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Culture Eats Real Estate (too)

Puzzles & Roadmaps

“Since when did employee engagement in our tenant companies become our business?” The Chief Strategy Officer of one of Singapore’s largest REITs posed the question in the middle of a tense session about how they were looking to reposition their office portfolio. They wanted to ‘activate’ some of their offices buildings in such a way to be more attractive to young knowledge workers. They were looking at building a coworking brand. They feared that their portfolio was becoming stale.

Our answer was tentative, but in retrospect probably a decent one. “Well, the stickier your spaces and the more engaged are those who work in them, the more likely you will be able to retain them as tenants.” To which our client replied with a question, “So it is less of a B2B thing, and more of a B2B2C thing?”

That was a breakthrough for them, and a revelation for us. As a workplace strategy and ‘coworking’ consultancy, our clients are real estate developers, asset owners, brokers, and entrepreneurs whose curiosity is peaked by the coworking/shared workspace phenomenon. On the one hand there is the cool factor, given coworking’s idealistic roots in the Bay Area startup scene. Even the most traditional real estate professional seems to be attracted to coworking. On the other hand there are the economic factors affecting the entire office market. Where is demand heading? Will younger knowledge workers want the same product as their parents? Should we have coworking in our portfolio? If so, how much, and how fast? Can we make more money via the coworking leasing model (vs. the traditional model)? How do we underwrite projects that have such an uncertain future? How do we manage risk going forward? If we don’t do something (the classic innovator’s dilemma), will our products remain relevant in the coming decade?

Over the past four years we have built our business on answering these questions and helping asset owners ‘get into’ coworking. Prior to that, we were coworking space owners/operators, going back to the beginning of the industry. This article is a pause, or a moment of taking stock, in an industry experiencing hypergrowth. Coworking is indeed a part of the real estate industry, despite what some people might claim. Though elsewhere we discuss how it is more than just this. However, the extent to which coworking is impacting the real estate industry more broadly has as much to do with the power of culture, and how that shapes demand, than is generally appreciated. In this respect, Culture (big C Culture, not little c ‘corporate culture’) is the silent driver behind coworking’s success and the real estate industry’s incorporation of it as a new (and disruptive) leasing model.

Work and the Sharing Economy

Like Airbnb, Uber, and Lyft before them, coworking businesses such as WeWork demonstrate that some people (nearly two million at last count) are comfortable conducting their work in shared spaces with employees from other companies and industries. This reflects a generational comfort with sharing all sorts of things- houses and apartments, cars and car rides, tools, labor, etc. The overarching values that define the sharing economy are important here- collaboration, autonomy, community, flexibility, protean careers, reputation. Taken altogether, these values sit behind social transportation, social travel, and now the social workplace (i.e. coworking/shared workspaces).

With respect to the social workplace, we would be mistaken to assume that coworking is purely the domain of freelancers and startups. To the contrary, the industry’s off-the-charts growth over the past two years is being driven by the adoption of coworking by large firms and their employees. For example, in 2010 85% of members of coworking spaces were freelancers and employees of startups. Fast forward to 2017, and only 39% of coworking members were from the freelancer/startup demographic.

The knock-on effect of the corporate adoption of coworking is significant, and is currently altering the office leasing industry. Most of the coworking story is told through numbers, as the real estate industry is a ‘per sq ft industry.’ However, without the scale and scope of changing demand- which is in part an expression of the generational values of the sharing economy- it is highly unlikely that asset owners, investors, underwriters, and developers would have let coworking ‘in the door’ as a credible and viable leasing model across the office market landscape.

The aha! moment in the evolution of the industry occurs when large firms realize that, because of new technologies and anytime/anywhere work, they simply don’t need as much real estate on their books as they once did. Modular, flexible leasing accomplishes two things simultaneously. First, it can significantly reduce company’s real estate spending. Secondly, the kinds of workspaces offered in coworking spaces are more aligned (than their own offices) with the aesthetic and social values of their younger employees. This naturally puts pressure on the corporate real estate industry, which sees demand for its traditional product shrinking. All parties are now animated.

Space and Capital As Commodities

It is often said that prostitution is the oldest industry in the world. Perhaps this is true, but if so then the real estate industry is a close second. Collecting rent has been a part of the human repertoire since the domestication of plants and animals in the Near East some 10,000 years ago. Real estate’s centrality in most of the economies in the world is based in this history. It is, arguably, the backbone industry on which most economies sit.

Because of this, the industry is understandably ‘set in its ways.’ Conventional practices around lending and underwriting, leasing, credit, risk management, etc., are highly conservative for good reasons. So many people build wealth through real estate of various sorts that whole economies would be put at risk, as we have recently seen (2008), if rules are loosened too much.

When coworking came along in 2005, several years before the Great Recession of 2008, it was up against a CRE industry that was disinterested if not downright dismissive. The very idea that multiple sub-tenants would be contributing towards the lease requirements was a non-starter. How many will there be? Who will they be? Who do they work for? How credit worthy are they all? And, what is this thing called coworking anyway?

Anecdotal evidence among coworking operators in the early years of the industry (2006-2010) confirms this industry reaction. For many people it was difficult-to-impossible to get an asset owner to lease space to a coworking business. As for borrowing money from a traditional bank, this was absolutely out of the question. It was not until 2008-2009, when the full effect of the recession was spreading across the country, that building owners watched as more and more of their buildings became vacant. They faced an interesting dilemma: Either they could stick with their traditional terms of a 5-10 year lease for a single, credit worthy single tenant and receive $0 per month, or they could ‘experiment’ with coworking and sign a lease with a young entrepreneur for a year or two at a reduced rent rate and earn something.

Many of these early coworking businesses failed, which confirmed the fears of many in the real estate industry. However, many others thrived and in doing so encouraged others to start their own businesses. As unemployment climbed steadily between 2008 and 2011 to as high as 9.1%, millions of knowledge workers in the US and Europe gravitated to coworking spaces for both social and economic opportunities. The combination of looser leasing requirements with rising unemployment created a perfect storm for the growth of the industry.

WeWork, the industry leader, was founded in 2010, and by early 2018 has over 300 locations in 61 cities around the world and a valuation of $35B. WeWork is the sharing economy unicorn that most people still don’t know about. Largely because of WeWork’s success, but also because of the successful growth of other brands such as Knotel, Industrious, Convene, Work Bar, Tech Space, among others, money is pouring into the industry worldwide. It is estimated that in China alone there are around 3,000 coworking spaces, though getting an accurate count has proven difficult. The largest coworking space to ever come online, interestingly, is GoWork in Gurgaon, India. Being built in two phases, GoWork will be nearly 1M sq ft when completed. Other ambitious projects are being built in China as well, which underscores that coworking is no longer simply an American freelancer phenomenon.

Abundance of Space

The rapid growth in the number of coworking spaces, and thus the overall number of workstations (or ‘hotdesks’) for rent, simply added to a significant glut of office space, both in the US and internationally. When you take note of the standard space utilization rates of corporate offices in the US, which hover between 40%-50%, you have a picture of abundance/poorly managed space. Business such as Liquid Space, which is a marketplace for office buildings and coworking spaces to sell short term work and meeting spaces for people looking for flexible solutions, was born of this very abundance. Some have dubbed Liquid Space the Airbnb of office space. Similar types of platform marketplaces have sprung up around the world to broker the availability of excess office space.

This excess is driven in part by the traditional leasing norms favored by asset owners and brokers. For decades, tenant companies leased around 300 sq ft per person, which is significantly more than most people need. Over the past five-seven years, given the pressure being placed on brokers by the shared workspace industry, this number is coming down significantly. Allocating 150-200 sq ft per person is not uncommon today.

In WeWork locations, for example, single workstations are around 40 sq ft per person, with the total allocated per person (including common spaces), now being down between 65-90 sq ft per person. For traditional asset owners and brokers, this is truly disruptive. What has become quite clear is that in the traditional model tenant companies are being leased much more space than they either need or could possibly ever utilize at meaningful rates. This is the core industry-wide realization that has set the industry in motion.

Abundance of Capital

As Clayton Christensen and Derek van Bever have argued quite persuasively in an HBR article, both large firms and investment shops are awash in capital. Indeed, there is more cash on the books in corporate America than ever before. This is both good and bad. As they argue in “The Capitalist’s Dilemma,” Christensen and van Bever outline the process whereby firms hoard cash and recycle that cash via share buybacks and increased dividends as a way to manage institutional shareholder demands and expectations. An ideology of scarcity leads to the hoarding, despite the record levels of cash already on hand. That is, there is not a scarcity of capital, but rather an abundance. The result is that firms are not investing in their own businesses (or in their employees), but are rather engaged in what they call ratio management- IRR, RONA, EPS, etc. As long as these ratios are well managed, analysts reward firms with glowing reports and further investment. According to Christensen and an Bever, this is not a desirable state of affairs.

