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Corporate Coworking — Is It Calculated Brilliance, or Foolishness?

by
Dr. John Sullivan
Apr 15, 2013, 5:36 am ET

zapposThe concept of “corporate coworking” is among the boldest corporate people management concepts of the decade. If you’re not familiar with the concept, it varies from traditional coworking, which is a well-established concept where a group of startups and entrepreneurs share a facility that supports their getting launched.

There is a new model, which I call “corporate coworking,” where the employees of a major corporation share a facility that also houses startups and/or employees from another corporation.

The primary goal is not to save real estate costs, to provide space for expansion, or to provide remote work options. The objective is to generate and test new and innovative ideas.

On the Surface, it May Appear to Be a High-risk Approach

Most corporations are risk adverse, so even the thought of placing corporate employees (with their proprietary information) alongside employees from other corporations and startups appears on first glance to be totally crazy. Crazy for no other reason than the fact that almost every corporation spends thousands of hours and millions of dollars trying to shield its ideas and innovations from everyone. Some firms like Apple go to extreme lengths to restrict employees from sharing product ideas even with other employees, no less outsiders. Given that well-established corporate practice of secrecy, you can only expect resistance from most corporate lawyers, product designers, and business intelligence professionals who have not calculated the ROI of the practice.

Sharing a Common Space Increases Innovation and Productivity

If you don’t live in the Silicon Valley, you might not know why so many successful firms like Facebook, Google, Twitter, and Apple start or relocate here. The compelling reason is because of the energy and the competition that exists when so many smart and innovative people work and interact in a relatively small geographic space. In fact, even if there were no interactions between employees of the different firms in the Silicon Valley, the mere presence of so many smart people working close by would be an energizer just by itself. Obviously having so many great firms so close together also creates intense wars for talent but that one detrimental factor is more than overcome by the positive value of the competition felt with employees from other firms.

The same can be said for the increased creativity that firms find by locating in major arts and entertainment areas like New York City and Los Angeles. The same increase in innovation and idea-generating can occur using “corporate coworking” when your employees are co-located with strangers from startups and other corporations. To support that contention, I offer a recent survey by Deskmag that found that 71 percent reported a boost in creativity since joining a coworking space and 62 percent reported that their standard of work had improved. Also 64 percent were better able to complete tasks on time and 90 percent of the coworkers reported an increase in self-confidence because they now worked in a supportive community.

Use Is Growing Among Corporations

Even though it might initially appear to be an extreme idea, you might be surprised to learn that corporate coworking is a growing concept. The biggest proponent for the corporate version of coworking has been Tony Hsieh, the CEO of Zappos. His stated goal is to make Las Vegas the “coworking and co-learning capital of the world” with his 3 C goals of collision, community, and co-learning. He is expanding the concept not just to include the Zappos offices but also to increase serendipitous meetings in the surrounding areas. The corporate coworking concept has already been successfully used by a good number of firms, including low-tech firms like PwC, Steelcase, Accenture, and Amway. Tech firms like AT&T, Ericsson, Twitter, and Plantronics have tried the concept and Yahoo has for years shared its brick house R&D building with other firms.

The Primary Goal Is to Generate and Test Ideas by Harnessing the Power of a Diverse Group of Non-employees

The primary reason for “corporate coworking” is to generate and test new ideas. Obviously, corporate employees residing in a coworking environment would be expected to “crowdsource” new ideas as a result of their increased serendipitous interactions with the employees of other corporations and startups. It is also true that the availability of individuals from extremely diverse backgrounds also would be expected to also provide an equally important opportunity to “test” new ideas and to get direct criticism of those ideas from non-employees (that are likely to have a more neutral perspective). Incidentally, if you’re wondering if revealing your ideas to strangers could result in “idea theft”, the answer is that it can but that you can minimize the likelihood of that occurring by taking advantage of your tremendous corporate resources and by designing execution processes that are extremely fast, so that you can produce the product or service well before any competitor has time to catch up.

