Flex-Space Operational Metrics: Measuring what matters, matters.

Gustav Klimt - Portrait of Adele Bloch-Baue (detail) 1903-1907

The 2010s were about efficiency in the workplace. If we are smart, the 2020s will be about effectiveness.

Every decade has a different vibe, a different zeitgeist. The 2010s witnessed the growth of the flex-space market from a small and scruffy niche to a mainstream sector representing a significant percentage of the total take-up in cities such as New York and London. In short, it became a big deal. What we mean when we talk of an ‘office’ today is fundamentally different from what we meant in 2010. Indeed, the changing nature of the ‘office’ is actually speeding up.

Your smartphone in 2020 is 150 times faster than it was in 2010. By 2030 it will be 8000 times faster. The world feels like it is changing faster than ever before, because it is. The same applies to the workplace. 

In the 2000s it is fair to say that, in real estate, no-one really measured anything. In the 2010s this changed to an obsession with ‘data is the new oil’ (a highly misleading phrase but that is by the by). We started to add sensors all over the place and measure workplace occupancy, utilisation of desks, and so on. Now that we have the tools, let’s see how efficient we can make the offices we occupy. With data we can see how much space we really need, reduce our estate, and save a lot of money. Data will show us how to get more from less. 

A huge number of companies did just this and for a brief time it seemed like a really clever move. Open plan became the rage and space requirements dropped 20-30%. What a win. 

Except of course it was no win at all. The most common theme of workplace commentary by the end of 2019 was how awful open plan offices are, how everyone hates them, and ‘why are our bosses spying on us?’ 

The mass adoption of technology in pursuit of efficiency has backfired. According to the Leesman Index (an employee workplace satisfaction tool), just under half the 600,000+ individuals they have asked ‘Does your workplace enable you to be productive?’ answered ‘NO’. Combine that with statistics from architects Gensler that the average occupancy of workspaces is roughly 50%, and the reality is that real estate is suffering from a double #Fail. Our customers don’t really like our product and are not actually using it all that much. 

All of this of course is a key driver behind the growth of Flex Space, which, on the whole, does try to build better spaces for people and offers a new way of thinking about what an office can, and should, be. But in the 2020s we need to think smarter.

I see the best flex-space as a refocussing of real estate around people. Improving the productivity of people becoming the core value proposition. How do we enable individuals to perform as best they can? How do we move from providing a company with an office, to providing them with a productive workforce?

JLL have what they call the ‘3-30-300 Rule’ – this is that a company spends $3 on utilities, $30 on rent, and $300 on payroll per square foot per year. In the 2010s, the real estate industry pretty much focussed on how to most efficiently manage utilities and rent. In the 2020s the smarter side of the industry will focus on how to design, monitor and optimise space to enable the people who use that space to be as effective as possible. Being efficient is necessary, but not sufficient. You cannot be effective without being efficient but being effective is 10X the more important goal. 

So how does this mindset impact on what we should measure in Flex-Space? 

First off, the industry has to address the widespread, growing, and important concerns people have with being tracked, and having their personal data captured by third parties. The #Techlash that we are seeing against the huge technology companies, like Google and Facebook, is a result of the breakdown in trust between these companies and their users. Google was supposed to be the ‘Do No Evil’ company and Facebook just a way to connect with friends and family. But it has not turned out like that, and people do not like it. 

The real estate industry would be wise to get its house in order before privacy concerns become a big thing in the workplace. 

The RED Foundation, led by Dan Hughes, ex head of data products at the Royal Institution of Chartered Surveyors has published a set of Ethical Principles, which are as good a short statement of how to behave as I have seen. They are:

Accountable – Real Estate companies should be accountable for the data that they collect and use. This includes taking responsibility for using the data in an appropriate and secure way. 

Transparent – Real Estate companies should be transparent about what they collect and why. Whilst this cannot be expected for every data point, at a minimum a general data policy should be published for each building and company covering what is collected and why. 

Proportionate – It is the responsibility of the real estate sector to make sure that not only is data collected within legal and technical requirements, but is also proportionate to the benefit and the expectations of the general public.

Confidential and Private – All activity with data – whether collecting or using – should at all times consider confidentiality and protect privacy; both within necessary legal requirements, but also according to the expectations of the general public. 

Lawful – All data should only be used within all local and international laws and regulations. 

Secure – Security principles should be built in ‘by design’ into all applications and appropriate steps should be taken to keep data secure. 

Abide by these and it can be made clear to you customers (everyone who uses your places and spaces) that your and their interests are aligned. Real Estate does not operate on an ad supported business model so there is no imperative to capture data for any other purpose beyond improving the user experience for everyone. 

With those principles in place, there is still a lot of data that needs to be captured to aid in optimising your flex-space.

It sits in three buckets: 

About your Building
You have to understand how your building is performing in real time. The four key metrics are Temperature, Air Quality, Lighting and Noise. There is a mountain of peer reviewed science looking at the correlations between these factors and cognitive function. Get them wrong and you impair the cognitive function of your customers. In other words, the buildings performance has a direct impact on their productivity. This data needs to be captured in real-time, and at a granular level, and be available to customers, as well as you. 

About its Use
At an equally granular level as above you need to understand occupancy, utilisation, footfall and desire paths within your space. This is what will tell you the reality of how your space is actually being used: who is going where, which spaces are busy, when and on what days? What services are being used or not? How are people moving around? How well does the reality of use correlate with how you thought your spaces are used? 

About your Customers
This is the data that I believe will separate the best operators from the pack. This is about understanding what Professor Clayton Christensen (of Disruption fame) describes as the ‘Jobs to be done’ of people. What are the specific wants, needs and desires of people? Everybody in an office has different tasks to perform during the day, and each task, in an ideal world, would best be performed in a space suited for that particular task. The extent to which spaces are available that suit the ‘Jobs to be done’ of everyone in an office, is a strong determinant of how well that space enables someone to be as productive as possible. The more a Flex-Space operator understands the ‘Jobs to be done’ of customers in their spaces, the more that workplace can be optimised. Or alternatively, the more a Flex-Space operator knows about the ‘Jobs to be done’ of the market segment they are targeting or developing space for, the more likely it is that that space will enable future customers to work as effectively as possible. 

With all this data it is critical that it is captured regularly and then analysed with the tech world mantra of ‘Build, Measure, Learn’ in mind. In the same way as software is never finished, no workplace can ever be finished. It is going to become increasingly important to design and build spaces that can be easily reconfigured, based on those three core buckets of data. An effective workplace is an iterative workplace. 

The bottom line is that measuring what matters, matters. We have to measure the data we need to improve the user experience for all our customers. Without putting the wants, needs and desires of people at the centre of a data strategy you might end up with an efficient space, but you’ll never create an effective space. Creating effective workplaces is hard. Maintaining them is even harder. Which is why they will always sell at a considerable premium. And that really matters. 

This was first published on the Essenys blog