On the other hand, though,, the abundance of capital has turned out to quite fortuitous for the fate of the coworking industry. Many billions of dollars have been invested in the industry thus far, with WeWork receiving the lionshare of that. In a single round in 2017 WeWork received a $4.4B investment from Softbank. Smaller industry players also routinely receive rounds of funding in the range from $40M to $100M. In this respect, the abundance of cash is being acknowledged concurrent with the recognition that the global office market is at a once-a-generation inflection point of opportunity. Investors of all sorts- technology and real estate- are pouring in.

Space as Service

While coworking continues to be a feel good story in the popular media, its real impact in the office leasing industry can be seen in the numbers. According to recent research by JLL, coworking and flexible space (combined) has been growing at a rate of 23% since 2010, and it “has emerged as the primary growth driver within the office market.” As of Q2 2017, “expansion from this sector claimed more than a quarter (29.4%) of the total US office absorption over the past 24 months (18.1 million sq ft).” By Q4 2017 over 51M sq ft of real estate was being lease as coworking/executive suites/flexible workspace.

Fifty one million sq ft of executive suites/shared/coworking office space is still less than 5% of the over 1B sq ft of office space in the US. “Given industry shifts, flexible workspace and shared amenity spaces are projected to encompass approximately 30% of the office market by 2030.” This means that over 300M sq ft of office space will be leased as flexible office space (including coworking spaces) by 2030. Using standard industry projections, this suggests that by 2030 the coworking/shared workspace industry will be a 36B/yr industry.

Asset owners and investors are drawn to the numbers. Because of the decreasing footprint per workstation, combined with the premium charged for both the flexibility and social atmosphere that are part of most coworking memberships, operators can generate significantly more per sq ft via a coworking operation than the asset owner can through a straight lease to a traditional tenant. For example, in a 30,000 sq ft space, an efficient operator can generate $115-$130/ sq ft, while they might pay $45/sq ft to lease the space. The rent arbitrage in between these two numbers gets everyone’s attention. Generating these returns is not necessarily easy, but as the industry matures and operational best practices become more commonly known, it is likely that more asset owners will want to convert some portion of their office portfolio to this higher risk/higher yield leasing model.

The Power of Culture

Peter Drucker is generally credited with coining the phrase, “culture eats strategy for breakfast.” Countless CEOs and consultants have repeated it over the years, which is now a kind of maxim. We all know that even the best laid plans can be scuppered by a disconnected or switched off team that is not rowing in the same direction to execute company strategy. Rarely, though, do we think about the relationship between culture and the real estate industry. After all, real estate is a commodity that (theoretically) is in scarce supply, and the laws of supply and demand are supposed to apply. While this remains the case for the most part, a new ‘wild card’ has entered the picture to skew demand in disruptive ways.

Whether as freelancers or as employees of large firms, young knowledge workers today simply use products differently than previous generations. They experiment, prototype, graze, and move on. From our work with dozens of companies and hundreds of company employees, it is clear that for many young employees today the idea of working at a fixed workstation every day of the week is no longer very attractive. While their Baby Boomer counterparts do want to nest in their offices with pictures of their family and pets, for Gen Y and Gen Z this is anathema to a dynamic, social career that is fluid, collaborative, and autonomous. That is, the core values that young knowledge workers bring to work are simply different than those of previous generations. Coworking, in the independent workplace sector, and activity based working (ABW), in the corporate context, are elaborate accommodations of these shifting generational values.

The industry shifting impact that coworking is having on the office market, I suggest, is being driven by the shifting cultural demands for new ways of working. Such values differences are sometimes subtle, and it is always difficult to “prove” their influence. However, to the extent that the real estate industry- one of the oldest and most staid industries in the world- is now accommodating these value differences, is a testament to the power of culture.

The values-challenge posed by the sharing economy also present enormous opportunities to asset owners and their large-company tenants. Large property managers such as JLL, CBRE, Colliers, Cushman and Wakefield, and Avison Young have been actively researching coworking and the sharing economy’s impact on their portfolio properties, and many asset owners are already engaged in converting some part of their portfolio to shared and amenity spaces that cater to the social and cultural needs of younger knowledge workers. Following cultural demand, but also drawn to attractive rent arbitrage numbers, portfolio diversification in the direction of coworking is underway.

On the corporate side of the equation, there is significant movement too. Many large firms have embraced the coworking movement and have employees working from various spaces around the world: GE, Silicon Valley Bank, Salesforce, Dell, Unilever, Google, Microsoft, Samsung, Uber, Amazon, KPMG, Lyft, HSBC, Merck, The Guardian, Accenture, Marriott Airbnb, etc.

From a consultancy perspective, the corporate embrace of coworking is one of the most interesting. Our work with coworking ventures around the world allows us to see, first hand, places where thousands of employees from hundreds of companies work on their own work in shared spaces. What might Drucker say about these places?

The Social Building

WeWork, the industry leader, already sees itself in the ‘culture business.’ In their new ‘onsite solutions’ division, where they propose to manage company campuses for them, part of the value proposition is that those employees will be able to have a WeWork experience while doing their company’s work. With its sharing economy credo leading the way- “we build spaces and communities that help people make a life, not just a living”- WeWork is well on its way to eating both culture and real estate. The company’s recent contract with IBM, wherein they will manage the entire IBM campus at 88 University Place in Manhattan, is the first well documented case of campus/culture outsourcing in the industry.

It is unlikely that there will be a mass exodus of company employees to coworking spaces or a mass conversion of traditional offices to coworking-like arrangements anytime soon. However, it is clear that in a variety of ways the cultural forces behind coworking and the sharing economy are having an impact on the real estate industry (and their corporate tenants). Economists typically view culture as an ‘externality’ that only needs to be accounted for when the laws of supply and demand are out of sync. Today the cultural values of the sharing economy might be an ‘externality’ within the broader scope of the economy. Over the next decade or so, as Millennials become the largest generation at work, with Gen Z close behind them, the ‘externality’ of culture very well might eat other segments of the economy as well.

A quick return to that client conversation back in Singapore. Over the course of nearly six months of working together, the CEO and his team were finally able to distill what it is they are trying to achieve in their portfolio. We want to ‘activate our buildings,’ they said. ‘We want our buildings to be social places where young people want to work.’ And finally, in a most poetic turn of phrase, they put it this way: ‘The buildings are the hardware. We are already good at hardware. What we need is the software that brings the buildings to life.’

This article was originally posted on LinkedIn by OpenWork Agency Partner, Drew Jones, PhD.

Corporate Coworking is a Thing: Now What?

Over the past five years more and more companies- small, medium, and large- have embraced coworking as part of their workplace strategy. It is now widely accepted that coworking is no longer just for freelancers, startups, and solopreneurs. When firms such as IBM, Amazon, and UBS take up whole buildings under WeWork’s coworking management system, it is clear that the coworking industry has hit an inflection point and is heading to a new level of maturity.

What are the specific elements, from a corporate perspective, that are driving those rising rates of adoption? There are many, but I consider a couple here.

1. The real estate angle is an obvious one. As firms scale up and down, and as company employees seek greater choice and flexibility in how they work, fluid workspace solutions help firms avoid costly long leases for offices that go underutilized. Traditional office utilization rates rarely get above 60%, which has been a structural problem in corporate real estate for years. Of course, this is great for asset owners and brokers, who happily lease tenant companies more space than they need, but for companies and employees it seems that that changing..

2. Another driver, as yet not sufficiently explored, is the issue of productivity and employee output among workers who work in coworking spaces. Recent research suggests that working in open plan offices not only leads to greater frequency of illness in offices, but that workers in open plan offices are also 15% less productive than their office-bound counterparts. This is food for thought for workplace strategists.

Working in the Fish Bowl

Perhaps this is why many (if not most) corporate employees who work in coworking spaces do so within private offices within the spaces. Yet, in this transition, the square footage per worker has continued to shrink to around 40-50 sq ft (down from around 150-250 sq ft per person in the traditional office, and now down to around 100-150 sq ft in the corporate environment). This raises an important question that needs addressing. How small can the sq ft per worker shrink before these private offices cease to be desirable and productive places to work?

