Boost corporate performance with an innovative approach to real estate

By Hans Leijten, Regional Vice President - East Asia, Regus | Dec 5, 2011

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The traditional view of corporate functions like IT, HR and Corporate Real Estate (CRE) was that they each had a specific role: managing the network, managing staff, and managing real estate. They had no contribution to wider aspects of corporate performance.

But many senior management teams have amended that view. They realise the corporate functions have a broader role in supporting and advancing an organisation’s business strategies.

Take CRE. This year Regus published a report by two leading CRE thinkers, Barry Varcoe and Martha O’Mara, offering, for the first time, solid evidence of the correlation between CRE and company financial performance.  Their study of the CRE practices of forty Global Fortune 500 companies found that certain practices relate to corporate profitability.

One of the practices noted by Varcoe and O’Mara is continuous improvement and innovation by CRE management. They showed that a 28% improvement in this practice relates to an addition of 0.84% to an organisation’s return on assets. Varcoe and O’Mara noted the benefits of focused research and continuous improvement tools like Lean Management, Six Sigma and Kaizen; they also called on the CRE industry to consider being more adventurous.

One element in a more adventurous approach to CRE is cost. Many innovative companies have moved away from fixed property to more agile arrangements. For example, outplacement consulting firm Challenger, Gray & Christmas uses Regus workplace solutions to take advantage of new business opportunities in different locations – a more nimble approach than leasing its own offices.

“Any company looking for ways to be highly productive has to look at its real estate costs. Real estate has been so rigid for the last century that creating a flexible model takes on a new kind of creative thought,” explains John Challenger, CEO of Challenger, Gray & Christmas. Their own creative thinking led them to use Regus workspace, rather than have under-used leased space sitting empty.

Innovation and improvement in CRE terms is not just a matter of real estate costs. Regus’s research report VWork: Measuring the Benefits of Agility at Work  quotes Steven Johnson, author of Where Good Ideas Come From: The Natural History of Innovation: “Innovation springs out of the ‘adjacent possible’ – the most inventive places are hives of activity where people get together and share ideas.”

Google is well known for the value it puts on spaces where ideas can flourish, and its offices include pool tables and huddle areas. When Regus established a sales office for Google in Portugal, it knocked down a wall to create space for a football table and a massage chair. In the words of Dr Paulo Barreto, Country Manager, Google Portugal, “Every day Regus evolve their service as they learn more about how we do things differently in Google” – a case of two companies partnering to do things differently and better.

Steven Johnson’s hives of activity don’t even need to be physical. Transformational technologies like smartphones and videoconferencing enable staff across the world to create their own virtual version of Google’s football table, without the drain of travelling across continents to meet.

So, the CRE team in a quest for innovation and improvement should look for a mix of physical and virtual workspace that fosters productivity, and eliminates inflexible costs from the balance sheet. This means looking away from traditional real estate arrangements, and working with suppliers of more creative, flexible solutions.

Above all, they should seek agility. They need to improve not just today, but tomorrow and next year. That way, they provide the stages and the flexibility for the rest of the company to do that too.

For more information on Varcoe and O’Meara’s report, Corporate Real Estate Impact on Enterprise Success, go to LINK (http://www.regus.co.uk/corporate-workspace-solutions/resources/whitepape...).