The Future of Coworking: Here's What to Expect

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It’s a regular occurrence to have new work-related buzzwords take the business world by storm thanks to the ever-changing nature of technology.  Over the last decade, several of these ubiquitous terms have siphoned through the very same cycle—beginning with cynicism and inevitably turning status quo rather quickly. “Social media”, “cloud computing”, “remote work” and “blockchain” are all primary examples of once-obscure terms that have become commonplace vernacular.  Now, we’ve reached another precipice—coworking.  Having far surpassed existing as just a topic du jour, the initial rebellion has turned into a movement with approximately 1.7 million people participating in coworking worldwide.

Widely regarded by experts as a ‘revolution’— coworking is quickly becoming the new normal according to research.  Ask almost any organization, large or small, their contemplations on the issue and they’ll assuredly have an opinion.  Yet, eschewing a traditional office environment has resulted in mixed emotions from the businesses that are putting the policy to practice. There is a mixed-bag conversation regarding its reliability, and viability, long-term.  With propensities for both spectacular successes and irrefutable failures, it’s a uniquely bipartisan topic that’s transcended its former technological limitations, leaving a looming question mark on the outlook of the future of work, as we know it.

Until recently, remote work—the precursor to the coworking phenomenon—in general, had a vastly different connotation than it does today. Multilevel marketing, transcription gigs and a small fraction of customer service opportunities were most commonly considered the only options for office independence. Today, the culture has shifted to a more progressive model—one emphasizing the importance of work/life balance and collaboration, focusing less on jobs that are simply ‘easy to do’ from home.

Virgin’s Richard Branson is one of the most outspoken champions of employees’ workspace sovereignty, believing one should work wherever they feel most productive. Unsurprising for a visionary, he held well-formed views regarding remote work’s efficacy long before the current insurgence of collaborative spaces throughout the world.

Penning an article fervently admonishing a more traditional model back in 2013, he notes in the short manifesto:

“We like to give people the freedom to work where they want, safe in the knowledge that they have the drive and expertise to perform excellently, whether they at their desk or in their kitchen. Yours truly has never worked out of an office, and never will.” And closes with, ”Working life isn’t 9-5 any more. The world is connected. Companies that do not embrace this are missing a trick.”

The success is much farther reaching than the U.S., too. In a Harvard Business Review interview with Nicholas Bloom and James Liang, cofounders of Chinese travel site, Ctrip, found their work-from-home employees greatly benefitted their bottom line, explaining:

“We found that people working from home completed 13.5% more calls than the staff in the office did—meaning that Ctrip got almost an extra workday a week out of them. They also quit at half the rate of people in the office—way beyond what we anticipated. And predictably, at-home workers reported much higher job satisfaction.”

Still, even with its staunch supporters and verifiable benefits, the practice of remote working is not without skepticism. Marissa Mayer is a prime example of a C-level executive who made headlines for reinstating a more antiquated office-only option—going so far as to rescind the dispensation to work remotely from Yahoo employees all together.  In an internal memo, Jackie Reses, head of human resources noted to their remote workforce:

“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices.”

Facing criticism, Mayer doubled down on the decision, explaining that it was more about common excuses than company culture. Speaking to Adam Lashinsky, a Fortune editor, at the 2015 Global Forum conference, she lamented,

“Actually, I had less of an issue with people who had really good work-from-home setups. A lot of time when people work from home formally, it works really well. I have nothing against working from home per se.”

 The article continues,

“But [Mayer] felt like people who were supposed to come into the office were often abusing the right to work from home, using excuses like bad traffic, bad weather, or “waiting for the cable guy,” she said. “I think we all know in that setting, you don’t necessarily have the most productive day.”

IBM is another top company that not only allowed, but wholeheartedly embraced, the practice only to later largely withdraw the option—which created a gain of $1.9 billion dollars by reducing its necessary office space between 1995 and 2008.  One of the earliest pioneers of remote work, the company-wide practice traced back to the 1980s. In 2009, a staggering “40% of IBM’s 386,000 global employees already worked at home.”

In the end, it became a justification of the importance of ‘team proximity’ leading to ‘innovation’ that became the long-held policy’s fatal flaw—with San Francisco State University professor of management, John Sullivan going so far as to say, “[Remote work] was a great strategy for the 90s and the 80s, but not for 2015.” Because, “It turns out the value of innovation is so strong that it trumps any productivity gain.”

While the customary remote work paradigm doesn’t offer the benefit of consistent collaboration amongst a team or a group of autonomous entrepreneurs, the popularity of coworking assuages the issue by still physically putting people together— and existing for longer than you’d think.  Although now mainstream, the idea of coworking began floating around more than a decade ago according to Allwork, a flexible workspace news site founded in 2003.

The U.S. origination stems from a 2005 blog post by software engineer Brad Neuberg, touted as the first adopter of the movement, writing on his ‘weblog’ Coding in Paradise:

“Traditionally, society forces us to choose between working at home for ourselves or working at an office for a company. If we work at a traditional 9 to 5 company job, we get community and structure but lose freedom and the ability to control our own lives. If we work for ourselves at home, we gain independence but suffer loneliness and bad habits from not being surrounded by a work community. Coworking is a solution to this problem.”

From that humble ideation, the movement kept growing. From what The Atlantic explains began with “the European hacker spaces of the 1990s, where independent programmers swapped coding skills in dark basements with an air of techno-anarchism” and transcended into the U.S., with the “first true coworking” space, emerging from an existing feminist outpost in the Mission District of San Francisco:

“This eventually became the Hat Factory, an industrial loft in the Dogpatch neighborhood, which described itself as a “community office space for geeks and media hackers.” It was co-founded by the guy who invented the hashtag.”