Where is the Academic Research?

More academic research needs to be conducted on corporate employee productivity in coworking spaces before we can know how it differs from declining productivity in open plan offices back at company HQ. Such research will be critical as companies continue to consider coworking as part of their workplace portfolio.

Now that coworking has proven to be a real thing, it is time for academic researchers to play their part in terms of generating actionable research to help companies in their ongoing decision making processes regarding their workplace strategies.


This article authored by OpenWork Agency Partner, Drew Jones, PhD.

The Economics of In-Firm Coworking

As I have suggested recently, the key drivers behind the growth of corporate coworking have been for the most part real estate drivers. The economics of this simply make sense, despite the skeptics. If one looks only narrowly at the price per square foot for a workstation in a private office in a coworking space (such as WeWork), the ‘cost’ of coworking at first appears astronomical. With a closer look, though, the math of coworking is quite interesting.

Some Comparisons

Consider, for example, a market where the price per sq ft for Class A office space is $45/yr. If we use a total sq ft per worker of 183 sq ft (much smaller than even a decade ago when it was closer to 250-300 sq ft), this comes to a per worker/yr cost of $8,235. Note that this is inclusive of the common spaces allotted per person, assuming an actual workstation footprint of between 80-100 sq ft.

By contrast, in the same market, the per month membership fee at a WeWork will range from $700/mo/person (for a 1 person office) to as low as $450/mo/person in a larger office with 8 or 10 people. Using an average of $575/mo/person, the annual cost of that worker is $6,900.

If one focuses, as some coworking critics do, on the cost per sq ft of just the workstations within a WeWork, there is indeed a potential for sticker shock. If one is looking at a 1 person office at a WeWork, the price per sq ft can reach as high as $180 sq ft. But this is precisely the wrong way to look at it, as it is more or less comparing apples and oranges.

The Coworking Disruption

Among other disruptions around the social norms of sharing workspaces with people from different companies, coworking is also consistently putting pressure on the size of the footprint per workstation across the office industry. In some coworking spaces, a workstation can fit within 40 sq ft, which is a half or a third of a workstation footprint even in a dense open-plan office (not to mention the massive amount of sq ft allotted in yesterday’s corner offices).

Workstations in conventional corporate offices are slowly shrinking in this era of the shared workspace, yet there is still a norm/practice of lavishing massive amounts of (often underutilized) space on knowledge workers. This is due, in large part, to the legacy systems and practices of asset owners, brokers, and corporate real estate professionals.

The awkward truth is that the “system,” such as it is, is designed to lease more space to tenant companies than they (will ever) need. Under the warning/scenario that “you wouldn’t want to be short on space if you grow and need to add staff,” companies enter into long leases on floor plates they will utilize (most likely) at around 50-60%.

And the world turns. The REITs feed dividends to shareholders, brokers receive their commissions, and CRE professionals receive their kudos. Looking at these industry dynamics from a 35,000 ft perspective, it is perhaps not too extreme to say that commercial (office) brokers may easily go the way of the travel agent. But that is for another article…

Coworking Economics Inside the Company

The first step in re-calibrating what an office is and what a workstation is, in the spirit/economics of coworking, is to deal straight on with the Great Utilization Dilemma. In this era of cloud computing, worker mobility, and cloud officing, it is no longer the case that people need to go to ‘their’ office every day. By definition that means tons of empty workstations everyday. We know this from the coworking world. People come into the space some days, but not others. It depends on what they are working on. Flexibility and choice are largely what coworking is about. This is the stuff of the 40% space utilization rates that are commonly reported across the office industry.

What follows here is a brief what if scenario that asks:

If a company in a specific city with a specific number of staff members is looking for an officing solution, how would an in-company coworking model compare, financially, with a traditional leasing model?

The purpose of the comparison is to help bring about a shift in thinking. Rather than viewing coworking strictly as a 3rd party alternative to the (same as it ever was) officing norm, I am suggesting that coworking, in some form, can become a new norm.

The Basics:

  • Acme Company has a staff of 600 people
  • The cost of Class A office in their market is $45/yr

Note that in the comparison below, I bake in the inevitable poor utilization rates that most companies experience into the coworking model, and account for workstations for only 60% of the staff. This assumes that many people work from different locations (office, home, coffee shops, vacation, etc) in a given week. Granted, these are extreme comparisons, but that is the point. The stark contrast is intended to be illustrative of the potential disruptive economic advantage of the in-firm coworking model.

Traditional Officing Model

  • Space for- All 600 staff
  • Sq ft/Person (total)- 183
  • Sq ft/Workstation- 90
  • Total Sq Ft Required- 110,000
  • Cost/Worker/Yr- $8,235
  • Lease Cost/Yr- $4,950,000

Coworking Officing Model

  • Space for- 360 (60% of staff)
  • Sq ft/Person (total)- 85
  • Sq ft/Workstation- 45
  • Total Sq Ft Required- 30,600
  • Cost/Worker/Yr- $3,825
  • Lease Cost/Yr- $1,377,000

This is indeed a simple and crude comparison, and is presented in the spirit of provocation. There are numerous institutional forces that will never want to see the economic model of coworking applied to everyday officing solutions in companies. At the same time, though, I would think that when (tenant) companies begin to look closely at the numbers, they might be intrigued.

Operations & Transitions

Finally, simply allocating space according to coworking principles is likely not enough. Coworking works because of the many soft and squishy things (operations, events, programming, etc) that differentiate it from activity based working. For corporate coworking to take off as a viable, long-term officing model, some level of intentional programming and operations will need to be included.

Incorporating coworking operations and programming will inevitably add some costs back into the coworkng model. Even still, on the whole, in terms of both the costs and the effectiveness, the coworking office, in our opinion, will soon prove to be an attractive strategy for companies interested in coworking but who also want to keep their employees together under one roof.


This article was originally posted on LinkedIn by OpenWork Agency Partner, Drew Jones, PhD.

Corporate Coworking: On Campus or 3rd Party?

Twenty five percent of WeWork’s members are ‘corporate coworkers,’ and the company now boasts that 22% of the Fortune 500 companies have employees who work in their spaces. At the current rate of growth, some 40-50% of coworking members will be corporate users within five to seven years. With firms such as GE, Samsung, Microsoft, Dell, HSBC, Accenture, Unilever, Amazon, Salesforce, Google, and IBM leading the coworking headlines, large firms are turning out to be enthusiastic adopters. It would seem that the corporate adoption of coworking is at least part of the story behind WeWork’s eye-popping $35B valuation.

The growth in the corporate coworking market provides exciting new opportunities for all operators, not just for WeWork, and is one of the driving forces behind the maturation of the industry. It is likely that many operators, or at least those whose infrastructure can support corporate usage, will benefit from the rising tide. From the operator side of the equation, it is difficult to find a down side.

The Why and the What

For tenant companies, though, these are still relatively early days of coworking adoption, and the process is perhaps not as straightforward as may appear at first glance. First is the question of why companies are buying employees memberships and allowing them work offsite at 3rd party coworking spaces (such as WeWork).

  1. Often, companies make the plunge into coworking when they are in transition between leases or purchased properties, using the spaces essentially as temporary office space (similar to the case with Regus over the years).
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  3. In other cases companies are opting to shrink their fixed real estate footprints (and costs) by embracing a more modular and mobile approach to officing. Recognizing that utilization rates are consistently quite low (between 40-60%), coworking represents an approach to ‘right sizing’ a company’s officing usage.
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  5. In yet other cases, there is some evidence that some companies are embracing coworking in order to attract and retain top talent. As Millennials and Gen Z become more prominent in organizations, demands for greater choice and autonomy in workplace practices are being baked into companies’ employment value propositions (EVP).


Then there is the question of what the other benefits are for those companies who have employees coworking in 3rd party spaces?


  1. First is the increase in interaction and collaboration with knowledge workers from other companies and industries. The thinking here is that these serendipitous encounters will lead to innovation (in the form of new products and services) for the companies whose employees are engaged in such interactions. Surely there have been tangible examples of this type of innovation over the past several years, but until sufficient academic research validates this, such claims remain anecdotal.
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  3. Another benefit lies in the sheer freedom that a coworking membership provides a coworker (corporate or freelancer), where an individual can work more or less when and where she chooses. Building a culture of choice, empowered by coworking, seems to be a no-brainer in terms of nudging company culture in that direction.
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Challenges & Requirements of 3rd Party Coworking

While these benefits may or may not be material for participating coworking companies, it is nonetheless the case that there are significant problems and challenges for companies that embrace 3rd party coworking. There are individual and team level practical/tactical issues, and there are much deeper cultural level challenges that present themselves as well.

