 1.6% work from home (large employers) </li></ul>
If city populations are set to double in the next 40 years why send people into immobile business districts?
Commuting Today – going local <ul><li>32.1% spend 41 minutes to an hour </li></ul><ul><li>27.4% over an hour </li></ul><ul><li>59.5% are commuting for 41 minutes or more each way every day </li></ul><ul><li>BUT </li></ul><ul><li>Only 12.3% of people want to work from home… </li></ul>
Free Agent Nation <ul><li>40% of the US workforce will comprise ‘contingent workers’ by 2020 </li></ul>
Collaboration and Virtual Presence <ul><li>Pathological collaboration and the rise </li></ul><ul><li>of the Jelly bean </li></ul>
Where Good Ideas Come From <ul><li>Most of the significant inventions of the last two centuries have NOT come from flashes of inspiration but from communal, multilayered endeavour. </li></ul><ul><li>“ innovation springs out of the ‘adjacent possible’ – the most inventive places are hives of activity where people get together and share ideas.” </li></ul>
<ul><li>From Noun to Verb </li></ul><ul><li>59% of people now feel that they have the right technology to be able to work from anywhere </li></ul><ul><li>62.5% have rolled out a new ways of working programme (respondents from large enterprises) </li></ul>
<ul><li>The business Drivers that will change the way your organisation works </li></ul>
Digital Immigrants and Natives <ul><li>70.9% of respondents believe younger workers - the millennials and those still at school – will be more accepting of virtual working and reject the traditional office… only 8.9% felt they would carry on working in the workplace of today </li></ul>
Large Employers… <ul><li>58.2% predict a decrease in the need for office space as a result of future workstyles. </li></ul><ul><li>Only 7% predict an increase </li></ul><ul><li>Most believe the office will become a place for occasional use (51.2%) </li></ul>
Measuring Agility: Company ABC <ul><li>1,500 employees </li></ul><ul><li>City of London office </li></ul><ul><li>15-year lease </li></ul><ul><li>50,000 square feet </li></ul><ul><li>Cost of the building per annum $20m (rent, rates, utilities, operations) </li></ul><ul><li>Total cost per square foot per annum is $133 </li></ul><ul><li>Over the 15 years, the lease represents a $300m liability or $200,000 per head. </li></ul>
<ul><li>1,150 desks </li></ul><ul><li>Hot desking has already been introduced at sharing ratio 1:2:1 </li></ul><ul><li>Leaving 632 desks unused per day. </li></ul>55% of desks are not being used 45% typical office utilisation
The Agility Dividend for Company ABC... …is between $6m to $11m per annum <ul><li>(based on average cost per desk per annum $17,200). </li></ul><ul><li>Cost of unused space $11m per annum </li></ul>
How do we monetise agility? <ul><li>The Agility Dividend </li></ul><ul><ul><li>p (f+o) + c (t+c) + d (s) </li></ul></ul> Efficiency dividend property (p) fixed (f) and operational (o) cost savings Happiness dividend commuting (c) time (t) and cost (c) savings Productivity dividend output (d) employee/salary costs (s)
Agility in Action… <ul><li>Yell </li></ul><ul><li>700 employees </li></ul><ul><li>Closed 18 offices </li></ul><ul><li>Driver was cost </li></ul><ul><li>GB£1.5m pa saving / 40% </li></ul><ul><li>Access to 153 Regus centres vs 18 before </li></ul><ul><li>10-15% productivity increase </li></ul><ul><li>Transitioned in one month </li></ul><ul><li>Watford to London example </li></ul><ul><li>7-Eleven </li></ul><ul><li>Driver – cultural change 1 st , cost 2 nd </li></ul><ul><li>1000 employees transitioned </li></ul><ul><li>Retail mgmt and franchise sales </li></ul><ul><li>Closed 36 out of 44 offices </li></ul><ul><li>Left 8 hubs open </li></ul><ul><li>US$8m pa saving </li></ul><ul><li>Access to 450 Regus centres </li></ul><ul><li>Meeting rooms </li></ul><ul><li>Day offices </li></ul>… membership v ownership
Buy your own… <ul><li>Agility is not just about cost reduction through real estate. Monetising agility moves the measure of costs per person from fixed bricks & mortar, to the individual </li></ul><ul><li>Examples of other models - BYOC – Buy your own computer </li></ul><ul><li>Citrix – In 2009, Citrix gave staff a budget of $2,100 to BYO computer. It has saved 15-20% of costs </li></ul><ul><li>From BYOC to BYO Workplace – Dawn of ‘user-chooser’ </li></ul><ul><li>Can we move to a vision of ‘provisioning work’ </li></ul>