Workplaces of the Future: Flexibility Isn't Enough | Jamie Hodari

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Jamie Hodari, CEO and co-Founder of Industrious, talks about welcoming Gen Z into the workplace and why flexibility isn’t enough to create the workplace of the future.

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Ceci [00:00:16] Hello and thank you for tuning in to the Allwork.Space Future of Work podcast. Today we have Jamie Hodari with us. He is the CEO and co-founder of Industrious, the largest premium flexible workspace provider in the United States. Jamie, welcome.

Jamie [00:00:36] Thanks for having me.

[00:00:47] So today we want to talk to you about the future of work and how the workplace is changing to accommodate the emerging needs and demands of the new generation of the workforce. So I’m just going to dive right into this. Jamie, is Industrious ready to receive Generation Z in the workplace? And if so, how?

Jamie [00:01:08] So that is the first time that someone has asked me that. So I’m going to have to kind of pull my thoughts together here on the fly.

I think we are. And I think it’s an important question, you know, because people have spent the last 10 years saying, is the workplace ready for millennials and ready for millennials? What do millennials want? Well, I’m a millennial and I’m almost 40. You know that question is getting a bit long in the tooth. And I think at this point, it’s relatively clear what the workplace trends are and what the demands are that millennials are placing on work environments.

And it sort of feels in a certain way like as soon as the workplace industry got their head around that. Well, it’s on to the next thing because there’s going to be an enormous wave of Gn Z workers entering the workplace. And my sense is that there are things that are unique about Gen Z,in a lot of ways they represent almost an acceleration of the trends you’ve seen with millennials, particularly around the demand for more inclusive, more diverse workplaces and workplace environments. And the desire to integrate their workplace experience into their broader life;hat instead of going upstairs at eight thirty a.m., sitting at a desk and leaving at six thirty and having to live the rest of their life, the going to the gym, going grocery shopping, the meeting up with friends into the spaces that exist before eight thirty and after six thirty or before nine and after seven or whatever it is,wanting to stitch together their life in a more seamless way throughout the course of their day. I think that will be doubly true for Gen Z, for a generation that’s grown up for their entire lives with access to information and to different experiences.here the boundary lines between when you’re texting with friends and when you’re in school and when you’re reading for pleasure and when you’re having to sort of, you know, respond to professor, etc. I think we’re are much more blurred than when I was in middle school or high school, for example, and that will translate very much into the type of workplace environment they expect as well.

Ceci [00:03:22] Yeah, no, I definitely agree with you that Gen Zwill demand more flexibility. And I think it’s not just Gen Z. I think that’s one of the things that they share with millennials, because there’s also a lot of talk that millennials, Gen Z doesn’t want. But I think flexibility is definitely something that people will increasingly start to demand. I mean, I cannot imagine if someone told me right now that I had to go back to work in an office, the traditional nine to five. I mean, there are days I wake up at five thirty, I start writing. And then there are days that it’s 11:00 p.m. and I’m still working.

So I think that’s definitely a big trend. And then one of the things that there’s also been a lot of talk about is how there will be a lot of generations together in the workplace. And so I assume Industrious has a wide variety of members, so different professionals, different generations. How are you able in Industrious to handle the different workplace needs and demands of this varied workforce?

Jamie [00:04:26] So I think that’s been a core tenant and a core component of the business that we’ve tried to build for a very long time now;creating a space or series of spaces that feel comfortable and welcoming and inviting to people of all ages, races, different personal preferences for the way they spend their time for the way they interact, etc.. And I think that’s actually one of the advantages of having workplaces delivered by experts like us rather than when companies try to do it themselves. And that’s one of the advantages of companies, you know, 50 companies having their own private workplaces, but also sharing lots and lots of amenities. As a result, you’re able to create a wider diversity of space types, atmospheres, modes of interaction.In the simplest possible sense, if you’re a 42 person company and all you have is your space for 42 people all day, every day, you’re not going to be able to throw events that are meaningful to or interesting to the widest possible array of employees. You’re not going to be able to deliver the variety of space types and experiences that would be meaningful to or exciting for all of your employees. At 42 people, you probably have a big open floor plan, you know, pit of desks and a couple of conference rooms. Well, if those same 42 people have a private suite for them, but it’s plugged in to a hundred thousand square foot complex that they share with 50 other companies that has focus rooms and lounges and speakeasies and can have lunch and learns during the day that are focused on career development and a political debate in the evenings, et cetera, et cetera, et cetera.You know, it goes without saying that that context is almost invariably going to be a more inviting, more stimulating environment to a wider variety of people. If all you can do is serve your four employees and nothing else, you basically have to pick a profile of employee type and do your best to to hit that particular profile rather than being able to hit 40 different profiles because of the scale you have and the shared amenities.