Allwork cited from recent statistics,

“Shared workspaces have grown at an incredible rate of 200% over the past five years. In global cities like London, New York and Chicago they are expanding at an annual rate of 20%, making coworking an institutional part of the market.”

There is a risk-to-reward proposition to coworking versus its remote work alternative, however, especially when you give employees the power of choice. A coworking organization’s failure to flourish not only affects team moral and employee trust, it can also become extraordinarily costly to a business’s bottom line if improperly executed.

Last summer, Quartz detailed one particular case study that became a poster child for the counterpoint of coworking’s collaborative mission—and an extremely expensive misstep for one of technology’s largest players. A quickly fledgling San Francisco coworking office owned by Automattic, the parent company of WordPress.com, hoped to create a timely juxtaposition of the intersection of working-from-home and coworking culture— only to end up a communal and financial flop for Automattic.

But those hiccups are not slowing down the train for enterprise organizations. According Harvard Business Review’s Why People Thrive in Coworking Spaces, managing partner of San Diego-based Co-Merge, Michael Kenny told HBR,

“In the past year and a half, we’ve seen a dramatic increase in the use of the space by enterprise employees. We have seen teams come in to use various on-demand meeting rooms. We have users from global companies of size ranging from several hundred to several thousand employees who use the space not only to allow their distributed workers to get productive work done, but also to attract employees who demand flexible workplace and work time.”

Consequently, coworking has two major advantages that make it not just sustainable, but impactful, long-term—universal appeal and meeting the expectations of an ever-growing millennial workforce are the cornerstones of its future. When examining the global impact, it’s apparent that the tides are changing as quickly abroad as they are stateside.

Striving to make collaborative work as readily available as possible— coworking facilitators are making sure that they’re not leaving anyone behind. In the U.S., expanding beyond the largest cities like New York, Chicago and LA, they aim to reach a wider geographical audience—like the oft-overlooked Midwest. According to Entrepreneur,  “Cities like Indianapolis, Cincinnati, Columbus and Detroit are seeing expansion from national names in coworking like WeWorkSerendipity Labs and Industrious, with some planting multiple locations within one city.”

And although WeWork is not the earliest inceptor of the idea of coworking, nor the largest—that title goes to Regus, founded in Europe in 1989, which according to recent data “operates in over 120 countries and 900 cities” and “offers a range of workspaces such as virtual offices, meeting facilities, coworking spaces, day offices and business centers”—they are the largest stateside coworking startup. Considered a real estate company, their current valuation is 20 billion dollars.

And they’re growing globally. Forbes notes, “In 2017 [WeWork] opened new spaces in cities like Beijing, Buenos Aires, Paris, and Sao Paulo. New projects in Mumbai, Bogota, and Melbourne are expected to come online this year.” They’re also not just catering to new businesses. The article continues“while its first clients were scrappy start-ups and freelancers, WeWork has moved heavily into the corporate market, leasing offices to companies ranging from GM and IBM to Spotify and Salesforce.”

As for Millennials, they desire spaces that compliment their career—a place that gives them a sense of empowerment creatively. Privy to a look into the Mad Men-era midday martini mentality of office life, they’re simply asking for artisanal eats to accompany their ethically sourced afternoon latte. They crave a corporate culture that’s progressive and possesses uniqueness—one that will enhance not only the quality of their work but their overall self-satisfaction.

Now, pair those ideals with the rise of the ‘digital nomad’ mentality.  Just go to Instagram and search the hashtag #DigitalNomad to discover a whole new side to Millennials’ preferred office environment. Boasting strategically placed MacBooks amongst a backdrop of the Amalfi Coast, why have an office at all? It’s no easy task to create a space that feels more desirable than gallivanting around the world, yet niche spaces try to bridge that gap by bringing like-minded people together.

In the United States, there is The Wing in New York and DC, a solely female workspace; the current Fulton Market tech project in Chicago; the Viva MedSuites, a coworking space for medical professionals in Scottsdale Arizona and The Foodloft in Boston to name very few. Abroad, you’ll find Campfire in Hong Kong, TechHub in Bangalore, Bucharest and London and The Creative Fringe outside of Sydney. There are even more obscure industry-specific options popping up, too, like Tradecraft Industries, dedicated to the construction community. In an interview with Tradecraft’s director of operations, Sarah Battani, explains the need this way:

“The interesting trend is the divergence of general versus industry specific spaces. General open their doors to anyone, which is great, but doesn’t provide the lead generation, networking or experience share that industry specific spaces are able to provide.”

Analysis shows that the success of coworking programs, especially for enterprise organizations, often comes down to three key elements: effectively communicating the necessity of and expectations for the program to employees; curating a culture that’s an elevated alternative to what was already available to them and effectively managing the transition into and subsequent workflow in the new environment. A team will be most successful when it believes upper-management has their best interest continuously front-of-mind; if a coworking space exceeds their expectations for what an office ‘ought to be’, it can have lasting effects on productivity and growth.

As technology continues to advance us at an ever-increasing speed, it’s imperative to improve the solutions available for corporations, collectives, small businesses and the like. To thrive, companies must attract top talent, and prospective candidates are likely going to make their career decisions based upon traditionally overlooked factors.

Coworking operations continuously blaze the trail for adopting a new way to look at how we work from a top-level perspective. As they continue to provide innovative opportunities, businesses have a responsibility to follow suit—to keep up with the ‘new normal’ and create more meaning. To create fresh solutions for why we work.

This article originally appeared on Opensourced Workplace