#SpaceAsAService and the hyper competitive company

We are already in the age of ‘Superstar’ companies. McKinsey wrote a report about them in 2018. They concentrated on the rapid growth of $Billion+ companies, and demonstrated how ‘In this group, economic profit is distributed along a power curve, with the top 10 percent of firms capturing 80 percent of economic profit’. Superstars also exhibited ‘relatively higher levels of digitization; greater labor skill and innovation intensity’.

5 years later this superstar effect is, if anything, becoming more pronounced. It is also though becoming noticeable amongst all companies, from startups upwards. Covid, by acting as a forcing function, has magnified this trend. Being pushed to work from home rather than the office necessitated a wide range of technological, behavioural and societal changes that have all played into the hands of the best companies. The actual and the aspiring superstars.

These fit into two core buckets which, I believe, will act as massive drivers of adoption of #SpaceAsAService real estate.

The first bucket is technology. The best companies are trialling, testing, and adopting where appropriate, every digital tool that enables an end to end digitally native company.

It is estimated that a startup with 35 employees has an average of 102 SaaS (Software as a Service) tools, with a power law distribution where 5-10 account for the bulk of usage. The SaaS universe has become so large that one can find world class tools, available on demand, that cover just about every use case within just about every business.

Starting from scratch is a great advantage as a new company can adopt best in class with no ‘technical debt’, but the best companies have been big users for years, and Covid egged them on. Being dispersed, and needing to work more asynchronously, with better channels of communication, and more need to activate ones culture without the crutch of a corporate HQ, led all of them to either upgrade existing systems or leverage, rapidly, new ones.

And every good SaaS tool is a force multiplier, enabling one person to generate the output of 2, 5 or even 10 people using ‘old school’ technology. The latest AI systems, such as ChatGPT, DALL-E, or GitHub Copilot, have been described as like having an army of interns available to you, on demand. Skilfully used, these tools are extraordinary augmenters of humans. Superstar companies not surprisingly cannot get enough of them. They embrace them, test them, and roll out those that work well for them, at speed. As a tool of competitive advantage against ‘the average’ they are without doubt widening the gap between the best and the rest. And this gap, once opened up, is nigh on impossible to close. Technologies interact, and act as fly wheels for each other. Simply put, the faster get faster.

The second bucket is productivity. The best companies are relentlessly focussed on maximising the potential of each individual. They are employing advanced, scientifically validated, tools to help people maximise their potential. They know that athletes get personal programmes to ‘tune’ their performance, so why not knowledge workers? They know that management of highly talented people is not a guessing game. Every manager is committed to learning, and learning everyday. 

Daniel Pink famously wrote that ‘Purpose, Autonomy and Mastery’ are the keys to being happy and productive. Companies need to instil into their employees a sense of purpose, that what they are doing day to day matters. Everybody needs a sense of purpose. Then they need to be given the agency, the autonomy, to work out how to do what they need to do as efficiently and effectively as possible. And finally they need to be given all the requisite tools to enable them to master their brief, their work, their contribution, their output.

The superstar companies of today and tomorrow obsess about this.

Combined with pervasive adoption of productivity enhancing technology, a relentless focus on productivity across the board becomes easier. One simply has the tools and techniques needed to ‘make it happen’.

And that is where #SpaceAsAService comes in. I’ve described it as a refocussing of real estate around people, where pleasure and productivity IS the value proposition. Where understanding the wants, needs and desires of individuals, underpins the provision of the places, spaces, products and services that enable people to be as ‘happy, healthy and productive’ as they can be.

And flexibility, of location, space and time is central to making this work. So it is no surprise to see the best companies lean in to the opportunities that Covid has made clear as to how and where one needs to work. The Gordian knot tying work to ‘the office’ has been irreversibly cut, and the best compares are embracing this as well when they debate and decide how they use real estate. Yes, they will utilise core space but they’ll also adopt flexible space en masse. 

Offices are going to have a much more particular purpose in the post Covid, ‘Superstar Company’ era. No longer are they where people go as a matter of course. One goes for a reason, and that reason needs to be worth the effort, and time, to get there. 

Average companies are quite likely to fail at adopting hybrid (or distributed - call it what you will) successfully, because they won’t work hard enough on their technology and productivity. We’re already seeing dumb mandates galore. A Future Forum survey reported that ’60% of executives said they’re designing their companies’ policies with little or no direct input from employees.’ Imagining the result of this thinking isn’t hard, and it isn’t hard to understand why the best and the brightest will not work for companies that operate like this.

They’ll be working for, or with, the ‘smart’ companies, and almost definitely they’ll be utilising #SpaceAsAService.

They understand what #SpaceAsAService means, and how it’s the third bucket, to match their other two, of technology and productivity.

For us in real estate this means we need to double down on finding product/market fit with the best companies. Because real estate is not a bit player here: forward thinking companies want, AND NEED, a forward thinking real estate industry.

#SpaceAsaService - The TrillionDollarHashtag’ is no joke. Behind every great company will be great real estate. 

And today, there isn’t nearly enough of it.