Ceci [00:06:59] And so you talk about experience and amenities. And I feel like these are two topics that have been increasingly popular in the future of work conversations. People everywhere are looking for experiences. And so what I want to ask is what elements in the workplace make for a great experience other than the amenities that they add value and they create this like different types of opportunities. What are other elements that companies should take into consideration when they’re trying to create a unique workplace experience? How does Industrious do that?

Jamie [00:07:34] I will try to limit the answer to the workplace experience because obviously a lot of what goes into whether someone has an engaging day at work is about their relationship with their manager or their colleagues, and there are certain things that certainly set outside the control of a workplace provider like us. And you can kind of get it, get ahead of yourself claiming that you have the ability to influence every component of what makes for an engaging, productive day at work, but as far as workplace design and the delivery of the workplace experience, perhaps the simplest way to describe it would be that the best way to work is activity-based working.

Meaning if you take the average white-collar worker, you know someone who works in finance or, you know, a lawyer or someone who works for a PR firm, you can break down the way that they spend their day or the way that they spend their week, and say that, you know, roughly there are six, seven, eight different types of work they do throughout a week. There is responding to emails, there is sitting down and writing a very complex investment memo,there’s casual internal meetings, there’s large training sessions, there’s formal external meetings, et cetera, et cetera. And you can say, look, there’s seven, eight different types of work and there are optimal spaces or optimal types of environments for every one of those things.

The one thing we know for certain is the worst way to work is to sit at a desk and an open floor plan environment with someone one foot to your left and one foot to your right, as you go through all of those different types of work. That is demonstrably, no question, will result in an unproductive, bad workplace outcome. And unfortunately, at least in the United States, even though we can all acknowledge that’s a bad way to work, that’s how 95 percent of office workers work. So the better way to do it is you have focus rooms for when you have to go and work on that investment memo, and you can be at your desk when you’re working responding to emails and you have brainstorming or creative conference rooms or when people are doing more casual meetings, and you have more formal board rooms for what people are doing, you know, more formal external meetings. And what you can do is, and this is going to sound a little wonky at first, but I think the average listener who works in an office environment, if they close their eyes, can probably picture this, is you can take someone and say, OK, I assume that at their desk, that’s their home base. How far are they willing to travel to take an unscheduled phone call? Maybe it’s 10 feet. How far are they willing to travel to take a scheduled phone call? Maybe it’s 30 feet. How far are they willing to travel for a one on one meeting, for an external meeting, for a board meeting, et cetera. Maybe it’s 50 feet, 80 feet for the board,whatever it is. And you can map out an office environment with that person at the center of it;that would be the optimal work environment for that person. And then you replicate that for every person in the office and then you replicate that for the 50 companies sharing the space and you end up with this enormous optimization problem, design problem and logistical problem. But if you can solve it appropriately, you will have developed a workplace environment that 99 percent of the time will deliver a better, more productive day at work than when the average person just sits in a giant open floor plan environment with no access to different space types and no logistical support all day, every day.

Ceci [00:11:04] So it boils down to giving people choice, sort of. ot constraining them to one specific work environment and work model, but just giving them enough choice and control of how and where they work.

Jamie [00:11:17] I think choice;I think that’s a great way to put it. In fact, one thing we often say is it’s hard to measure productivity. It’s hard to say that there’s one way to define productivity. But one thing we would say is that. Order for people to be productive. Most people would accept that you have to be comfortable, you have to be in control or empowered,you have to be focused so free of distractions, and then periodically you have to be inspired. And that second category, feeling in control or empowered,that’s very important to feel like you have the choice of where to be. You have the choice of when to be interrupted. And I think people oftentimes don’t acknowledge how much they actually feel out of control in their work environment, that they feel like distractions, conversations, interactions are foisted on them without them getting to choose them. And that can be really, really, really corrosive to the workplace experience and to productivity more broadly.

Ceci [00:12:23] And so you talked about how difficult it can be to figure out how much people are willing to go for different tasks and different things. And then you talk about control and empowerment. And is there a role of technology in all of that? Do you think it can actually help designers, architects, flexible workspace operators, better design and fit out the space?

Jamie [00:12:49] I think technology is quite helpful in supporting design, but I think there are certainly companies and there have been times where I’ve seen people overstate the state of play on that front.