Tactical/Practical Issues

  1. Individual employees and teams must adapt to not having much (if any) ownership over their physical environments. Within cramped ‘private offices,’ individuals have less privacy and ownership than they probably did in their previous open-plan office. Pictures of your dogs and cats might need to go onto your phone from here on out.
  2. BR> BR>

  3. Individuals need to amp up their powers of concentration, as the relative levels of chaos can be extremely high. With hundreds of workers from dozens of companies milling about and doing their own things, the skill of focusing on one’s own work comes at a premium.
  4. BR> BR>

  5. Individuals need to develop skills of digital collaboration, as only a handful of company colleagues might be physically co-present in the space. From project management, to simple communication, to storage and document management, one’s “office” more or less shifts to the cloud.
  6. BR> BR>

  7. For managers whose team coworks, they need to once and for all move past ‘line of sight management,’ and also embrace the full suite of digital management tools. The old notion that ‘how do I know that my people are working if I can’t see them working’ has to go out of the window.
  8. BR> BR>

  9. In parallel to this, managers must also further develop their abilities to clearly communicate company vision and strategy to keep team members aligned with strategy and rowing in the same direction. Coworking necessitates new types of communication skills that are fit for purpose.


Cultural Issues

Over the past several years Yahoo!, Bank of America and IBM reversed years of remote working policy and have called employees back to the office to work co-present with their colleagues. The idea, simply, is that when colleagues spend more time collaborating and working together, there is an increase in social bonds and cultural cohesion. Social ties not only build trust and enduring relationships (i.e. the stuff of culture), they also allow for more opportunities for cross-functional, cross-departmental collaboration. If one is working in relative isolation (from the bulk of one’s colleagues) in a coworking space, then such broader collaboration opportunities are more difficult to achieve.

If insufficient attention is paid to a company’s cultural health, then several critical areas of company life can be undermined:

  1. Community: Community is an everyday thing. It is made up of mundane and unrehearsed interactions. Take these away and a company’s overall sense of community weakens.
  2. BR> BR>

  3. Communication: How companies communicate, both formal and informal messaging, varies widely. While technology can relatively easily replace formal communication, informal communication is still best accomplished face-to-face.
  4. BR> BR>

  5. Collaboration & Innovation: The opportunities to work with colleagues from different parts of the company can be easily sacrificed if teams are plucked out the the hub and paced among strangers. From a collaboration and innovation perspective, it makes sense that creativity benefits from proximity and density.
  6. BR> BR>

  7. Cultural Identity: There is no question that coworking spaces have their own cultures, and that members can become a part of those cultures. From a company perspective, though, this does little to reinforce its own values and goals among its employees.


Coworking on Campus

To date, much of the impetus behind the growth of corporate coworking has been real estate driven. As discussed above, these reasons are clear and straight forward. In other areas of company life, such as the ‘people and culture’ dimension, the consequences and challenges of 3rd party coworking have been insufficiently addressed.

This is not to suggest, in any measure, that coworking is a poor officing choice for companies. Rather, it is a question of where. Elsewhere we have discussed the deeply positive aspects of coworking, and we anticipate that more (not fewer) companies will eventually embrace coworking as a modality of work as part of their overall workplace strategies. We think that coworking on-campus is a logical next step in the evolution of corporate coworking.

On-Campus coworking (to be discussed in greater detail in Part II of this series), has the potential to address the real estate issues at the heart of the first phase of corporate adoption, while at the same time it can address the ‘people and culture’ issues that are currently being mismanaged.

Still in its early days, coworking as a mode of working remains associated with 3rd party operators such as WeWork (and the thousands of others). Over time, though, it is likely to become more and more just the way that companies work. At that point in time, the ‘co’ might just dropped away and become ‘working.’

This article was originally posted on LinkedIn by OpenWork Agency Partner, Drew Jones, PhD.

Recommended Reading – Top Articles on HR Policies in the Future of Work

In the spirit of today being Independence Day (in the USA), it felt especially fitting to honor the global discussion around company policies that encourage independence within the evolving employee workforce. At OpenWork Agency we believe that employees who are honored with choice, flexibility, autonomy, and decision-making rights are more productive, healthier, and ultimately contribute to a more innovative-driven company culture. However, given the stronghold of outdated management styles, the policy structures in place that empower employees to work in this “new way,” are often underutilized (and underestimated in value) today. This conversation is catalyzing within companies all over the world. HR Directors, C-suite executives, and Corporate Real Estate pioneers are ruminating over how to evolve company HR policies and CRE strategies in a way that revitalizes company culture at the same time it improves the company’s bottom line. A progressive + pragmatic approach to the realities of a modern, evolving workplace strategy will ultimately enable companies to prosper in today’s ‘Future of Work’ environment.

The following are a number of thought-provoking articles recently published in June and July that highlight these important topics and discussion around evolving workplace policies:

OWA’s Recommended Articles Discussing HR Policies in the Future of Work

JUNE 05, 2018 – Think about the ultimate impact that having an engaged distributed workforce has on your company. You have the freedom to hire the best people not just in your country but the world. Then, you are empowering these talented employees with the responsibility of getting their work done from wherever is most convenient for them, putting the focus on results and execution instead of number of hours spent at the office. What does that translate to? Happier employees and better execution, which translates to a better product, which translates to happier, more loyal customers.

The Art Of Managing A Mobile Workforce

Jun 27, 2018 – We are seeing a dramatic shift toward a more distributed workforce as employees are increasingly prioritizing some aspect of remote work, while organizations are quickly understanding how they can benefit from it. In fact, of employees 50 years or older often work away from traditional offices already, along with 70 percent of millennials – and this number is growing. Gartner predicts that half of the future workforce will work outside the traditional office setting most of the time by 2020.

Eight Ways To Determine Where Your Company Policies Have Room For Flexibility

JUNE 11, 2018 – As an organization, it’s up to you to determine how flexible your policies should be, and whether you want to allow all — or just some — staff members to take advantage of remote work.If you need some help figuring it out, eight members of Forbes Human Resources Council offered their advice for crafting policies and communicating them effectively.

The challenges of HR in the disruptive world

JULY 2, 2018 – You might wonder how innovation is related to HR. Think of it this way — innovation is all about putting your users or customers at the very centre of what you do. And many organisations are not able to innovate all because of the misconception that innovation means new technology.

Why flexibility is the key to the future of work

JULY 4, 2018 – As we progress further into the future of work, offering flexibility to employees needs to be seen as having a positive impact on the business as opposed to a favour given to those who have to ask…Sheamus was the first to speak on the importance of flexibility and how businesses need to see it as an asset, both in terms of utilising the advances in technology as much as possible, but also in reducing the cost of physical real-estate office spaces that don’t have to be used all the time.

Companies should give freelancers the same onboarding as staff

JUNE 27, 2018 – According to Deloitte’s “2018 Human Capital Trends” report, which surveyed more than 11,000 business and HR leaders around the world, 37% anticipate a growth in contractors, 33% expect an increase in freelancers, and 28% predict an increase in gig workers by the year 2020. Today, however, only 16% have an established set of policies for non-traditional workers, only 32% track the quality of contract work, and only 29% track compliance with contact terms. Overall, only 45% of HR and business leaders provide these workers with training, and only 54% offer formal onboarding.

“You can’t keep contractors and freelancers to the side in a company, you have to treat them as part of your overall workforce ecosystem, and figure out how they’re going to play with your full-time employees,” says Erica Volini, Deloitte’s U.S. human capital leader and coauthor of the “Human Capital Trends” report.

Cultural Transformation of HR in the Digital and Cognitive Era

June 13, 2018 – HR professionals around the world are undergoing a major change, redefining the meaning of their position in their organizations. So accustomed to dealing with issues of organizational culture, HR is now facing a cultural shift in its own role in this digital and cognitive age. Because every change brings risks, it is natural that you might be thinking about how to handle all this. Be bold: Try, fail, learn fast, and adjust the course. Use data to guide your decisions and confirm your intuition. Embrace technology, but stick to your beliefs in people. Be the guardian of organizational culture—and a living example of it.

Thanks for reading. Follow OpenWork Agency on LinkedIn to receive our posts related to future of work, the evolving nature of HR & CRE, coworking, and innovation. 

