The mass exodus has begun.
During the COVID-19 crisis, hundreds of millions of office workers around the world suddenly discovered that they don’t really need an office to do their jobs. And now, having realised that working-from-home can be so much more productive – and satisfying – than sitting in a corporate workspace from Monday to Friday, many of them have decided that they won’t ever be going back to their old cubicles and their boring daily commute. They have left the office for good.
According to Martin Reeves, a managing director for Boston Consulting Group, "We’re not going to go back to something called ‘normal’. All major social crises, epidemics and wars have had long-lasting changes." Nobody would argue that the Coronavirus pandemic of 2020, the worst global crisis for many decades, has profoundly and perhaps irreversibly changed the way we think about office work.
A recent survey of more than 100 large businesses across a wide range of industries found that, on average, companies expect only about 75 percent of their workers to come back to the office after Coronavirus restrictions are fully lifted. And nearly 20 percent of the firms surveyed said they now plan to do all their work remotely. They will no longer need offices at all.
This fundamental shift in how, when, and where we work has the potential to be the biggest global transformation in the history of modern society. It is going to irreversibly change what companies look like, what cities look like, what homes look like, and what lives look like. It will make the industrial revolution of the mid-eighteenth to mid-nineteenth centuries seem only minor in comparison.
Welcome to the Ghost Town
It used to be the stuff of apocalyptic, end-of-the-world disaster movies. Eerie daytime pictures of empty buildings and deserted streets in the busiest business districts of some of the best-known capitals on earth. But as soon as the global Coronavirus pandemic forced national and regional governments to introduce lockdown measures to slow its spread, these images became reality. The city centers of New York, London, and Paris, for example, became instant ghost towns.
Yet did the entire business world come to grinding halt? Not at all. Almost overnight, we found that office workers everywhere were running even large multinational corporations from their living rooms and kitchens. And, unbelievably, the transition was almost seamless. Video calls immediately replaced the usual face-to-face interactions with colleagues, clients, suppliers, and partners, and nobody seemed to care if a spouse, or one of the kids, or a stray pet wandered past in the background.
Even Chief Executives have been pleasantly surprised. Sir Martin Sorrell, the 75-year-old former chief executive of advertising giant WPP, who now runs S4 Capital, said that like many others he has found working from home to be “energising”. Having personally experienced the benefits, he now expects teleworking to bring a “permanent change” to the way his company works. Jim Collins, CEO of biotech and agriculture group Corteva says, “I have been so much more connected to 20,000 employees in the last six weeks than I have in the last six months thanks to the technology we are using.”
Jennifer Chatman, a professor at UC Berkeley’s Haas School of Business, argues that, “most organisations would say, ‘Wow, we can do a lot more remotely than we ever thought.’” Underscoring this conclusion, Jes Staley, a manager at Barclays Bank, believes that “the notion of putting 7,000 people in a building may be a thing of the past.” He says, “We will find ways to operate remotely for a long time."
The Economics of a Work Revolution
Corporate executives have woken up to what this work revolution could mean for their bottom line. Imagine saving around 25 percent of your organisation’s office costs, which average out to between $6,000 and $10,000 per worker. Or what if you could literally save 100 percent of those office costs by having all your work done remotely? The economics are obvious. And entirely feasible.
Sir Martin Sorrell, quoted earlier, says, “I spend around £35 million ($40 million) on property in a year. I’d much rather invest that in people than expensive offices.” He reports that he has already started ending leases at some of his office sites. In a similar vein, Dirk van de Put, CEO of Mondelez, one of the top 5 of largest food companies in the Benelux, said, “Maybe we don’t need all the offices that we currently have around the world.” Sergio Ermotti, CEO of UBS, announced that his company was already thinking about moving out of expensive city-center offices. Many other senior executives agree. In a recent PwC survey, 25% of chief financial officers said they were seriously thinking of cutting back on corporate real estate. The Site Selectors Guild, a North American association set up to help companies locate new office buildings, says that over half of US office searches have now been put on hold.
One giant company in Germany spends around a billion dollars annually on its corporate real estate. If it could reduce its office-based work by 25 percent, that would immediately represent savings of $250 million a year. And this may be just the start. Legislation is being passed in Germany that will make it every employee’s legal right to work from home if the nature of their job makes this possible. So, in theory, if a company employs mostly office workers, it could be faced with a situation where all of them decide that they would rather work remotely. In that case, the company’s offices would become completely redundant. But if this means the organisation can save up to a billion dollars a year, and the work still gets done, who is going to complain? Some corporate real estate people in Germany are already conservatively estimating that at least 20 percent of the country’s current office space will no longer be required. On a national scale, that would be like closing every single office in Bavaria.
