Small Business Labs

Is the Traditional Office the Least Productive Place to Work?

Last summer we did a lot of interviews (over 60) with members of U.S. coworking facilities.  One message we consistently heard was coworkers felt they were more productive at a coworking facility than they were working from home or from coffee shops.

We heard this so consistently, we included several folks explaining why in our Voices of Coworking video.

Office Nomads, a coworking facility in Seattle, discusses the same topic in their blog post Negotiating Your Coworking Membership With Your Boss.  Key quote:

The most important and positive element that people gain from their time at coworking spaces though, is the productivity.

What makes this really interesting is the amount of research saying most people who work from home are more productive than they are at their offices.  For example, the Costs and Benefits of Telecommuting are nicely described by the smart folks over at the Telework Research Network.  A major benefit of telecommuting from home, backed up by numerous examples, is increased productivity.

So let's see here.  Working from home is more productive than working in a traditional office.  Working in a coworking facility is more productive than working from home.  

This suggests that the least productive place to work is a traditional office.  

The Voices of Coworking Video

The Voices of Coworking is a video where members of coworking facilities discuss why they cowork, the benefits of coworking and where they see this new style of work going in the future.

The video is the the synthesis of over 80 interviews with coworkers conducted by Emergent Research over the last summer.  Over 40 of these interviews were filmed, and we believe the 17 people in the film provide a broad and accurate perspective on this new way of working.

This research was an extension of the Intuit 2020 research series, which isconducted with our research partner Intuit Corporation.  In this work we forecast that over the next decade the growing array of Web-based technologies will reinvent the workplace, making these “third places” (including coworking facilities) for work outside of the traditional office and home more commonplace.

For those not familar with coworking facilities, they are shared workspaces that offer the amenities of a traditional workplace with the convenience and sociability of your neighborhood cafe. 

While their configurations vary, coworking facilities offer everything from desks and meeting rooms to social areas, high speed Internet access and office equipment.

Most facilities offer memberships by the day, week or month and appeal to the freelancers, entrepreneurs, startups, small businesses, big company telecommuters and other laptop nomads who are tired of working alone at home or in crowded and noisy coffee shops. 

More importantly, coworking and coworking facilities are much more than just a place to work.  Coworking facilities create a community of workers who socialize and, more importantly, collaborate.  They bounce ideas off each other, share expertise, join forces on projects, refer business to one another and even join to create new companies.

Our recent post Coworking at a Growth Inflection Point explains why we believe the next 2-3 years will see accelerating growth in the number of people coworking.  The Voices of Coworking provides more ammunition for this forecast. 

The Tablet Revolution - Tablets Taking Over

In case you've been living in a cave the last year or so, the use tablet computers (and especially Apple iPads) is surging.

According to a recent report by Pew Research, about 11% of adult Americans own a tablet computer.  This is stunning growth given that the first iPad was released just 18 months ago. 

If the report was from anyone but Pew, I would be more that a bit skeptical.  But Pew's work is rock solid.

As the chart (from the study) below shows, most tablet owners use their tablets every day and over half use tablets daily for news. 

        

Several blogs cover the report in detail so I won't bother.  Hubspot's 30 New Tablet Usage Stats Marketers Should Know does a great job summarizing the key statistics from the report, including:

• Tablet owners spend an average 90 minutes per day on their tablet
• 39% of tablet owner use their tablets daily for social networking
• 30% of tablet owners use their tablets for gaming daily
• 33% of tablet owners say they are turning to new sources of news

Journalism.org's How People Use Tables and What it Means for the Future of News has an excellent analysis of what it means for news and new organizations. 

One of their most interesting insights is that tablets may not be the business model savior many news organizations are hoping for.  Key quote from the article:

The revenue potential for news on the tablet may be limited. At this point just 14% of tablet news users have paid directly to access news on their tablet. Another 23% get digital access of some kind through a print newspaper or magazine subscription. Still, cost is a factor, even among this heavy news consuming population. Of those who haven't paid directly, just 21% say they would be willing to spend $5 per month if that were the only way to access their favorite source on the tablet. And of those who have news apps, fully 83% say that being free or low cost was a major factor in their decision about what to download.

The tablet revolution is part of the broader move to mobile computing and information access through the cloud.  There's no reason to think its explosive growth won't continue. 

Politicians, Small Business and the U.S. Economy

The role small businesses play in the U.S. economy is a very popular topic these days.  This is primarily due to our politicians saying "small businesses are the backbone of the U.S. economy" pretty much every time they open their mouths.

But as a flurry of recent articles have pointed out, our politicians tend to exaggerate the importance of small business.  This is not to say small businesses aren't important - they're really important.  They just don't dominate the economy.  

