Alexandra Miller, Director, Holtby Turner Executive Search met with Chris Pieroni, Operations Director, Workspace to learn how Workspace Group innovates through its Club Workspace co-working concept, and why real-time data is such a powerful catalyst behind the Group’s growth. Flexible working is a booming business, with new offerings arriving from diverse players including FTSE 100 REITS like British Land with their new brand, Storey. Banks are clearing floors to make better use of their space, and even chartered accountants are offering co-working space for their customers.
Co-working is a highly competitive scene compared to 2011 when Club Workspace launched. Tell us about that change.
When the first Club Workspace opened, the founding team struggled to find the right revenue model. Beginning with the only real competitor we had – cafes- we worked out how much someone would have to spend in Costa coffee if they commuted into London three days a week. It was around sixty pounds a month, so that’s how we priced their first co-working membership package. Workspace kept it that way, letting the market steer demand, until realising we could increase prices whilst not losing customers if we provided smarter and faster technology than a coffee shop could ever offer.
Fast-forward five years and the team were spot on with their thinking. Club Workspace now has 18 locations and is a key part of the wider Workspace offer. Approximately 45,000 people go in and out of Workspace’s portfolio every day, which includes 68 multi-let buildings in London. Gone are the days where co-working was pretty much exclusively home to tech start-ups; now Workspace boasts a diverse range of small businesses amongst the four thousand customers the group has.
As Operations Director at Workspace, how extensive is technology’s impact on your role in the business?
It is critical to my day-to-day role, and the way operations fit more broadly within our growth. Not only do we provide technology for Workspace customers, we also monitor data capacity in and out of the buildings which helps us understand requirements in any new buildings we take on. Workspace buildings would have been fine with a data capability from 100MB circuits three to four years back, but not today– our buildings now need 10GB circuits. That’s a major challenge because the ongoing hurdle is to invest continually in upgrading infrastructure; the more data capacity we give to customers, the more they use.
We know that we will have to pour investment into boosters and transceivers ahead of the advent of WiredScore being more widely introduced. WiredScore is a technology accreditation for landlords of buildings because in the not too distant future, buildings will incorporate a technology rating to their valuation, taking their value beyond their bricks and mortar, or location. That’s quite exciting because setting standards like this helps everyone, especially customers, who will have an appreciation of a building’s technology and infrastructure potential before they move in.
How has customer behaviour changed over the last five years?
When we started Club Workspace – which is a similar model to gym memberships – it was originally chosen by individuals. It gave them access to space, with business grade technology and espresso machines, along with events which enabled relaxed networking with others in the building.
Sometimes they’d take two memberships, and then a couple of months later, up to eight. I’d point out to them that in paying for eight individual co-working memberships they were actually paying more than if they were to rent a beautiful unit of their own, also within the building. It was so surprising just how many customers would rather pay more than be responsible for an office unit. They simply didn’t even want to think about straightforward office matters. Nowadays, founders prefer co-working spaces when growing their business as it saves them taking on a bigger unit.
So, customer data is what’s primarily innovating your operating model?
Absolutely. The more we understand what customers want through data, the better we can anticipate changes and design work spaces that are exactly what they want.
Our CRM system offers a better understanding of who our actual customers are too. Now, we are working on a database of individuals using our space, where previously all we had was a contact for the person whose name was on the lease – even if they’d never set foot in the building. Fortunately, this customer relationship management system really does give us a much better feel of how to run our business.
Where do you input customer information into your building design?
What we see are Wi-Fi flows around the buildings that reflect what people are doing, and the facilities they’re using. For example, on the ground floor you’ll see toilets get used far more than on the top floor. So why are there the same number of toilets on the top floors? That analytical approach extends to parts of buildings collectively. Let’s take weight requirements as an example – do we need the loading requirements to be the same across all floors, when the floors are clearly not being used in the same way? Well if not, you can then reduce building costs by building the way people naturally tend to work in them.
Can you share an example of Workspace taking data and applying it directly in design?
We did this a few years ago, when we asked some architects to tell us about the best reception areas in the world. They picked The Ace Hotel in New York and The Seattle Public Library as examples where receptions didn’t have someone waiting behind a desk in a uniform. Rather, as you walked in there was a relaxed buzz, with technology used to overcome the formalities of signing in and checking out etc.
We looked at our building designs alongside the flows of people in and out, and ripped out many of our receptions. We then placed our centre managers in co-working space just as you walk in, so they’re open rather than locked away in an office.
We also made sure our cafes, communal and event spaces were at the front of the building, enabling businesses to meet other businesses with ease and openness. Across the portfolio, every other night, we facilitate events run by businesses wishing to connect with our customers. This is a great opportunity for businesses to get together, meet each other, and grow.
In an ideal world, our colleagues would be on sofas in cafes with tablets, but that doesn’t always work – they need privacy and proper chairs so they don’t get back ache. So, our mission is to achieve a blend of co-working-cum-café in some way.
A typical Workspace customer gets 10% of their sales from other customers in the same building. The human side of co-locating and communal space is just as important as the technology side: our end goal is to get everyone working together.
It’s a commonly held view that ‘data is the new oil’. Is this true for Workspace, and will it be how you future-proof your business?
Well, yes and no; it’s only recently that big data has become prevalent enough to be that valuable. How do we intend to future-proof Workspace? We don’t forecast the future, we simply respond and change on a constant basis. Nothing ever stands still in our business – we change things all the time.
The only way to future-proof is to have a continuous stream of intelligence about what’s going on out there. The only mantra we have is not forecasting what goes on but having data. We experiment a lot. We make mistakes. But that doesn’t matter, that’s how you learn. The flexible workspace market is very dynamic: 25% of our customers leave their unit every year, either taking more space, moving offices or leaving altogether. If you look at our co-working customers in Club Workspace that statistic rises to 125%.
We need to be able to read that and adapt to it in real time. So, every Monday we re-price the portfolio according to market. My job is to make sure that we have real-time data to understand what’s going on and ensure the organisation is flexible enough to react to it in real time. But we still can’t predict what today means for our business in 2-3 years’ time, because the minute you think you have sussed it things will have changed.
I’d be worried if we were ever comfortably in our groove, in the middle lane doing 70, feeling pleased with ourselves, because that’s when you are going to hit the wall. You have to put pressure on each other to continually change.
Read more about PropTech & Innovation in our Insight Report here, A Brave New World? Innovating Real Estate