Human Tech


As software, AI, IoT, and robotics swallow more and more of the world (as Marc Andreessen suggested they would), it is natural to wonder what the role will be for people?  For years we’ve heard corporate leaders, as well as their HR lieutenants, tell us that their people are ‘their most important assets,’ but at the same time the increasing pressure for efficiency seems to be steadily and necessarily replacing people with various smart technologies.  It is easy to become pessimistic, and to see advances in AI and IoT as the ‘enemy of the people.’ But this would be a mistake.

Yes, millions of jobs globally are currently in the process of being made redundant.  Anyone caught up in this path will feel the pain. When Tim Cook went on TV recently to suggest that learning coding should be a central part of every kid’s basic education, tech journalist Kara Swisher seemed skeptical.  She kept asking, essentially, “So, your answer to the growing knowledge-skills-jobs gap is that everyone should learn to be a programmer?”  Cook sort of answered the question, but the way the exchange unfolded made it seem like that was what he was saying. I actually think he was saying something much more important, but unfortunately that didn’t come through in the conversation.

Education and Knowledge Today

What constitutes knowledge, and useful knowledge, is changing.  It always has. When you apply Moore’s Law analogically to other domains of human endeavor, such as learning and working, we see acceleration everywhere.  As a former educator (a B-school professor), I know this all too well. I spent years teaching students things that were either outdated (in terms of the state of research knowledge) or more or less useless from any practical point of view.  I am still getting over that.

Traditional university education, despite it’s becoming such a huge industry and and even larger parental obsession, is terribly wanting.  New alternatives, such as MissionU, are a shot across the bow.  Relevant tech education delivered over the course of one year produces tech-minded knowledge workers ready to earn a living at around 19 years of age.  Of course, pure tech education isn’t sufficient to building a fully literate society. Perhaps one year to read books (lots of them) and one year to do the tech thing, is enough to create an intellectual techie?

Back to Cook’s comments.  What I think he meant when he said ‘all kids will need to know how to code’ is that they will need to ‘think like coders’ in order to solve complex problems.  The exponential proliferation of data and smart devices simply confound the nature and scope of human decision making. Leveraging that data with the information processing skills of the human mind is not possible.  We need apps, tools, shortcuts, and collaborations.

Tech and Work

In the world of work, which is our company’s domain, tech is more important than ever.  HR tech applications allow busy managers to see, in real time, what their people are working on, where they are, who they are working with, how engaged they are, and a whole host of other social data that are important.  Yesterday’s annual performance reviews, or once-every-five-year culture surveys, are just not up to the task. Some of your best Millennial employees will have moved on to new gigs anyway. What is needed are real-time analytics at the tip of managers’ fingers.

The impact that this is having on the field of HRM is really only just beginning to be understood.  This has already (and quite easily) been recognized with respect to hiring, benefits, and payroll, etc.  However, the soft and elusive stuff- engagement, culture, trust, etc- is now also in the belly of the software.  Even if you don’t know how to code (and I sure don’t), I think that if you understand this basic fact, then Tim Cook’s point is successfully made.    


This article authored by OpenWork Agency Partner, Drew Jones, PhD.

Invisible Innovation


Research on CEO priorities consistently shows that innovation remains a top priority for most corporate leaders.  This has been the case for well over a decade. Which company, or company leader, would not want their companies to grow through innovation?

The challenge, when push comes to shove, is how to get to innovation?  At what cost? And what do a company’s leading institutional investors think about it?

Too often, at the end of the day, investor pressure demands such high levels of risk mitigation and ‘modelable’ predictability that organic growth through new product and service innovation is not structurally possible.  Consider recent reports from a group of leading firms who have publicly commented on what they plan to do with the free cash they will soon receive when this year’s lower corporate tax rates kick in.  Among this group of companies, thus far they have earmarked $171B for share buybacks, while only $6B has been earmarked for (re)investment in their firms in the form of R&D or capital expenditures.  

This only confirms what we’ve known for a long time.  Clayton Christensen and Derek van Bever, and Michael Mankins, Karen Harris, and David Harding been writing about this for years in the Harvard Business Review.  These are neither new nor radical ideas.

Managing the Ultimate Constraint

However, the near shut-down in substantive corporate spending on long-term innovation should not be the end of the story.  From a design thinking perspective, this is merely a constraint, albeit an epic size one.  Even with their hands so tied, can firms embrace (cheap and lean) innovation without showing significant innovation spending on their balance sheets?

At the risk of being overly simplistic, the key here lies in your HR policies.  How do your employees work? Where do they work? How much box-ticking busy work are they engaged in?  How much of their time is focused on customers and adding value to them, vs. internally focused processes and control systems?  How much time are they allowed to spend with colleagues from other departments and functions thinking about end-user value?

Long before Google popularized their 20% Time program, companies such as 3M, W.L. Gore, and SEMCo have been getting low-cost innovations out of their employees for years.  True, most of these innovative firms are private and don’t live under the thumb of the CFO of their institutional investors, but this is achievable in public firms too.

1- Unburden Employees:  Having an official policy (whether 15% or 20% time) can be a hard sell for most HR managers.  Rather, companies can identify and remove wasteful process and procedure tasks from employees’ work loads, thus freeing up some amount of time during which they can work on creating new value for the firm.

2- Prioritize Workspace:  Few companies actually build work environments that align with human nature and the known patterns of collaborative interaction.  Activity based coworking spaces and choices, rather than expensive and ‘monumental’ corporate interiors, provide the stage-set for encouraging everyday collaborations and potential innovations.

3- Incentives:  We know that ownership, either outright or symbolic, is a powerful motivator.  It is critical to reward good and actionable ideas with the opportunity to ‘run with them.’  Virgin Group’s long-standing intrapreneurship program has created a stable of new companies that drive the group’s bottom line.

Keeping it Simple

For super busy CEOs these notions are probably a bit abstract.  In lieu of tackling all of this at once, there is a simple, inexpensive way that companies can move forward.  Send a team or a group of teams coworking!  For a limited trial period (maybe 3-4 months), present a challenge to one of your teams have them decamp to a coworking space to work on it.  They don’t need to work exclusively on the challenge, just some of the time. See what happens.

In the larger scope of corporate spending, the cost of the coworking experiment will barely register. Invisible and unbeknownst to virtually anyone, you might just end up with a new product/service/business model that can bring value to the company.  


This article authored by OpenWork Agency Partner, Drew Jones, PhD.

OpenWork Manifesto

Over the past eight years coworking has gone from being a social movement to being a bona fide industry.  As asset owners and real estate professionals learn more about the significant rent arbitrage potential, and as investors and lenders become more comfortable with the risk profile of coworking businesses, the floodgates have opened up.  VC firms are on board, as are some REITS. No longer are people asking, “Is coworking an actual thing?” Now they are asking: “How big will coworking be?” This is great news for many parties. For those of us who have been involved with the industry since its infancy, there is much to celebrate in coworking’s maturity.

Why has coworking been so successful?

At the risk of being atavistic and naive, we believe that it is easy for ‘the industry’ to overlook what it was (is) that made coworking so compelling in the first instance.  One could argue, and some do, that the essence of coworking- defined as a particular type of work experience– has been lost in the process.  But what is this experience, and why does it matter?

Let’s start with some definitions.  Generally speaking, coworking can be defined as “community-oriented work environments where freelancers, startups, and corporate employees work on their own projects in shared workspaces, where they belong as members (similar to a gym membership).”  Not everyone will agree with this definition, but broadly speaking it hits the highlights. Still, we think that it misses the mark.

Coworking at the experiential level

Prior to being transformed from purely open and collective work environments (at big tables) to endless hallways of highly monetized private glass offices offering workers 35-40 sq ft of workspace, coworking offered something that was truly unique at the time.  We talk about this with a touch of sadness, as in today’s market the demand for open spaces (i.e. coworking without private offices) is in decline pretty much everywhere (with a few exceptions here and there). But the experience of coworking is worth remembering, because we think there is more to it than maximizing revenue per square foot.


As a counterpoint to working in and for a company, coworking offered participants freedom.  Unlike a traditional company job, folks who showed up at the coworking space to work chose to be there that day.  They could have stayed home or worked at a coffee shop if they wanted to.  The psychological difference of this is huge. We think that empowering knowledge workers to work when, where, and how they choose is essential to the coworking experience.