And this was a conservative estimate. The real numbers may in fact be much, much higher.
What Will Happen to Cities?
As an indication of how this might play out for major metropolitan areas, consider the San Francisco Bay Area in Northern California. Since Silicon Valley’s innumerable tech companies instituted COVID-related work-from-home policies, some of which are now permanent (Twitter, Facebook), the rent prices for real estate in San Francisco have plummeted by over 9 percent. People are leaving the city in unprecedented numbers and heading for less expensive places to live. A few miles down the road in Mountain View, California, where Google has its headquarters, rents have fallen by nearly 16 percent. In Menlo Park, home of Facebook, and in Cupertino, where Apple's HQ is located, prices are down by over 14 percent. And in nearby Palo Alto, rents have dropped by nearly 11 percent.
Other cities are facing a similar situation. The number of people now leaving New York City, and relocating to cheaper suburban locations in nearby New Jersey or Connecticut has reached what local moving companies are calling “insane” levels. Some former residents are going much further afield, finding new homes in cheaper southern states like Florida, Georgia, and South Carolina.
This mass exodus from the traditional workplace will therefore have massive repercussions not just for corporate real estate people, office planners, human resources directors, line managers, IT executives, and people in other business functions, but for large metropolitan areas themselves and their real estate markets, their public transportation systems, their restaurants, retail services and so on.
Over the next decade, we may witness a de-urbanisation of epic proportions.
The ‘Third Wave’: A New Society
Back in 1980, the renowned American futurist, Alvin Toffler, introduced the world to the concept of giant societal waves that represent the three major watersheds in human history. The First Wave was that of the Agricultural Society. It followed the Neolithic Revolution and replaced early hunter-gatherer cultures with what became settled agriculture-based civilisations. This societal wave covered many thousands of years, defining much of the world right up until the seventeenth and eighteenth centuries, and still prevails in some countries today. In the First Wave, most work was rural and agriculture-based.
The Second Wave began with the Industrial Revolution of Western Europe and later the United States, from there spreading to much of the world. It ushered in an Industrial Age Society, which gave birth to the modern corporation. In the Second Wave, work moved from the field to the factory, and eventually on to the administrative office. This was the wave that led to mass urbanisation, skyscraper offices, commuting, nine-to-five work at desks and cubicles, and the business districts of giant cities with all their amenities set up to principally serve the white-collar office worker.
The Third Wave is that of the Post-Industrial Society, or what Toffler referred to as the Information Society, driven by the rapid advance of computing and communications technology. The transition into the Third Wave started in the 1960s and 1970s with large-scale office automation, picking up speed in the 1980s as mainframes gave way to desktop PCs and laptops, and then going exponential in the 1990s with the advent of the Internet and the mass market mobile phone. Today, with all the available technology platforms, it’s possible for us to do traditional office tasks anytime and anywhere. We don’t need to be sitting at a desk in an office. As Information Workers, we are free.
The interesting twist here is that work is moving away from the city again. The Third Wave means that we can do information-based work sitting on a farm, or a beach, or a sailing boat. If we choose to, we can go back to living and working in the rural areas, just like we did in the First Wave.
The age of mass urbanisation may have come to end.
Back to No Future
If, however, we decide we want to return to working in a metropolitan office building from Monday to Friday, what can we realistically expect our post-COVID daily life to look like? Well, get ready for a long list of inconveniences. First, there are all the things we had before. The early start. The rushed breakfast. The dressing up. The long commute. The office politics. The pointless meetings. The endless interruptions. The nagging frustration that comes from not being as productive as we know we could be. The absence from the family. The overtime. The weary return journey. The late dinner. The alarm clock.