Some of the articles are:

The New York Times Small Isn't Always Beautiful points out that "more than two-thirds of the American work force is employed by companies with more than 100 workers."  

What May Be the Most Commonly Misunderstood Fact About the Job Market covers the same ground as the NY Times piece and may have inspired it.  Key quote:

So, summing up, small businesses, say those with 100 workers or less, account for a minority of both workers and payrolls, and are not the primary engine of job growth.

Prolific small business researcher Scott Shane weighed in with Another Misunderstood Fact About the Job Market where he pointed out that most discussions only talk about the private workforce.  If you include government workers, small businesses account for even a smaller percentage of employment.

One of the more interesting trends we follow but don't talk about much is the growing interest in the small business sector.  When we started following small businesses 10 years ago there was very little interest in the sector and politicians rarely mentioned it.

Now, they're all over it.  

Bain's Trillion Dollar Growth Trends

The Great Eight: Billion Dollar Growth Trends to 2020 is a fascinating look at macro trends from the elite consulting firm Bain and Company.

Bain's primary business is strategy consulting at the highest levels of world's largest corporations. 

Because of this, they look at trends from a "where's the money" point of view and each of the their Great Eight trends is expected to generate at least $1 trillion (yes, trillion) in global GDP over the next decade. 

The Great Eight are:

1.  The Next Billion Consumers:  China, followed by India and other emerging Asian economies, is creating a vast new population of consumers, whose growth will continue into the coming decade.

2.  Old infrastructure, new investments: Urbanization in developing nations and obsolescence in developed nations will spur infrastructure spending.

3.  Militarization following industrialization: A transient opportunity for defense contractors as China, India and other developing nations expand their defense spending.

4.  Growing output of primary inputs: Demand for all commodities will rise. Increased consumption of oil, food, water and ores is a function of population growth but has been amplified by the industrialization of emerging economies.

5.  Developing human capital: Investments in workforce training will be required to lift skill levels in new markets and to remain competitive in developed ones.

6.  Keeping the wealthy healthy: In advanced markets, aging populations and increasing rates of chronic conditions, such as obesity and diabetes, will continue to inflate healthcare costs.

7.  Everything the same, but nicer: For the affluent, the search for quality improvement rather than quantity will drive consumption trends.

8.  Prepping for the next big thing: The next platform breakthrough isn’t here yet, but the seeds are beginning to sprout.  Candidates include nanotech, biotech, artificial intelligence, robotics and ubiqutous connectivity.

The chart below is from Bain and summarizes the GDP impact forecast for the trends.

I highly recommend visiting Bain's site and reading their article.  It's full of interesting charts and graphs illustrating the trends. 

For those interested in trends, you can also download the Intuit 2020 Report.  It covers 20 trends likely to impact business and society over the next decade.  There is a strong overlap between the two trend sets. 

The Trend Towards U.S. Manufacturing Continues to Accelerate

The Boston Consulting Group (BCG) is forecasting a major uptick in U.S. manufacturing.  Key quote from their most recent study:

"Over the next five years, a U.S. manufacturing renaissance in home appliances, car parts, and other sectors could accelerate—boosting output by $100 billion and adding 2 million to 3 million jobs."

There are currently about 11.7 million manufacturing jobs in the U.S. - down from over 16 million in the late 1990s.  To paraphrase our Vice President, adding 2-3 million manufacturing jobs would be a big "bad word" deal. 

We first noticed companies starting to shift manufacturing back to the U.S. in 2007.  Although the Great Recession slowed this shift, it's started to pick up again with the global economic recovery.  By early 2010 it was clear this trend was real and would continue to grow in importance.

The drivers are:

• rising overseas production costs, particularly in China
• strong U.S. productivity
• rising transportation costs
• better understanding of the total costs of long supply chains

The last point is growing in importance and is nicely illustrated in the New York Times article A Company Grows, and Builds a Plant Back in the U.S.A.  Key quote on long supply chains:

"The lead time for orders coming from China is three weeks, and all of our brewery clients want our products faster — that’s the first thing they say when we meet with them. ... Right now, we’re losing orders because of lead time."

A growing number of companies have this supply chain "need for speed." Also increasing is the number of products using shorter production runs and/or requiring customization.  These shifts favor locating near sources of demand to cut product cycle times. 

Add in the potential of supply disruptions and the environmental impact of long supply chains, and it's easy to see why manufacturing in the U.S. is becoming more popular. 

Coworking for the Bio-Curious

Last year we reported on the growing interest in developing biotech coworking labs.  The effort we reported on has come to fruition.  bioCurious, a 2400 square foot coworking lab, is now open for business in Silicon Valley. 

According to their blog, at bioCurious you can: "Make genetically-engineered bacteria, sequence DNA, find the tools to get your bio-project growing, or make friends with amateurs and experts in the community."