Social Connection

Because coworking originated as a workplace solution for freelancers, the spaces became social centers where otherwise isolated workers could develop friendships and social ties.  Over time these connections became quite real and meaningful. Unlike the obligatory relationships that are often thrust on employees in companies, where we are bonded with one another through trust falls and zip lines, these relationships had an organic quality to them that was refreshing.

Collaboration & Innovation

A friend of ours, who was a member of a coworking space in NYC a decade ago, tells the story about how he popped out with some friends for an early dinner, and by the time he got back to the space a group of folks had not only envisioned a new business idea but had bought the domain, built the website, and launched the business.  When creative and energetic people cluster and work according to their own rhythms, crazy amazing things can happen.


In the early days of the movement freelancers greatly benefited from the co-presence of others who had similar needs for support and help.  Working as an independent freelancer is a tenuous journey financially for most. The extent to which members passed on leads, gigs, referrals, tips, and technical assistance went a long way in keeping fellow members ‘in the income.’


The overall shared experiences of coworkers who work together over a period of time in fact create a new kind of cultural environment.  This is not company culture, nor is it the culture necessarily of one’s neighborhood or family. Often referred to in coworking circles as community, we like to think that the communities of successful coworking spaces also become meaningful cultures that enhance members’ overall quality of life.

Takeaways for Companies

One of the more interesting and exciting things to occur in the coworking industry in the past few years is the increasing level of corporate participation.  Lots of household name companies have employees who now cowork: Dell, Samsung, Accenture, HSBC, Silicon Valley Bank, Salesforce, Merck, Google, Microsoft, Marriott, IBM, Amazon, among others.  If, however, “corporate coworking” devolves into isolated teams being required to show up in tiny glass offices on a fixed schedule, then this obviates the experiences of coworking.  It is probably too much to expect that the benefits of traditional coworking, as experienced by freelancers in the early days, can be easily transferred to corporate members, but we think it is worth exploring.  

Coworking and culture change

Above all else, coworking is about the day to day working patterns and relationships that coworkers organically develop over time.  Unlike standard corporate culture change programs, 70% of which fail, coworking creates a new kind of ‘culture at work’ without anyone ever using the words ‘culture’ or ‘change.  This is why we strongly believe that if companies are interested in getting the benefits of coworking- autonomy, social connection, collaboration, innovation- they should consider (re)creating the conditions of the original coworking movement.  This can be a single-company coworking campus or a multi-company space, but the freedom and ebb and flow that defined coworking in the first instance need to be in place. This does not mean all open plan offices, by any means. Recent research demonstrates that many knowledge workers flail in open plan offices.  A thoughtful, activity-based coworking solution will have plenty of private and semi-private spaces for those who want them.

Of course this requires adjustments in certain areas of company policy (such as anytime-anywhere work), and large companies will never quite get to the levels of openness and freedom as early-adopter freelancers (because of the obvious security reasons).  However, for those companies that are drawn to something about coworking but don’t know quite what that is, try to think about it from the experiential level.  How can your company create spaces and relationships where the majority of your people show up at the office even when they don’t have to?  If you can do that, then you have the opportunity to harness discretionary energy and self-motivation that you might have never seen.

Business Culture in the Sharing Economy


According to the historian of science Thomas Kuhn, scientific paradigms change only at glacial speed. Even as evidence in a particular scientific field mounts to challenge existing theory, a field’s professionals, institutions, associations, and journals often acknowledge and embrace the new paradigm over the course of a generation. This is clearly happening in the field of psychology, where brain science is challenging and undermining much of what used to be orthodoxy in the discipline.

This article argues that much the same is happening with respect to our understanding of culture in business. Beginning in the early 1980s, a generation of management consultants, scholars, and practitioners established a particular point of view, or paradigm, regarding the role of culture in business decision making, employee morale and energy, and strategy execution. Much of that discussion has taken place within the pages of the Harvard Business Review, even as recently as the Jan-Feb 2018 issue. Our leading consultancies also work within the established ‘corporate culture paradigm,’ which further spreads the existing orthodoxy across companies across industries.

Today, as members of Gen X, Gen Y, and Gen Z become more central figures in large firms, and as the cultural values of the sharing economy permeate social life, consumer behavior, and organizational life, it is time to reassess what we mean by corporate culture. The broader cultural values of the sharing economy- transparency, autonomy, community, collaboration, protean careers- have yet to be factored in to what we think of when we think of culture in companies. What we see today, both within and outside of firms, is much closer to what Douglas Holt describes as ‘crowd cultures’ than it is to the myriad versions of culture types that still largely define the corporate culture paradigm.

In this article, I first outline the structure and assumptions that underlie the corporate culture paradigm, and then discuss how that paradigm is out of step with the fluid and porous nature of culture on the ground today. As public firms become increasingly oriented towards institutional investors and share-price management in the context of a significant generational shift (from Baby Boomers to Millennials), the very notion of corporate culture loses much of its valence for many of the young knowledge workers in those firms. Secondly, I provide a scientific, anthropological re-assessment of how we can better understand the role of culture in business. This requires us to look at culture as more of an exogenous dynamic to be embraced than an endogenous system to be managed.

Next, in a case example, I discuss the coworking industry, which is being increasingly embraced by large firms, as a petri dish for the emergence of a new form of multi-company business culture that reflects and embodies the values of the sharing economy. More aligned with the organic values of young knowledge workers than with the engineered culture types of large

firms, the business cultures of coworking spaces provide a new opportunity for firms to connect meaningfully with young talent in a potentially more sustainable type of employer-employee relationship.

Finally, I provide a framework for how firms can participate in and leverage the culture of the sharing economy to their advantage. The model is grounded in twenty years of consulting with small and large firms around issues of culture, leadership, and innovation. As a trained evolutionary anthropologist, I want to inject a greater level of scientific understanding into the challenge of managing culture in the sharing economy.

The Corporate Culture Paradigm

The corporate culture paradigm (CC paradigm), as it has been institutionalized in business, is premised on a specific intellectual traditional within anthropology.- interpretive anthropology. Articulated by Princeton’s Clifford Geertz in the 1970s, interpretive anthropology is a humanistic (‘non-scientific’) approach to understanding culture. Geertz’s emphasis on values, beliefs, and behaviors has had enormous resonance among the scholars and consultants behind the corporate culture paradigm- Ed Schein, Tom Peters and Bob Waterman, Jim Collins, Terrence Deal and Allan Kennedy, Dan Denison, Jon Katzenbach, Jon Kotter, etc. It is from this one intellectual tradition within anthropology that the paradigm is descended.

Interpretive anthropologists define culture as the values, beliefs, and behaviors that people share as members of a social group (country, region, ethnic group, organization, etc). This frames the default definition of corporate culture as “the way things are done around here.” In the early 1980s, when the CC paradigm was being established, it was very helpful and useful to ask business leaders to focus, as Peters and Waterman did in In Search of Excellence, on the ‘soft stuff’ of organizational life. The emphasis underscored the fact that organizations are more effective when employees feel like they are on the same page, and when they feel good about their work, their colleagues, and the company. When members of a company have a shared sense of purpose (i.e. the ‘company culture’), they tend to work more effectively in executing company strategy. Peter Drucker’s famous dictum that ‘culture eats strategy for breakfast’ is derived from this understanding. In this respect the CC paradigm has been very important.

However, from a scientific-anthropological perspective, it is worth asking: What is the relationship between what we call ‘corporate culture’ and Culture? Is it enough to simply say that culture is made up of those thoughts and feelings that bind people together? As I suggest in the article, the humanistic perspective on culture (the CC paradigm) is insufficient to the task of fully understanding the evolution of culture as it is unfolding today in the sharing economy.

The Science of Culture

Perhaps the CC paradigm is effective in describing the policies and prodecures within a particular company, but those descriptions remain disconnected from what we know about Culture in a broader sense. Interestingly, advances in brain science are contributing to the advancement of anthropology and our understanding of culture as much as they are to the discipline of psychology.

In his book, Wired For Culture, evolutionary biologist Mark Pagel explains how culture is much more than values and beliefs. Culture, according to Pagel, is the very mechanism that has enabled humans to evolve successfully as a species. Culture is a capacity wired in the human brain, and is the mechanism by which humans observe others, learn from others, mimic others, communicate with others, and share and store information within and across generations. If the capacity for culture is the hardware, then shared, stored, and passed-down information and knowledge is the software that drives the hardware. The collective store of knowledge and information, differing in different parts of the world, is what enables groups to more effectively adapt to their specific environments over time. In this respect, culture is a central driver of human evolution, more than just a collection of values and beliefs.