I don’t believe that, you know, algorithmically driven floor plans, for example, yield the best outcome. I think technology is very important delivered the physical workplace environment, in how people navigate it. You know the world I just described, 50 companies are sharing a complex mix of private and shared spaces and environments that that need to be bookable and accessible just in time,and the elevator system needs to know that you are actually your next meeting is four floors away and you have to have access to that meeting room. You know that you know when you want it, when you want it, et cetera. That kind of stuff, I mean, that sounds maybe mundane, but that requires a complex set of digital tools in order to unlock. Or if you try to do it in a more analog fashion, it doesn’t work. You know, the complexity of delivering in a workplace environment where all of a sudden 50 companies are sharing various resources and the types of spaces people have access to is much more varied and much more complex than justI sit at my desk all day. That requires like customer-facing apps, backend, you know, physical and technology integrations, et cetera, to make that work.

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Ceci [00:14:27] Yeah. That that definitely makes sense. And I agree with you to certain extent that technology can make it easier to navigate and it can provide people more control of their workspace, so they can adjust the temperature, the lighting. I think those kinds of things, like you said, they’re mundane and they’re small, but I do think that they make a big difference. And so I’ve noticed that there are two key themes that you’ve talked about here.

It’s been flexibility and choice and just basically making sure that you’re providing a workplace that is able to cater not just to different generations, but different types of tasks. And I do believe that in the future of work, we’ll see job roles and job tasks evolving significantly. I want to ask this very concretely, what are some key changes that you believe Industrious and other companies will need to make in the workplace to adjust to the emerging roles that are likely to come up in the near future?

Jamie [00:15:29] So two things. One is what we see there is beginning to be a move towards and I think this will accelerate over time is within any given workplace, to your point as the,as the definitions of different rules start to blur and as the nature of work becomes in certain ways less specialized and more focused on generalists and more focused on teams of people working collaboratively.This is not, I don’t just mean this in a kind of mushy qualitative way, I think there is an enormous amount of data to suggest that the amount of time the average American office worker spends in interactive rather than independent work; in collaboration, rather than working alone on their computer is rising very quickly for a whole host of reasons.

And as a result, what you see is in the average office, the number of hours in a day that all of a sudden the finance team and the design team have to huddle up and work on a project together, or six people, two people from H.R., two people from the network expansion team and two people from the design team need to go spend four hours together working through something. As that increases and increases and increases, when it eventually means is you need to have workplaces with more modular environments that can work, where more is movable and less rigid over time.Meaning, you know, at the most extreme level, meeting rooms can pop up and disintegrate on a moment’s notice or desks can be clustered or broken up, you know, in a minute or two to create those clusters of people rather than having a rigid fixed set ofthis is where everyone sits,this is where they always sit; they never move around. And none of that can physically change. I think that sounds a little bit futuristic or maybe a little chaotic today,but by seven, eight, 10 years from now, I think that will be the norm in a lot of offices.

I would zoom out and say the same is true at the city level. And this is where operators like industrious have perhaps a bit of an advantage or a front-row view to this.We’re aware of how much once we get to 10, 12 locations in a city, people always underestimate how much a company will say, OK, I’ll be based in Evanston in suburban Chicago or I’ll be based in downtown New York, but I’ll hold meetings in midtown or we’ll do a session with an external partner in Hudson Yards. And they start to use essentially the city as their campus. And so not only with any given officewill there be more movement, more, you know, less sort of fixity The same will be true at the at the city level. I think people will use networks of offices across cities rather than having to show up to the same place all day, everyday and not having an ability to take advantage of different parts of the city. And that’s where a network like Industrious can be very helpful for a company.

Ceci [00:18:58] You actually just said something that I’ve been thinking about a lot, and it’s that I do believe that in the future flexible workspace providers that will be the most successful are the ones that have a solid regional footprint. And it goes with cities,ut I think it also has to be regional, in some cases international, so that they can support the different teams, satellite teams, international teams of big companies. So I do think that you definitely, at least Industrious has that going for it.

Jamie [00:19:35] And I will say that has translated like oftentimes, you know, every growing company will say in the press, they’ll say to investors, you know, the bigger we get, the better we get, you know, and we have network effects and returns to scale and all of these things. And yet you look at their, you look at their numbers, and that isn’t true.

In fact, oftentimes companies margins get worse as they grow. Their customer retention goes down as they scale. And at least from what we’ve seen at Industrious as we’ve gotten bigger and is as we’ve built a national network, almost any metric for the business, customer satisfaction, score, churn rate, average occupancy ramp times have all gotten better and better and better with time, which I think supports your thesis, which is that as you become a national network, that there are beneficial effects and what you’re able to deliver to customers, et cetera. And you know, obviously, as a CEO of a company that is not only growing quite quickly but has, you know, operates in 47 cities, I’m really happy that that’s the case.

Ceci [00:20:46] And I do think that you’ve managed that growth wonderfully and there’s been, I mean, different companies that have managed with that differently, some have been successful, others haven’t. Before we finish off, I just want to ask you we’re talking about the flexible workspace industry. What do you think would be the role of flexible workspaces in the future of work?