Membership includes "access to gel electrophoresis, real time PCR, incubators, fridges, freezers" and they are "adding new equipment all the time." 

My first reaction - What could possibly go wrong giving people the ability to make their own genetically-engineered bacteria? - was the result of watching too many disaster movies. 

Once past this initial reaction, it's easy to see that shared labs make a lot of sense. 

Last week we discussed the growth of coworking and the growing number of coworking facilities that aren't office-based.  Coworking's concepts - shared space, targeted at independent and mobile workers, an emphasis on community and networking - are rapidly spreading beyond offices. 

bioCurious is an example of this trend. 

3D Toy Printing for Kids

Origo is creating a 3D printer for kids.  The idea is kids can design their own toys using a very simple, PC-based drawing application and then make them out of plastic using the printer. 

The picture on the right is an artist's rendering of their 3D Printer. 

For those not familiar with 3D printing, my favorite description comes from a New York Times article on the topic from about 18 months ago:

A 3-D printer, which has nothing to do with paper printers, creates an object by stacking one layer of material — typically plastic or metal — on top of another, much the same way a pastry chef makes baklava with sheets of phyllo dough.

Long ago when I was a kid I had a similar product that used a very different technology - Mattel's Vac-U-Form. 

I had asked my parents for a Thing Maker, which made creepy crawlers.  But the Vac-U-Form was cheaper and my raised-in-the-depression era parents saw no reason to spend the extra $8 bucks just because it was my birthday. 

         

Not that I'm still mad at them, but creepy crawlers were so much cooler. 

We've long followed 3D printers.  They've been around several decades, but due to technology improvements and price drops they're getting a lot more notice these days.  Our 3D Printing Comes of Age post provides an overview of 3D printers and links to other resources on the topic.

The Singularity Hub has more on Origo's 3D printer. 

Label Maker Innovation and Atoms Versus Bits

Epson recently announced a new line of labeling products. 

What caught our attention is how well this product illustrates the growing digital technology is playing in almost every product.

The new Label Works products from Epson are also great examples of how the prices of products with digital content is falling, while the prices of physical products are going up. 

Here's the product description from the email they sent me accompanying their press release:

The LabelWorks LW-300 and LW-400 deliver professional labels with 14 font types, 75 frames and more than 300 symbols. They can be used with more than 40 tape cartridges including pearlized and reflective tapes to create custom bar codes, wire wraps, and even a mirror effect for the ultimate in folder organization, no matter which way the folder is facing. 

I'm fascinated by the amount of technology that included in these products, the amount of innovation required to stay competitive in this market, and the continual price declines of label makers.  This product sells for just $39.99. 

Yes, I know it's a razor - razor blade product line and they make their money selling the labeling materials.  That's what makes this product line so interesting.   The value in the label maker is mostly digital - software and a chipset in a plastic package.  In other words, the value is mostly bits.

The value in the tape used in a label maker is made up of physical materials - it's atoms.  And the price of the tape has increased over time because of this.

We're going to see this happening more often.  Products with digital content (made up of bits) will continue to decline in price.  Products made up of physical products (atoms) will see price increases.

We call this trend Scarcity and Abundance in a World of Atoms and Bits.  This trend will make understanding and managing inflation complex over the next decade. 

Coworking at a Growth Inflection Point

Coworking facilities - shared, collaborative workspaces - are rapidly gaining traction as a work location option.  This is illustrated by several clear signals.

Web traffic and activity related to coworking continues to surge.  The chart below shows the number of Google search hits for the term "coworking".  Yes, you don't want to read too much into Google search data, but we've found it to be a good indicator of trend directions.

       
 
The second signal is the increase and growing diversity of mainstream media coverage of coworking.  Recent articles include The Investor's Business Daily covering coworking from a real estate point of view, the Wall Street Journal covering coworking as a place for tech startups and the Washington Post talking about coworking facilities as incubators for small businesses. 

Also interesting is the recent article on coworking in the New York Times Fashion & Style section, which seems to be covering business almost as much as fashion these days. 

Of course the biggest signal is the growth in the number of U.S. coworking facilities and the growing diversity of types of coworking facilities. 

We currently estimate there are around 380 office-based U.S. coworking facilities, up from around 260 a year ago. 

We've also added the words "office-based" to our description because of the rapidly growing numbers of other kinds of coworking facilities (shared kitchens, labs, industrial spaces, Maker spaces, etc.). 

Even within "office-based" coworking we're seeing growing diversity as incubators, accelerators, traditional executive suites, libraries, hotels, private companies and others offer hybrid forms of coworking. 

All of this is leading us to believe coworking is at an inflection point and the next 2-3 years will see accelerating growth in the number of people coworking.