So Why Are Enterprises Moving Teams Into Co-Working Spaces?

A growing number of innovative teams at leading enterprises had moved from their dull and grey HQ to an inspiring and colorful coworking space. Oded Israeli offers five explanations for that shift, including one that your CFO will really love

Written by Oded Israeli

3 years ago

If you work for a large company, this would be familiar to you. You arrive at the lobby where the company’s logo and a security guy greet you. Silver elevators take you to one of several identical floors. You pass by grey fields of cubicles, each striving to break the pattern using a kid’s painting or some colorful toys. You get to a long corridor confined by many closed doors labeled with names and numbers. Walking the grey carpet towards the horizon feels like taxiing on a runway. You want to run, pass it quickly, see if you take off eventually. Or you might wonder how fun it would be to play soccer with your kids here, kicking the ball to the other end of the corridor, occasionally hitting a door or a poor colleague. But you don’t run. And you won’t play soccer here. You’re a grown-up and this is your place of work. What might your boss and colleagues think of you? You get to your office, put down your bag, and go to grab some coffee. Another day begins.

Corporate offices haven’t changed for decades. Younger companies incorporated in Silicon Valley this Millennium introduced in recent years a new work environment that includes a colorful look, fully-equipped kitchens, ping pong tables and video game rooms to keep their creative employees happy and playing at work. Some enterprises followed suit and introduced breakout rooms, which end up empty most of the day. Enterprises are not playful, they’re not fast, they embrace change slowly. A CEO of a NASDAQ-traded company I used to work for has put it this way: “This company is like a big ship — even when I decide where I want to take it, it takes quite some time to change its course to the new direction.”

Business today doesn’t wait for big ships. Countless vessels are crossing the waters. Other corporate ships upgrade their engines. Thousands of startup speedboats race ahead and disrupt entire industries. Enterprise Captains have traveled the seas longer and further. They have much to lose and know that they need to sail faster and adapt. So they acquire companies that help them move quicker, they invest in speeding startups to get a glimpse of the new world from the sea level, they expand their innovation endeavors, and they move entire teams to co-working spaces.

Yes, that’s right. Forward-thinking enterprises have figured out that they can benefit greatly from locating people in the newest form of work environments, and are moving their teams to co-working spaces around the globe. The co-working space I work at is home not only to hundreds of startups and freelancers, but also to teams from the biggest brands on the planet, such as Volkswagen, Barclays, and Samsung, to name a few.

Why do they do that, you ask? Why would a successful manager at a leading enterprise surrender his corner-office and the comfort of headquarter amenities to go work at a noisy office with hundreds of young hipsters? Well, it’s not exactly like that. In fact, there are a couple good reasons for this manager to do so, and most such managers and their teams enjoy themselves at work (… much more than you do :-). Here’s why:

1. Co-working spaces makes you meet startups every day
Startups are cool and enterprises want to be cool. Co-working spaces are inhabited by many startups with limited budgets and entrepreneurs who don’t want to work out of their living room or a coffee shop (who can afford a garage in the city nowadays?). Enterprises, like Venture Capital firms, want to meet these startups and understand what they do and what they can gain from cooperating with them. By locating its venture arm at a co-working space, an enterprise gets to interact with dozens such startups every day. Every meetup at the space and the natural turnover of tenants bring an additional flow of people, startups and opportunities. It’s like working at the cinema – you get to see all new movies first and a lot of new faces every day.

2. Co-working spaces are where you can innovate
I asked a manager at a large MNO why he based his innovation team at our space. Is it the inspiring design? The access to startups? The interesting meetups? He smiled at me and said: “Before all that, it’s just different. It’s not like at Corporate. It’s different.”

It’s a well-known practice for us veterans of the Corporate world and top-tier consulting firms that in order to get people to talk about change, you need to take them outside the office. An offsite offers a new environment where possibilities can be explored through fun, collaborative experiences. A team outing lets you see your colleagues in a new light. Even Steve Jobs used to take long walks outside the office to think and talk with colleagues.

Many co-working spaces offer an environment that fosters innovation inherently. Interior design that sparks creativity, common areas for mingling, and constant interaction with interesting people from different companies, all facilitate innovation and out-of-the-box thinking.

(Photo: Mindspace Hamburg)

3. Co-working spaces lets you experience the Future of Work
The Future of Work is a topic that interests many. Most of them are actually talking about the Present of Work, which for their companies is still in the future. Enterprises find it hard to accommodate the millennials, coming with their new set of ideals, looking for meaning and freedom, and expecting full flexibility to work from any place at any time through constant connectivity that they take for granted.

In many ways, co-working represents the future of work. It offers full flexibility – in the period of the lease, in the size of your team – from a single seat next to a hot desk to team offices for dozens, and in one’s ability to craft her own working experience: connect with others or not, participate only in the events she finds interesting, come to work when she’s most productive as the space is open 24/7. Co-working also offers the infrastructure for inter-connectivity and inspiration that is required for the creative jobs that we humans still do better than robots.

Enterprises like a taste of that. For them, working in such a place is a way to understand the new millennial culture and to attract creative talent that wouldn’t join them should they be constrained between corporate walls. It’s a way to try the Silicon Valley way of motivating the workforce without actually moving to the Valley, or replicating a “vibe” at HQ at the risk of breaking anything that still works. Co-working for them is experimenting without risk.

4. Co-working spaces allow you to expand fast
Another common reason for enterprises to use co-working spaces is to expand fast. Fast expansion comes in two flavors: geographical expansion and new business expansion. An enterprise that wants to hire talent in a city where it has no office, or next to an important customer, finds the convenience of city center co-working spaces extremely useful. Other companies that form innovative new business units don’t know in advance how quickly the new team would grow, and co-working spaces offer an easy way to scale the team and office up and down as needed in an atmosphere of total flexibility. In both cases, the speed of setting up a remote office at a co-working space removes the time-consuming hassle of finding an office to work from, and by doing so expedites the team’s success.

5. Co-working spaces make your CFO happy
Last but not least, enterprises are big and wealthy because they care about the bottom line. In contradiction to popular belief, co-working spaces can be up to 40% cheaper than renting a regular office, when you account for all ancillary costs, such as furniture and tech setup costs, taxes, cleaning, management fees, Internet, and year-round coffee supply. More importantly, buying or leasing real estate for a long period goes on your company’s balance sheet as a fixed asset and a liability. Getting liabilities off the books makes your Chief of Finance happy. Guess what, signing up for a co-working space with the right to terminate every month is just a regular operating expense. Voila, if you saved some costs and the CFO likes you more, you might get bigger budgets for your project…

So now you know.

Co-working spaces are not just for startups and freelancers. They’re also home to the most innovative teams at leading enterprises. If you’re leading such a team and still try to innovate at HQ, do yourself a favor – take a personal offsite and book tours at some nearby co-working spaces. Co-working spaces are not created equal, so find one that works for your team. True, you can’t always get what you want. But if you try sometimes, well you might find, you get what you need.

(Photo: Mindspace Hamburg)

* Oded Israeli is VP Marketing at Mindspace, a rapidly-growing global provider of beautiful and inspiring co-working spaces for teams of all sizes.

Interested in giving your enterprise team the chance to become part of the co-working movement? Contact us.

Find your dream office