Culture necessarily exists at two levels at the same time. On the one hand it is a genetically wired capacity (the ultimate human capacity) that resides at the individual level in the brain. On the other hand, by its very design, it is a social capacity because it depends on interaction- observation, learning, communicating, transmitting- between people in groups. This basic fact, that culture is both individual and social at the same time, has thrown off scholars for years.

Culture’s power in the course of human evolution is its role in harnessing knowledge and ‘know how’ over the generations that empowers each successive generation with the cumulative knowledge of preceding generations. At the individual level, though, culture is equally powerful. That is, each individual is designed for culture and the related social connections and communities that actually complete the ‘individual->collective equation.’ Herein lies the human need for belonging to some form of group. What originated as a survival skill within humans has become an individual need for cultural identification. The actual social substance that fulfills the individual need is arbitrary. That culture is an individual need, and the social expression of a collection of needs, is challenging for scholars who seem to want it to be one way or another.

Culture Needs

If humans are wired for culture, and thus have an innate need for cultural identification (‘culture needs’), and the specific individual-to-social attachments are arbitrary, an interesting question arises: To what extent do the relationships, collaborations, attachments, securities, etc., that come from working in a company fulfill the ‘culture needs’ of the individuals involved? That seems to have changed over time. It is perhaps the case that from roughly 1950-1990 there was a broad alignment between mainstream cultural values and the expressed values and commitments inside specific companies. During this “golden age” of company culture, the HP Way or being an IBM Man possessed great valence in terms of fulfilling employees’ culture needs. As Jim Collins has argued in his series of books, ‘great companies’ have often been successful through time because of such cultural alignment.

Fast forward to the present, and the alignment between individuals’ culture needs and the expressed values and beliefs of many public firms is dissipating. Outside of regions such as Silicon Valley, there is a visible chasm between the values of young knowledge workers and the ‘corporate culture values’ of the companies for which they work. The golden age of corporate culture is over, and the employer-employee relationship is now mostly transactional The once vaunted and even sacred bond of corporate culture is giving way to a new sharing economy paradigm of cultural identification. The center of gravity in the sharing economy is the relationship between the individual knowledge worker and her/his primary community, not so much with their employing organization and its engineered ‘shared values and beliefs.’ As a source of income and job security, large firms remain central to the careers of young knowledge workers. At the level of culture need, however, they no longer win the hearts of minds of members of the rising generations. To understand where that cultural identification is occurring, we must now look outside the firm.

Endogenous and Exogenous Organization

The CC paradigm assumes what anthropologists call an endogenous model of culture. Endogenous social forces are internal to a specific group, they arise from inside the group, they are shared internally, and the default assumption is that the overall cultural experience that people have in the group is defined by those internally circulating practices and values.

An exogenous model of culture assumes that, more often than not, much of the content (behaviors, practices, material artifacts, values, etc) experienced inside a group is actually derived from outside the group. Whereas an endogenous model assumes that culture is insular and resistant to change, an exogenous model assumes an open, porous, and always-change environment.

For roughly a generation, around the same time that management scholars and consultants picked up the culture concept, academic anthropology has assumed that culture is largely defined by exogenous forces. Travel, trade, investment, and now the internet have opened the transmission of ideas and values to such an extent that the culture concept itself inside anthropology has lost much of its currency. In the corporate world, on the other hand, the somewhat dated and abandoned perspective of interpretive anthropology (translated as “the way things are done around here”), remains the orthodoxy. In order for firms to continue to effectively understand and leverage the power of Culture, it is important to understand the dynamics of culture today through the lens of anthropology.

The New Realities of Culture

There are five emerging realities regarding culture that need to be understood before firms can make full sense of the sharing economy (SE) paradigm and its cultural challenges.

  1. Corporate Values, Shareholder Values

The manifest (vs. espoused) values of many of our pubic firms are already oriented externally towards the institutional investment community. The core, defining value of most public firms is shareholder value in the near term, not the often humanistic-sounding statements that make up the culture talk of companies.


2. Gen Y and Gen Z Have Checked Out

While young knowledge workers need the reliable income associated with corporate work, public companies no longer win their hearts and minds. Private firms are often much more effective at this than are public firms. The culture needs of young knowledge workers are fulfilled externally via social networks and distributed personal and professional communities that have little to do with their employers.

3. Endogenous Systems are Slow to Change

Innovation and industry disruption are occurring through multi-party platforms and platform technologies that rely on greater trust, transparency, and collaboration than internally focused public companies are comfortable with. Sharing economy companies (Lyft, Airbnb, Uber, WeWork) have built exogenous business models that more tradition-minded companies now must compete with.

4. Business Culture is Corporate + Freelancer

It is estimated that Millennials will have between 10-15 jobs over the course of their careers. This means that, to a certain extent, they are merely passing through their current assignment (job). This is part of the oft-cited Bureau of Labor Statistics stat that by 2010 40% of the US work for will be engaged in freelance work. The two career realms- corporate and solo- are now part of the same system.

5. Coworking Spaces Host the Emerging Culture of Business

Both metaphorically and practically, the growing industry of coworking spaces is playing host to and giving birth to a business culture that is: 1.) external to companies (exogenous); 2.) made up of large firms, SME’s, startups, and freelancers; 3.) less rule-bound and thus capable of nurturing organic relationships (vs. compulsory corporate ‘bonding’); 4.) cross-company, cross-industry, and cross-disciplinary to an extent never seen before.

The Case of Coworking

As a relatively young industry (b. 2005), most people still associate coworking spaces with young freelancers and startups. This is indeed where the coworking industry originated. This is no longer the case. For example, in 2010 85% of members of coworking spaces worldwide were freelancers or employees of startups. By 2017 only 39% of coworking members were freelancers or startups. The difference over those seven years is the rapid growth in the number of large firms who now pay for employees to work from coworking spaces such as WeWork. Corporate users are now the fastest growing segment of users in the coworking industry.

A few examples from early 2018 are:

  • GE
  • Silicon Valley Bank
  • Salesforce
  • Dell
  • Unilever
  • Google
  • Microsoft
  • Samsung
  • Uber
  • Amazon
  • KPMG
  • Lyft
  • HSBC
  • Merck
  • The Guardian
  • Accenture
  • Marriott
  • Airbnb

To date, coworking has largely registered as a business opportunity for the real estate industry. Much of the narrative has centered around the phenomenal growth of WeWork, the industry leader. WeWork has raised over $4B in funding and is currently valued at around $20B. They have 295 locations in 61 cities around the world, and have largely defined the industry in the way Starbucks has the coffee shop industry.

Of the 27M square feet of office space in the world that is managed as coworking space, WeWork currently operates around a third of that (10M sq ft). Naturally, because it is a new type of sub-letting business model, coworking is fairly classified as part of the real estate industry. However, given the scale of coworking’s growth and in particular the recent growth in the number of corporate members around the world, coworking is also becoming an important site for the development of business culture in the sharing economy.

Research conducted by Emergent Research points to further growth in the industry.

2010 2017 2022
Coworking Spaces 436 14,417 30,432- Avg. annual growth rate of 16.1%
Coworking Members 100,000 1.7 million 5.1 million- Ave. annual growth rate of 24%


Nearly as many people cowork (1.7 million) as work at Walmart (2.1 million), the world’s largest private sector employer. According to Emergent Research, more than double the number of people will be coworking in four years (5.1 million) than there are Walmart employees. Currently, in some of the larger coworking locations with 60,000-100,000 sq ft under management, employees from hundreds of companies cowork under the same roof. Unlike their counterparts who work at their company office, these knowledge workers are participating in (and defining) a new form of business culture. This is what exogenous culture looks like in the sharing economy.

Thus far I have merely described coworking’s growth and its potential to partially reshape culture in business. However, most company employees do not (and likely will not) work out of coworking spaces, so why should we get ahead of ourselves? The more important questions, which I turn to next, are: Why are so many people attracted to coworking and why is it so successful? Why is it growing so fast? What is it that people like about it, and why do they opt to return to conduct their work there on a daily basis?

Life in Camp

Seventeen years ago, London Business School professor Nigel Nicholson published a landmark article in the Harvard Business Review entitled, “How Hardwired is Human Behavior?” Nicholson made the case that the relatively young discipline of evolutionary psychology (EP) be incorporated into mainstream management thinking. He expanded on this in his book, Managing the Human Animal. In some respects the article and book proved to be controversial. That said, EP is part of the brain science revolution, and is thus in the midst of the paradigm shift in psychology. I do not defend many of the deterministic claims of EP, but I do think that Nicholson raises important observations that are relevant to modern organizations.

