There are some basic points that anyone working in flex understands well.
No revelations there. But the growing size and competitiveness of the flex market does throw important questions about what it takes to succeed as an operator.
The cliché has it that the rising tide lifts all boats. In reality, there is no room for complacency among operators – landlords and tenants alike have so much choice today that without a compelling proposition, strong brand and tight commercial plan, failure is still eminently possible even within a buoyant industry.
How, then, can smaller operators not just compete with their larger counterparts but triumph over them?
Smaller operators’ budgets will typically pale in comparison to those of larger companies, and indeed institutional landlords investing in their own flex spaces. So, instead, smaller operators must embrace the advantages they do hold – namely, greater agility and flexibility in creating a perfect product-market-fit (PMF).
Of the many lessons we can learn from the WeWork saga, an important one is that creating one type of site and deploying it everywhere is dangerous. We’ve likely all set foot in dozens of WeWorks in our time; the vast majority are copy-and-paste spaces, with the same décor, facilities and feel.
That’s not necessarily a criticism. It’s how global brands often function – create a product and replicate it as closely as possible across as many sites as possible, giving the customer a homogeneous experience. Fair enough; that replicability is a sound commercial model, builds a distinct brand and breeds a level of comfort and familiarity among customers.
However, when it comes to flex, the copy-and-paste approach is problematic, which brings us back to the importance of embracing an agile, flexible mindset as a small operator.
It’s easy to see the flex market as a single, global beast. But different flex products suit different geographies – every country, city and neighbourhood presents its own unique demands and opportunities.
Free from a corporate mandate and universal brand proposition that brings pre-defined customer expectations, small operators have the advantage of being able to better deliver exactly what the target market wants for a particular site.
Indeed, we increasingly talk about flex operators embracing a ‘hospitality mindset’ – in other words, delivering an exceptional customer experience. Well, if we look at the hospitality sector, there are obvious lessons in how businesses are acutely aware that their product has to vary significantly based on where a site is located – even multinational brands allow their hotels or restaurants to be shaped as much by the demands of the local customer base as by an over-riding corporate rulebook.
This is where the flex space is heading. But there is work to be done. This report is worth reading – ‘User preferences for coworking spaces; a comparison between the Netherlands, Germany and the Czech Republic’. It states: “There is limited understanding of how coworking space operators can design their business models for differing user demands … Coworking space users prefer different services and spaces and local, small coworking operators are specialising in specific local user groups and show a high diversity in terms of strategy, location and set-up.”
From the motivations for using a flex space, through to the qualities and facilities most in demand in a flex space, it’s essential that small operators understand the wants and needs of local customers. They can then take advantage of their greater agility to adapt their offering and achieve the holy grail that is a perfect PMF.
Take the differences between Berlin and Los Angeles. In the German capital, flex spaces have seen high levels of adoption among both larger firms shifting away from the traditional private office model, as well as a booming fintech startup scene. In LA, meanwhile, the large population of creatives, contractors and freelancers has equally seen demand rise for flex space, but typically, this demand is for coworking passes or single-person offices.
In both cities, flex is booming. But that simple example highlights how the needs of the customers vary significantly from site to site. So, creating the same product and rolling it out across different sites – even different sites within the same city – is typically a poor approach.
What small businesses lack in budgets or brand recognition, they can make up for through a more agile approach. The ability to be bespoke, assess a local market, understand what a successful flex space will comprise of, and then adapt their product – the tech, functionality, fit-out and facilities – accordingly will allow them to create a far more compelling proposition.
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