Now add to that all the new post-COVID restrictions. Car-pooling? Nope. Public transport? As long as you don’t mind the social distancing rules and regulations for queueing, for filling buses, trains, and tubes only to half-capacity, and of course the mandatory face mask everywhere you travel. You will also need to keep your face mask handy if you want to get a taxi or an Uber (do you really want to share a car with so many strangers?), otherwise you will be flatly refused entry to the vehicle. When you actually make it to your office building, you will have to queue outside the front door (hopefully under a rain or sun cover) to get inside, one at a time. The building will now have designated pathways that divide directional traffic, as well as separate entrances and exits. And once you’re inside, there will be another waiting area for the elevators. If you work on the 35th floor of a skyscraper, that will mean a very long wait downstairs because only two people will be allowed to ride in the elevator cab at any one time. Don’t expect to see any elevator buttons, by the way. Or door handles, for that matter.
So now you finally arrive at your own workplace. The door will be automatic. You will need a touchless key-card system to enter, unless the door lock relies on a biometric system like facial or eye recognition. And when you do get in, you’ll find that the workplace is not what it used to be. Welcome to your new social distanced office. Post-COVID spacing rules mean that desks must now be positioned to allow at least 2 meters (6 feet) of distance between individual employees. There will also be a lot of new panels, room dividers, and walls between you and your colleagues to establish physical barriers (sneeze guards) that separate you even more. Oh, and your desk has been turned around 180 degrees so that you now face away from people rather than towards them. Sounds like a lot of fun! More like a prison cell for solitary confinement than an office cubicle. Additionally, you will probably be required to wear a face mask all day, to complete a daily self-screening questionnaire, and to perform temperature checks before coming to work in the first place.
There will be a lot of signs hanging up on the office walls reminding you about hygiene and social distancing and making frequent use of all the hand-washing and hand-sanitizing stations everywhere. Those signs will be right next to the other signs with big arrows showing you the one-way walking traffic direction around the office. And you can forget about shared kitchens, canteens, coffee corners, and breakout areas. You won’t be meeting or interacting with your colleagues much, if at all. Finally, going to the office bathroom is going to be a major operation, once you factor in all the extra sanitization it will require.
Ready to go home already? Yep.
Ready to stay there and never come back to the office. Definitely!
‘Home sweet home’ has taken on a whole new meaning.
Exploding Costs, Imploding Cities
If this ‘new normal’ office life sounds like hell to you, spare a thought for your employer. Because all these new spatial and hygienic norms will significantly drive up the ‘per desk’ cost of running an office (which was already $6,000 - $10,000 per employee, as we saw earlier, before COVID-19 even came along).
First, there’s all that additional floor space required, which will need to increase by at least 50% just to accommodate the same number of desks as before. Then there’s an extra 30% in infrastructure costs, along with a 50% increase in running costs, based on analysts’ projections. Just think about all those expensive changes employers will need to make to building services, ventilation systems, office furniture and partitions, interior materials, sanitation processes, office cleaning, and so on.
And then ask yourself how appealing it must be to your employer to start considering shutting down the office altogether and having everyone work from home instead. Everyone wins, right?
Well, not everyone.
Certainly not the office lease holders. Or the office furniture and interior design companies. Or the office maintenance people. Or the office equipment and stationery suppliers. Or the city courier services. Or the public transportation companies. Or the taxi and Uber drivers. Or the restaurants, sandwich bars, and coffee shops just down the road from the office. Or the newspaper stands. Or the shops that used to sell you smart office clothes and shoes, raincoats, umbrellas, and suitcases. Or the bars and pubs and theatres and cinemas that were there for your after-office hours. Or the people who own all that real estate in the city that the retailers and restaurants will no longer be able to afford to rent because they no longer have enough customers.
The end of the office will create a domino effect resulting in the implosion of daily city life as we have long known it – a tsunami of change with the potential to decimate the world’s metropoles.
Plotting the Path Forward
If we want to form a coherent picture of the future of the workplace, we have to understand the confluence of a number of trends – in technology, business, economics, health, demographics, lifestyles, work styles, travel and transportation, sustainability, and several other domains. If we add up all these trends, we soon find that an overarching pattern begins to emerge.
Can you, for example, see the information worker of tomorrow? It’s not that difficult. In the future, the workforce will be young, mobile, tech savvy, well educated, cost-conscious, health-conscious, environmentally aware, entrepreneurial, fun-seeking, independent-minded, freedom-loving, comfort-oriented, future-forward, cautious about making commitments, looking for fulfilment, videogame-influenced, social-media focused, driven by high expectations and demands but with short attention spans, and having a need for instant gratification. Do you think these workers are going to want to go and sit in a corporate office cubicle every day like their parents did?