Jamie [00:21:15] I’m always hesitant to use the phrase flex or flexible, not because it’s not true, but because to me it’s kind of the table stakes of our industry. You know, like the way I would think about the role of our industry and the future of work is that we are basically in many ways an outsourcing industry. Companies outsource something that for the last 50 years they’ve done themselves the delivery of their employees workplace experience to a provider like Industrious. And in that context, there are different ways you can attack that market. So you can attack it by saying we offer more flexibility than when you do it yourself. And that’s fine. But in certain ways, that’s the commodity version of what our industry is. It’s the least defensible, it’s the riskiest and it’s the easiest for Blackstone or Brookfield or any landlord to simply decide one day they’re going to do themselves and they’ll just offer one-year leases or two-year leases.

I think the next level above that, which you’re starting to see more of, is it’s not just that I can deliver a more flexible workplace environment, but I can deliver something more beautiful or something trendier. And the value proposition is that you can deliver something essentially that’s cooler than when Johnson and Johnson builds it themselves. And again, I don’t think that’s the highest and best use of our industry.

The best use of our industry and where I think in the long run it will impact the future of work most dramatically is not just to deliver a more flexible workplace solution, not just to deliver a more beautiful or more nicely designed one, but to deliver a better day at work to your customers. To really be able to say to your customers, whether it’s Airbus or Merck, or a 20 person PR firm, that you can deliver a more productive, more engaging day at work to their employees than when they do it themselves, and that you’ll help your customers actually quantify and measure that you’re delivering on that value. I think in the long run, that’s where all of the profits in our industry will go. I think that’s where the defensibility will be and that is over time what will come to dominate our industry. And in that context, I think it’s going to have enormous effects on the future of work, because as long as all our industry does is offer flexibility, it’s not that meaningful for the average worker. But if the if the context and the concept is that a provider like Industrious Is on the hook for making sure that employees have productive, engaging days at work, and if we are in fact better at it than the average Fortune 500, the average mid-sized business, then it would stand to reason over time. That should start to result in better workplace outcomes for workers who have to spend the majority of the days every day in office.

Ceci [00:24:10] And what you just said translates into one word into a better workplace experience and not just one that contributes to the professional life of someone, but their personal ones as well. I think that’s one of the big drivers towards more flexibility, buildings, wellness. And it’s that the workplace in and out of itself shouldmake us better people or should contribute to our lives positively, not negatively. And so if there’s anything else you want to add before we head off.

Jamie [00:24:44] So I think the last thing I would say so that, you know, to avoid being too promotional or sort of I think not acknowledging both sides of the issue is that there are countervailing kind of arguments for why, you know, everything won’t be just rosy. And the growth of our industry is that if you look at manufacturing, outsourcing, for example, four companies have 90 something percent of global revenue. If you look at outsource logistics, three companies have 90 something percent of global revenue. Outsource data storage. It doesn’t matter. Almost always, these big global platform outsourcing industries concentrate into three or four companies. And that’s particularly true when the complexity of delivery rises. So when outsource manufacturing was just, hey, you know, my factory lines are overloaded, I need a, you know, two days of generic factory time, there were hundreds and hundreds of hundreds of providers. But in the end,an outsource supply chain version of the world, there are four.

And in the same way, as we move from a world where there is essentially executive suites providers that offer sweet swing capacity to a true outsource workplace industry who is meant to work hand in hand with the world’s most sophisticated occupiers to deliver a better workplace experience to their employees, there will be three or four global platforms that dominate the space. I feel very confident about that. I hope that Industrious is one of those three or four,when the dust settles. But what I will say is, you know, that’s a lot of concentration of power and decision making in a small number of companies. And to have millions of people’s workplace experience driven by a relatively small number of companies,there is risk in that. There is a risk of the Starbucksification of company cultures and everything becoming quite homogenous, there is the risk that, you know, I think people underestimate how much the workplace provider decides what food is offered in a workplace and what isn’t. And, you know, if bathrooms or spaces are inclusive or not inclusive or things like that. And so there’s, I think, more responsibility for the WeWorks and the Industrious’ of the world than people oftentimes think. And it’s just important that companies like us honor that and use that responsibility to good effect.

Ceci [00:27:23] Thank you so much. It was a pleasure having you here.

Jamie [00:27:26] Thank you.

[00:27:27] So just to wrap up everything that we talked about, Industrious for one, is ready to welcome Gen Zinto the workplace. And the move towards a workplace of the future will have a lot to do with choice, flexibility, and modular furniture in order to provide workers with, I would say, better work-life integration versus work-life balance, but also to create experiences that make their overall workday better.

Jamie [00:27:55] I think that’s right. I think that’s right. And I really appreciate you having me on. I think this is great. Thank you.