Perhaps most powerful is EP’s basic premise that, as a species, humans were not designed to be sedentary cube dwellers. The legacy structure of knowledge work, where each employee is assigned to a fixed workstation where they are expected to work every day, runs counter to the human need for mobility, movement, variation, autonomy, and choice. The traditional corporate office (and systems and processes) effectively constrain people from physically and emotionally embracing their natural rhythms. Coworking environments, to the contrary, allow people to move about, work in a variety of different spaces, and work according to their own rhythms. In this regard, coworking spaces are more aligned with human nature than their industrial/corporate counterpart. Young knowledge workers of the sharing economy, who already express cultural values around autonomy, choice, flexibility, and mobility, are a natural fit for the coworking environment.

There is an important organizational dimension to this as well. As Nicholson suggests, “groups work best when they can organize around things that really matter to them and their wider community.” For young knowledge workers, multi-company coworking communities house important elements of their ‘wider communities,’ and in this their culture needs are more organically met. Autonomous corporate groups that are empowered to get on with their work in the context of other corporate groups also doing their own thing, appear to have the best of both worlds. According to Nicholson, “Groups fail in organizations because they are in organizations. They reflect the surrounding culture- rigid, formal, and highly politicized in many cases.” Freed from the mandatory culture engineering of the CC paradigm, corporate teams and individuals working in coworking spaces are allowed to co-participate in the creation of a new type of multi-company business culture that is in some respects liberating, while in other respects confusing.

Not only do coworking environments allow people to work more organically according to their own rhythms, there is also a potential productivity premium at play as well. Nicholson talks at length about the innovative potency of regional clusters such as Silicon Valley. Something like this can occur in coworking communities. Clustering “forms the basis of a tribelike agglomeration of interlocking quasi-kinship groups of people who can circulate and innovate as they move around.” Few firms have explored the potentialities for how they might leverage the innovation opportunities that might exist in the new business culture.

Getting Culture Right Today

It is unlikely that firms will shift en masse towards coworking anytime soon. However, there are cultural lessons that can be learned from coworking’s success. Coworking is, in addition to being a new leasing model in the real estate industry, a new modality of work. At its core, coworking is grounded in the emerging cultural values of the sharing economy- choice, autonomy, flexibility, mobility, community, trust, collaboration, transparency, and platform technologies. Empowering young knowledge workers to express and embrace these values in their work is key to managing culture in the sharing economy.

  • Reject ‘Culture Types’

The vast majority of culture advice and consulting is premised on the idea that there are a certain number of culture types (or colors), and that a culture survey will help you understand what ‘type’ of culture you have and how to get to the type you desire. These are the bread and butter of the CC paradigm. This is counterproductive, and reinforces an endogenous mindset about companies, their people, and how they interact with outsiders.

  • Embrace Crowd Cultures

It is important for firms to acknowledge and accept that their young knowledge workers’ culture needs are not likely to be fulfilled by HR efforts at culture building, and that is OK. This does not mean that culture is any less important for them; rather, that they have their own identifications and they will be more ‘themselves’ and more engaged if they can be surrounded by the values of their own exogenous social connections.

  • Leverage the Clustering

Whether within the firm or externally in places such as coworking spaces, allow employees to ‘cowork’ with people from other industries and companies on a regular basis. If you put some structure around this and encourage employees to look for cross-industry or cross-company collaboration, new product, service, or business model innovations might develop more organically and inexpensively than is currently the case.

  • Love the 40%

Current low levels of unemployment are partly a function of a growing economy and partly a function of the fact that many knowledge workers have opted out of traditional corporate employment and work for themselves. This means that a large talent pool is out there that does not want (expensive) benefits, but wants to work with you on a specific project. If you think of your cultural footprint exogenously and inclusively, you can attract top talent more cost effectively.

  • Workspace Matters

Enabling knowledge workers to work according to their own rhythms, in such a way to get their best work, is not rocket science. Too often firms equate ‘workspace’ with exquisitely expensive designs and furniture. Legacy thinking and costs make the shift to coworking-like work environments cost prohibitive. Young knowledge workers want flexibility, collaboration, and productivity more than they want monuments to design. Empower young talent to bring their own design sense in-house.

The institutional inertia of the corporate culture paradigm remains strong. For many managers and consultants, the sharing economy and its emergent cultural values are still pesky upstarts. The very notion of ‘unicorn companies’ implies that some still believe that a real paradigm shift is unlikely if not impossible, and that sometime soon the bubble will burst and the economy will reset to normal Such is the nature of paradigm shifts and the resistance to them. Because of this, I do not anticipate the currency of the corporate culture paradigm fading very quickly. However, if you step into a WeWork location in the middle of a busy weekday and see thousands of knowledge workers from hundreds of companies coworking together, it begs the question: What is the culture of this place? No ‘culture types’ will be found, just culture-bearing people working together.


This article authored by OpenWork Agency Partner, Drew Jones, PhD.

OpenWork Partner, David Walker- panelist at 18HX

Please join PDR for 18HX— Eighteen Hacks

Enjoy craft drinks, small bites and inspiring conversation among friends.

18HX brings together a panel of six expert “hackers” who traffic in Cultural Capital. Each of our guests will reveal how they are actively reprogramming the realms of Hospitality, Social Impact, Brand Identity, Data Science, Real Estate and Workplace Engineering.

Come learn eighteen inspirational practices to carry with you into 2018.

Hacker:  noun  hack·er  \ ˈha-kər \ A disrupter of legacy networks. An expert at programming and solving problems; who cleverly exposes the weaknesses of a system and improvises solutions that rattle convention.



Brian Carrico
Co-Founder of The Guild
Brian Carrico is the Co-Founder of The Guild, an Austin-based hospitality company. The Guild is a technology-enabled hospitality company with a design focus that relies on a dedicated and motivated team to deliver amazing guest experiences. Brian believes that the company will only achieve its lofty goals by creating a rewarding workplace with a team focused on guest service.


Royal Frasier
Notley Ventures Director of Communications & Founder of RAD Office Tour
Royal is the Co-Founder & Executive Director of RAD Office Tour, Austin’s first Workplace Design Tour taking place in May 2017. Her background combines community impact, marketing and PR communications. Currently she consults on communication strategies for architecture, design and technology companies such as NBBJ, argodesign, CognitiveScale and the University of Texas for Integrated Design. Royal also leads communications for Austin Design Week.

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Julie Savasky
Associate Partner at Pentagram Design
Julie Savasky is an Austin-based graphic designer. After 22 years at international design consultancy, Pentagram, she now operates her own design practice which focuses on solving client’s communication problems through storytelling, brand awareness and culture. Her body of work includes editorial design, identity, strategy, web design and environmental graphics and has won awards from Graphis, Communication Arts, Society of Publication Designers, and Texas Institute of Letters among others. Julie                                                                holds a Bachelor of Arts degree from Southwestern University.

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Annahita Varahrami
Program Manager at IBM Cloud Garage
Annahita joined IBM in 2013 after an 8-year career as a clinical social worker in nonprofit and private practice. She brings critical thinking coupled with human- centered approaches to develop programs focused on cultivating rich, compassionate culture within IBM Cloud Garages worldwide. Annahita’s ability to connect with people has allowed her to successfully lead client-focused Garage initiatives, driving new business and opening new locations with innovation as a priority.

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David Walker
Partner at OpenWork Agency
David Walker is a Partner at OpenWork Agency, a global workplace strategy consultancy with roots in the coworking industry.  David brings nearly a decade of experience working in the coworking industry. Prior to co-founding OpenWork Agency, David co-founded and led operations at Conjunctured (2008-2014), one of the original coworking communities in the world. Conjunctured received global acclaim for being a unique community and innovative workspace alternative.

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Jackie Wheat
Principal + Director of Design at PDR
Jackie Wheat, is the Design Director at PDR and leads both the Interior Design and Visual Communication teams.  Her teams transform program and strategy into design solutions and help clients identify their brand while creatively infusing it into their workplace.  Jackie has a passion for thoughtful placemaking that connects people and expresses the client’s vision, identity and culture. The results are tailored, sensorial environments that both inspire and leave a lasting impression.

Kindly RSVP here by February 8, 2018.

See you soon!

Thursday, February 22, 5:30 pm – 7:30 pm
PRINTpress 1209 E. Cesar Chavez St., Austin, Texas 78702