Additional Benefits From Corporate Coworking

The additional nine benefits beyond capturing new ideas and vetting your own can include:

  • Recruiting opportunities – you should encourage your employees to scout out and assess the talent of highly desirable entrepreneurial individuals who are working in their facility. This effort can help provide your recruiters with leads, or alternatively your employees’ hiring recommendations can go directly into the employee referral program.
  • More diverse and powerful interactions – research at Google has demonstrated the tremendous power of serendipitous meetings between non-team members for increasing collaboration and innovation. However, because most interactions in the coworking environment are with non-employees who are likely from more diverse backgrounds and perspectives, exchanges with them can be even more powerful and beneficial.
  • Increase learning — accelerated interactions also improve the amount and the speed of learning. This is because the interactions between corporate employees from completely different industries and work experiences lead to much broader learning, and the learning from startup employees tends to be more on the leading edge.
  • Energized employees — many corporate employees find the coworking environment to be exciting and energizing because they are exposed to new surroundings, additional networking opportunities, and new people. Working alongside hundreds of startup employees and innovators can also be extremely motivating because learning about the success of others can cause competitive individuals to work harder in order to keep up.
  • Leadership development – because the coworking environment involves building relationships and influencing many diverse individuals who serve at different levels, the experience may further develop the leadership and team skills of the corporate employees that you place there.
  • Learning about the processes of entrepreneurship, collaboration, and innovation – working alongside dozens of startups and perhaps hundreds of innovators increases the likelihood that your corporate employees will learn more about how to successfully collaborate, innovate, shorten time-to-market, as well as how its employees could become more effective intrapreneurs.
  • Capturing best practices — because startups are generally lean, agile, and fast, larger corporations may be able to learn from and successfully adopt some of their business processes. Because other industries will also be involved, you increase the likelihood of learning the best practices and solutions to problems that have already been solved in other industries.
  • Increased retention – placing “at risk” corporate employees in a new environment with an increased opportunity for learning, idea generation, and innovation may reduce any thoughts that they had of leaving the corporation. Obviously managers must also be aware that their increased exposure to other companies and even startups will result in others trying to recruit away your employees.
  • Investment and partnering opportunities — if your corporation is interested in partnering with other firms, this target-rich environment will allow you to build relationships and to eventually increase the number of those partnering opportunities. If your firm has an interest in investing in or buying promising startups, your current employees working at the site can help you identify hot potential targets.

The Four Available Corporate Coworking Models to Consider

If your corporation is seeking to expand its innovation and idea generation efforts, the first step is to fully understand the different variations or models of coworking and which ones would best fit your corporate needs. If you exclude the most common one, the startup incubator model, where major corporations are not invited, you will find that there are four basic coworking approaches left to consider.

The first is the “unrelated corporation sharing model,” in which a group of corporations share a common space that none of them own (GRid70 in Michigan is an example).

The second model is the “friends of the corporation model,” where firms that you know and have a relationship with (like strategic partners, developers, or even customers) are invited to share your corporate office space (AT&T’s 3 Foundry innovation centers are an excellent example of this approach).

The third model is the “startup only model” where related or unrelated startups are invited to share corporate office space (Zappos is an example).

And finally the fourth model is the “startup sponsorship model,” where a company sponsors a coworking facility. An excellent example of this model is Google’s impressive “campus” coworking building in East London, where Google employees don’t actually work at the sponsored facility. However, their employees can capture ideas at events that Google sponsors there and ideas can also be captured when Google’s employees are serving as volunteer mentors to the building’s occupants. If you decide not to use your own facility, you’ll find that there are many vendors that can provide coworking space for your employees. Most operate in a single city but several including Regus, WeWork, and NextSpace operate across several cities.

Final Thoughts

As more corporations calculate the extremely high margins and profits that result from having industry leading innovations in your products and services, more executives will begin to fully appreciate the high economic value of improving collaboration by purposely increasing the number of serendipitous interactions.

Most will follow the Google approach using workspace design to increase employee interactions. Others, especially the extremely conservative ones, will realize that rather than going through a complete building redesign, they can quickly and inexpensively get a significant boost to their learning, idea generation, and idea-vetting efforts by placing a relatively small number of employees in a corporate coworking environment.

Unfortunately, before they will be able to see those results, they will probably first have to do battle with a number of lawyers and HR and business intelligence employees who mistakenly assume that the value of keeping secrets is higher than the return from increasing learning and innovation.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Keith Halperin

    Thanks, Dr. Sullivan.

    First of all:
    IMHO, before companies spend effort to try and capture good ideas, practices, etc. from outside the company, they should work to foster an attitude where everyone from the newest entry-level employee through the most senior CXO is actively encouraged to present the same; as I’ve mentioned, after a few weeks the lowest newbie is likely to know more how to improve his/her job and its environment than any number of outsiders do.

    Secondly:
    As I’ve often mentioned- If a rich and famous “Employer of Choice”(EOC) does something, that’s probably a good reason to extra-carefully examine what they’ve done, since just because it works for them doesn’t mean it would work for you, particularly if you’re NOT a rich and famous EOC.

    Finally:
    I understand there’s a term for a location where employees from different corporations interact and share ideas, discussions, etc. It’s called a “bar”.

    Cheers,

    Keith

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