Businesses are going to be different, too. The hierarchical, command-and-control model that dominated the industrial era has already given way to more networked and decentralised organisation structures in which talent liberation rather than management supervision is the key to performance. These structures are increasingly built on rampant collaboration across multiple external ecosystems around the globe rather than on siloed, internal-focused, linear-type business operations. And being a global player no longer means having sales offices in every country. It means scaling rapidly through technology and through a smartly connected network of partners that will enable you to create and deliver value to your customers. So why do we need to have an expensive office in a city center?
Considering everything we’ve looked at so far, one conclusion becomes obvious.
It’s time to transform the way we work.
The path forward for many companies will initially be a hybrid solution, in which there is still a physical office of some kind, but one that is much smaller than before – more for team collaboration than for task working – and outside of that a growing virtual component to the workforce, in which a large percentage of the company’s information workers are doing their jobs from home or other places, and staying connected to each other and to external constituencies via technology rather than face-to-face.
Your New Virtual Workplace
Instead of struggling to save the old paradigm – the traditional office – let’s focus on embracing the virtual workstyles and lifestyles that will inevitably become the new norm over the coming years.
The key to the future of work lies of course in the technology tools that will enable it. During the COVID crisis, we found that we could continue to function in our jobs by making far greater use of video conferencing in addition to the normal communication channels like email. But the constraints of these existing platforms – like Zoom, Skype, GoToMeeting, Microsoft Teams, and Google Hangouts – also became quickly apparent.
Worse, they don’t really offer executives an effective way to manage their people on a daily basis, evaluate their performance, build team spirit, alignment, and collaboration, and reinforce the company’s cultural values. Whereas many executives may have formerly relied upon ‘management by walking around’, this approach is useless if there’s no office to walk around in, and so far the most commonly-used technology has failed to offer any practical substitute aimed at facilitating the management of virtual workers.
Yet, there is hope. One particular platform is already rapidly emerging as the most promising option for transforming the way we work.
That platform is Virtual Reality.
Imagine there is a “digital twin” of your physical office space – a virtual workplace where colleagues can meet and collaborate as if they were literally in the same location, even if they are thousands of miles apart. A place where they can stand or sit together – and even ‘shake hands’ – without any social distancing concerns. Where they can discuss ongoing projects, address business challenges and opportunities, make presentations, take notes, brainstorm in breakout teams, use a virtual whiteboard and Post-its, create and analyse new strategies, evaluate ideas, and do everything else they used to do in physical meetings, but in an inspiring virtual environment. A place where they can also come together for “town hall” events, leadership conferences, companywide summits, and executive training seminars.
The GEMBA Live Experience
One of the most exciting developments in recent years has been the enterprise application of Virtual Reality. A few pioneering companies have been at the forefront of this movement, and an outstanding example is TLN – The leadership Network – an organisation I have been proud to work closely with as a leader of executive masterclasses for over six years already.
Initially recognising the opportunity to leverage VR for training large numbers of people across organisations, TLN was one of the first companies to produce high-level executive programmes in Virtual Reality, creating its own proprietary platform for this purpose – GEMBA. The name is based on a Japanese term meaning ‘the actual place’, the scene where something important happens. For example, in manufacturing the term is commonly used to refer to the factory floor, the place where the company creates value.
With GEMBA VR training, which utilizes the latest Oculus headsets, TLN has built a virtual ‘place’ where executives can go to take their leadership skills to the next level through a totally immersive experience, and where a company’s entire workforce can receive exactly the same training, aligning everyone around a set of shared principles and goals. As a matter of fact, my own ‘4 Lenses of Innovation’ methodology will be the subject matter of one of TLN’s next available VR training programmes, and later this year we will be running an entire ‘Innovation Excellence’ masterclass in Virtual Reality to cope with demand at a time when business travel is restricted or banned for many of TLN’s members.
During the COVID-19 crisis, however, another critical need has surfaced. As we have noted throughout this article, the business world is looking for radical new workplace solutions that will enable people and organisations to work, network, and collaborate effectively in virtual rather than physical spaces. GEMBA Live provides an excellent answer. Many leading companies are already using this VR platform to run virtual meetings that are highly flexible, that eliminate travel costs, save time, and reduce environmental impact, and that keep people highly motivated and engaged. It’s a revolutionary way to help remote teams and departments to connect, communicate, and work together effectively.
GEMBA Live provides a glimpse of the workplace of the future. And it’s already available now.